ILUKA RESOURCES LIMITED — Capital/Financing Update 2004

Dec 12, 2004

Notice to the Australian Stock Exchange

13 December 2004

ILUKA TO DEVELOP A NEW MINE IN WESTERN AUSTRALIA

Iluka Resources Limited has approved a total investment of A\$43 million to develop a mining and mineral concentrating project at Gingin. The investment is inclusive of a contingency allowance and approximately A\$12 million of pre-strip earthworks to remove the overburden at the commencement of the project rather than over the life of the project.

The project will be located in an area adjacent to the Brand Highway, approximately three kilometres west-north-west of the Gingin town site in Western Australia. The land is currently used for agriculture and has been extensively cleared. A total of 280 hectares will be utilised for mining and concentrating operations which are planned to commence in mid-2005 and finish at the end of 2008.

The mine plan is based on a Proved Ore Reserve of 8.3 Mt @ 16% contained Heavy Mineral The Ore Reserve has been estimated using parameters based on standard Iluka dry mining practices. The project will be developed using the Powell mineral concentrator (currently located at the North Capel West mine site), a new mining unit and associated infrastructure.

The decision to develop the Gingin project is consistent with the Company's strategic focus on the production and sale of high grade and quality $TIO₂$ feedstock, ilmenite for the chloride route pigment industry and zircon. Production from Gingin over a three and a half year period is planned to deliver approximately 600,000 tonnes of ilmenite for use as feedstock in Iluka's synthetic rutile kilns (this equates to approximately 360,000 tonnes of synthetic rutile from the Geraldton operations), a further 310,000 tonnes of chloride grade ilmenite for sale to a major USA-based customer, 75,000 tonnes of rutile and 65,000 tonnes of zircon.

In terms of approvals, the Environmental Protection Statement has been approved by the Minister and an application for a Works Approval has been submitted. The Company expects to complete the approval process in early 2005 to enable earthworks to commence before the end of the first quarter of 2005.

The Ore Reserves contained herein have been compiled by Iluka staff and reviewed by Mr Grea Jones, a Member of the AusIMM, a full time employee of Iluka Resources Limited and a Competent Person as defined by Clause 10 of the "Australian Code for Reporting of Mineral Resources and Ore Reserves".

Investment Community & Media contact:

Geoff Wedgwood Phone: +61 8 9360 4751 Mobile: 0409 997 256