ILUKA RESOURCES LIMITED — Capital/Financing Update 2005

Sep 28, 2005

Notice to the Australian Stock Exchange

29 September 2005

ILUKA FINALISES WESTERN AUSTRALIAN LAND SALE

Iluka Resources Limited is pleased to advise that it has entered into a sales contract with a consortium of investors headed by Macquarie Bank's Property business to sell 504 hectares of freehold land at Mundijong (located approximately 38 kilometres south-east of Perth). Under the terms of the sale agreement, Iluka will receive a payment of A\$18.23 million for this parcel of land by the end of 2005.

The land was originally acquired by the Company to secure access to the Mundijong mineral sands resource. However, a feasibility study has since demonstrated that the deposit can not be developed economically. The key impediments to development are the nature and extent of the mineral assemblage (predominately low value and poor quality ilmenite), relatively short mine life and access to water.

The decision to sell this land follows a recent review of the Company's 18.300 hectare freehold land portfolio in Western Australia. The review, which was done in conjunction with Grant Samuel, identified the Mundijong land as being both surplus to requirement and a significant divestment opportunity. Consequently, the land was offered for sale through CB Richard Ellis and thirteen offers were received from a range of private and government sector land developers.

Iluka's Managing Director Mike Folwell said that "whilst Iluka would not be mining the Mundijong deposit, the Company remains committed to the mineral sands industry and maintaining, or where possible, expanding its mining and mineral processing operations in Western Australia".

"The Company has already invested in new mines near Gingin and Wagerup in 2005 and is planning to establish new mines near Waroona in 2006 and Cataby in 2007. In addition, Iluka is also investigating the feasibility of building an iron plant to convert iron oxide (a by-product of synthetic rutile production) into pig iron, as well as the expansion of mining and processing operations at Eneabba", he added.

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