ILUKA RESOURCES LIMITED — Capital/Financing Update 2005

Sep 4, 2005

Notice to the Australian Stock Exchange

5 September 2005

SALE OF NARDELL COLLTERY MINING LEASES

Iluka Resources Limited wishes to advise that it has reached an agreement to sell the Nardell Colliery mining leases, held by Iluka's 93.3% owned subsidiary Ashton Coal Interests Pty Ltd ("Ashton"), to Xstrata Coal Pty Ltd ("Xstrata").

The agreement relates to mining leases ML1348 and ML1349 that comprise the coal resource of the Newpac No. 1 Colliery ("Newpac") (formerly known as the Nardell Colliery) in the Hunter Valley region of New South Wales. Newpac is operated by Resource Pacific Limited under a sublease agreement.

Under the terms of the sale, Xstrata will purchase the mining leases from Ashton for A\$15.3 million.

Iluka's Managing Director, Mr Mike Folwell said "the proceeds from the sale of Iluka's interests in the Nardell Colliery are part of the Company's planned second half asset sales and are included in the recently provided 2005 full year net profit after tax quidance of A\$130 to \$140 million."

Investment Community & Media contact: Geoff Wedgwood Mobile: 0409 997 256