ILUKA RESOURCES LIMITED — Capital/Financing Update 2005

Aug 17, 2005

Notice to the Australian Stock Exchange

18 August 2005

DOUGLAS PROJECT UPDATE

Iluka Resources Limited advises that at the end of July, the Murray Basin Douglas project was approximately 67% complete. This compares with the original plan of 98%

The key construction elements of Iluka's A\$270 million investment in the Douglas project include infrastructure, a mine and wet concentrator plant (WCP) and a mineral separation plant (MSP).

The majority of the project investment relates to a lump sum, largely fixed price, engineering, procurement and construction (EPC) contract with Roche Mining. The balance of the investment is being managed internally by Iluka.

The original completion dates specified under the EPC contract were April 2005 for the WCP and October 2005 for the MSP. Since January 2005, Roche have continued to revise their expected completion dates. The latest advice from Roche Mining concerning the EPC completion schedule indicates the following:

• completion of the WCP is expected in September 2005; and
• completion of the MSP is expected around March 2006. $\bullet$

This represents a project delay of at least 5 months compared with the original completion schedule.

As a consequence of the delays, Iluka has sought a third party assessment of likely completion dates. This assessment indicates that in order for Roche to meet a September 2005 completion date for the WCP and a March 2006 completion date for the MSP, a substantial (but achievable) increase in productivity is required. If the increase in productivity is not realised, the completion dates are more likely to be October 2005 for the WCP and mid-2006 for the MSP.

Iluka management have sought, and continue to seek, immediate improvement from Roche in the performance of its obligations under the EPC contract.

Investment Community & Media contact - Iluka Resources

Geoff Wedawood Mobile: 0409 997 256