ILUKA RESOURCES LIMITED — Interim / Quarterly Report 2003

Feb 27, 2003

$Rules 4.1, 4.3$

Appendix 4B

Half yearly/preliminary final report

Introduced 30/6/2002.
Name of entity
ILUKA RESOURCES LIMITED
ABN or equivalent company reference.	Half yearly (tick)	Preliminary final (tick)			Half year/fissancial year ended ('current period')
34 008 675 018		✓			31 December 2002
For announcement to the market
Extracts from this report for announcement to the market (see note 1).					\$A'm
Revenues from ordinary activities (item 1.1)		цp	0.5%	to	930.2
Profit (loss) from ordinary activities after tax attributable to members (item $1.22$ )		uβ	71.1%	to.	109.0
Profit (loss) from extraordinary items after tax attributable to members (item 2.5(d))		Gain (toss) of
Net profit (loss) for the period attributable to members (item 1.11)		ЦĎ	71.1%	to	109.0
Dividends (distributions)			Amount per security		Franked amount per security
Final dividend (Preliminary final report only - item 15.4) Interim dividend (Half yearly report only - item 15.6)				12.00¢		0.004
Previous corresponding period (Preliminary final report - item 15.5; half yearly report - item 15.7)				12.00¢		1.004
"Record date for determining entitlements to the dividend, (in the case of a trust, distribution) (see item 15.2)			09 April 2003
Brief explanation of any of the figures reported above (see Note 1) and short details of any bonus or cash issue or other item(s) of importance not previously released to the market:
If this is a fialf yearly report it is to be read in conjunction with the most recent annual financial report.

		Current period \$A'm	Previous corresponding period \$A'm
1.1	Revenses from ordinary activities (see item 1.23-1.25)	930.2	925.2
1.2	Expenses from ordinary activities (see items 1.26 &1.27)	(800.6)	(835.3)
1.3	Borrowing costs	(27.5)	(26.9)
1.4	Share of net profits (losses) of associates and joint venture entities (see item 16.7
1.5	Profit (loss) from ordinary activities before tax	102.1	63.0
1.6	Income tax on ordinary activities (see note 4)	8.1	(5.3)
1.7	Profit (loss) from ordinary activities after tax	110.2	57.7
1.8	Profit (loss) from extraordinary items after tax (see item 2.5)
1.9	Net profit (loss)	110.2	57.7
1.10	Net (profit) loss attributable to outside "equity interests	(1.2)	6.0
1.11	Net profit (loss) for the period attributable to members	109.0	63.7
	Non - owner transaction changes in equity
1.12	Increase (decrease) in revaluation reserves
1.13	Net exchange differences recognised in equity		0.3
1.14	Other revenue, expense and initial adjustments recognised directly in equity (attach details)
1.15	Initial adjustments from UIG translation provisions
1.16	Total transactions and adjustments recognised directly in equity (item 1.12 to 1.15)		0.3
1.17	Total changes in equity not resulting from transactions with owners äs owners	109.0	64.0

äs owners	109.0
Earnings per security (EPS)	Current period	Previous corresponding

	Earnings per security (EPS)	Current period	Previous corresponding period
1.18	Basic EPS	48.64	29.3¢
1.19	Diluted EPS	48.6d	29.3¢

Notes to the condensed consolidated statement of financial performance Profit (loss) from ordinary activities attributable to members

Condensed consolidated statement of financial performance

		Corrent period - \$A'm	IPrevious corresponding period - lsA'm
1.20	Profit (loss) from ordinary activities after tax (item 1.7)	110.2	57.7
1.21	(Less) plus outside *equity interests	71.231	6.0
1.22	Profit (loss) from ordinary activities after tax, attributable to members	109.0	63.7

		Carrent period - \$A'm	Previous corresponding period - \$A'm
1.23	Revenue from sales or services	894.5	900.8
1.24	Inferest revenue	1.2	1.5
1.25	Other relevant revenue
	- Proceeds on sale of PT Koba Tin.	24.5
	- Proceeds on sele of property, plant and equipment.	6.3	6.2
	- Net foreign exchange gain		4.9
	- Sale of Sierra Rubile Holdings Limited		6.3
	- Sundry income	3.7	5.5
1.26	Details of relevant expenses
	Cost of production (excluding depreciation and amortisation).	(563.4)	(548.9)
	Rehabilitation and mine closure.	(19.6)	(22.0)
	Marketing and selling (including royalties)	(41.0)	(46.9)
	Corporate, finance and administration	(31.0)	(33.5)
	Exploration and evaluation	(8.2)	(10.9)
	Research and Development	(4.2)	$\langle 2.1 \rangle$
	Sierra Rutile Holdings Limited project expenditure		$\langle 3.7 \rangle$
	Written down value of property, plant and equipment sold	(3.7)	(5.3)
	Other expenses
	- Write down of PT Koba Tin assets for sale		(37.5)
	- Written dawn value of PT Koba Tin assets sold	(23.7)
	- Write down of assets to recoverable amount.	(8.2)	(5.0)
	- Closure of Westlime Operations		(6.3)
1.27	Depreciation and amortisation excluding amortisation of intangibles (see item 2.3)	(97.6)	(113.2)
	Capitalised outlays
1.28	Interest costs capitalised in asset values
1.29	Outlays capitalised in intangibles (unless arising from an acquisition of a business)

Revenue and expenses from ordinary activities (see note 15)

Consolidated retained profits

		Carrent period - \$A'm	Previous corresponding period - sa'm
1.30 1	Retained profits (accumulated losses) at the beginning of the financial period	129.4	113.6
1.31	Net profit (loss) attributable to members (item 1.11)	109.0	63.7
1.32	Net transfers from (to) reserves (details if material)
1.33 1	Net effect of changes in accounting policies
1.34	Dividends and other equity distributions paid or payable	(51.1)	(47.9)
1.35	Retained profits (accumulated losses) at end of financial period	187.3	129.4

Intangible and extraordinary items

		Consolidated - current period
		Before tax	Refated tax	Related outside	Amount (after tax) attributable to
		\$A'm	\$A'm	"equity interests	members \$A'm
		(a)	(b)	$\langle c \rangle$	(d)
2.1	Amortisation of goodwill
2.2	Amortisation of other intangibles
2.3	Total amortisation of intangibles
2.4	Extraordinary items (details)
2.5	Total extraordinary items

	Comparison of half year profits (Preliminary final report only)	Current period		Previous corresponding period
3.1	Consolidated profit (loss) from ordinary activities after tax attributable to members reported for 2st half year (item 1.23 in the half yearly report).	\$A'm	41.1	\$A'm 46.1
3,2	Consolidated profit (loss) from ordinary activities after tax attributable to members reported for the 2nd half year		67.9	17.6
	Condensed consolidated statement of financial position	At end of current \$A'm period	As shown in last annual report \$A'm	As is last half yearly report sAm
	Current assets
4.1	Cash	21.3	28.2	7.2
4.2	Receivables	238.5	179.7	219.4
4.3	Investments
4.4	Inventories	129.9	200.3	156.2
4.5	Tax assets	0.3	1.7
4.6	Other (Deferred maintenance costs, deferred losses on foreign exchange derivatives and land held for sale)	28.1	47.6	17.9
4.7	Total current assets	418.1	457.5	400.7
4.8	Non-current assets Receivables	15.3	14.7	17.8
4.9	Investments (equity accounted)
4.10	Other investments		1.2	2.3
4.11	Inventories	2.0	3.1	1.7
4.12	Exploration and evaluation expenditure capitalised	106.7	91.2
4.13	(see para .71 of AASB 1022) Development properties ("mining entities)	24.4	63.1	96.7 48.0
4.14	Other property, plant and equipment (net)	1,065.5	901.4	903.4
4.15	Intangibles (net) (SREP patents and licenses)	17.6
4.16	Tax assets	32.6	7.8	9.8
4.17	Other (Deferred maintenance costs and deferred losses on foreign exchange derivatives)	39.2	27.7	27.0
4.18	Total non-current assets	1,303.3	1,168.2	1,106.7
4.19	Total assets	1,721.4	1,565.7	1,507.4
	Current liabilities
4.20	Payables	94.9	78.9	53.1
4.21	Interest bearing liabilities	76.2	0.1	0.1
4.22	Tax liabilities	3.1	6.0	1.2
4.23	Provisions	83.1	135.8	92.1
4.24	Other (provide details if material)
4.25	Total current liabilities	257.3	220.8	146.5
4.26	Non-current liabilities Payables
4.27	Interest bearing liabilities	393.3	388.9	438.2
4.28	Tax liabilities	26.4	16.9	10.0
4.29	Provisions exc tax liabilities	165.4	181.9	149.5
4.30	Other (provide details if material)
4.31	Total non-current liabilities	585.1	587.7	597.7
4.32	Total liabilities	842.4	868.5	744.2
4.33	Net assets	879.0	757.2	763.2
	Equity
4.34	Capital/contributed equity	610.4	534.0	534.0
4.35	Reserves	27.8	27.8	28.1
4.36	Retained profits (accumulated losses)	187.3	129.4	147.0
4.37	Equity attributable to members of the parent entity	825.5	691.2	709.1
4.38	Outside "equity interests in controlled entities	53.5	66.0	54.1
4.39	Total equity	879.0	757.2	763.2
4.40	Preference capital included as part of 4.37

Notes to the condensed consolidated statement of financial position Exploration and evaluation expenditure capitalised

(To be completed only by entities with mining interests if amounts are material. Include all expenditure).

		Carrent period - \$A'm	Previous corresponding period - \$A'm
5.1	Opening balance	91.2	84.6
5.2	Expenditure incurred during current period	17.0	37.5
5.3	Expenditure written off during current period	(8.2)	(10.9)
5.4	Acquisitions, disposals, revaluation increments, etc.	6.7
5.5	Expenditure transferred to Development Properties
5.6	Closing balance as shown in the consolidated balance sheet (item 4.12)	106.7	91.2

Development properties¹

(To be completed only by antities with mining interests if amounts are material)

		Carrent period - \$A'm	Previous corresponding period - l\$A′m
6.1	Opening balance	63.1	4.8
6.2	Expenditure incurred during current period	52.2	\$1.7
6.3	Expenditure transferred from exploration and evaluation
6.4	Expenditure written off during current period
6.5	Acquisitions, disposals, revaluation increments, etc.
6.6	Expenditure transferred to mine properties	(90.9)	(3.4)
6.7	Closing balance as shown in the consolidated balance sheet (item 4.13)	24.4	63.1
	1 Development properties include assets under construction.

1 See chapter 19 for defined terms

ILUKA RESOURCES LINSTED
31/32/2002

		Corrent period - \$A'm	Previous corresponding period - \$A'm
	Cash flows related to operating activities
7.1	Receipts from customers	823.9	858.3
7.2	Payments to suppliers and employees	(691.6)	(704.5)
7.3	Dividends received from associates
7.4	Other dividends received
7.5	Interest and other items of similar nature received	1.2	1.6
7.6	Interest and other costs of finance paid	(27.5)	(26.9)
7.7	Income taxes paid	(7.7)	(6.1)
7.8	Other (GST received, exploration expenditure and hedge restructure costs).	23.5	8.6
7.9	Net operating cash flows	121.8	131.0
	Cash flows related to investing activities
7.10	Payment for purchases of property, plant and equipment	(134.8)	(93.4)
7.11	Proceeds from sale of property, plant and equipment	6.3	6.2
7.12	Payment for purchases of equity investments
	- Basin Minerals Limited (net of cash acquired)	(56.6)	(1.2)
	- Consolidated Rutile Limited	(2.7)	(10.6)
7.13	Proceeds from sale of equity investments (proceeds on sale of PT Koba Tin net of cash disposed)	20.3	1.5
7.14	Loans to other entities		(2.9)
7.15	Loans repaid by other entities
7.16	Other (purchase of SREP patents and licenses)	(17.6)
7.17	Net investing cash flows	(185.1)	(100.4)
	Cash flows related to financing activities
7.18	Proceeds from issues of "securities (shares, options, etc.)		3.4
7.19	Proceeds from borrowings	310.2	102.5
7.20	Repayment of borrowings	(199.9)	(88.0)
7.21	Dividends paid	(53.6)	(53.9)
7.22	Other (Provide details if material)
7.23	Net financing cash flows	56.7	(36.0)
7.24	Net increase (decrease) in cash held	(6.6)	(5.4)
7.25	Cash at beginning of period (see Reconciliation of cash)	28.2	32.9
7.26	Exchange rate adjustments to item 7.25	(0.3)	0.7
7.27	Cash at end of period (see Reconciliation of cash)	21.3	28.2

Condensed Consolidated statement of cash flows

Non-cash financing and investing activities

(Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows are as follows. If an amount is quantified, show comparative amount.)

an amount is quantmed, show comparative amount.)
On 22 October 2002, the parent entity acquired 100% of the issued capital of Basin Minerals Limited. Basin Minerals shareholders were offered an
Option of accepting cash or Basin Minerals Limited amounted to \$76.4 million

Reconciliation of cash

	Reconciliation of cash at the end of the period (as shown in the consolidated statement of cash current period - \$A'm flows) to the related items in the accounts is as follows.		Previous corresponding period - lsA'm
8.1	Cash on hand and at bank	6.0	16.1
8.2	Deposits at call	15.3	32.3
83	Bank overdraft
8.4	Other (provide details)
8.5	Total cash at end of period (item 7.27)	21.3	28.2

Other notes to the condensed financial statements

Ratios		Carrent period	Previous corresponding period
	Profit before tax / revenue
9.1	Consolidated profit (loss) from ordinary activities before tax (item 1.5) as a percentage of revenue (item 1.1)	11.0%	6.8%
9.2	Profit after tax / "equity interests Consolidated net profit (loss) from ordinary activities after tax attributable to members (item 1.11) as a percentage of equity (similarly attributable) at the end of the period (item 4.37)	13.2%	9.2%

Earnings per security (EPS)

1. Details of basic and diluted EPS reported separately in accordance with paragraph 9 and 18 of AASB 1027: Earnings per share are as follows.

	2002 \$A'm	2001 \$A'm
Net Profit/(Loss)	110.2	57.7
Net (profit) loss attributable to outside equity interest	(1.2)	6.0
Earnings used in calculating basic and diluted earnings per share	109.0	63.7
	Number	Number
Weighted average number of ordinary shares outstanding during the year used in the calculation of basic earnings per share	224,445,102	217,075,832
Weighted average number of ordinary shares and potential ordinary shares of the entity used as the denominator in calculating diluted earnings per share	224.457.923	217.075.832

NTA backing (see note 7)		Corrent period	Previous corresponding period
11.1	Net tangible asset backing per "ordinary security"	N/A	N/A

Discontinuing Operations

-------------------------------------- $\langle$ see Note17). $\rangle$

ee Appendix C and Note 19.2

Control gained over entities having material effect

13.1	Name of entity (or group of entities)	Basin Minerals Group
13.2	Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the extity (or group of extities) since the date in the corrent period on which control was "acquired		(\$0.2 million).
13.3	Date from which such profit has been calculated		16 August 2002
33.4	Profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of extities) for the whole of the previous corresponding period.		(\$0.5 million)

Loss of control of entities having material effect

14.1	Name of entity (or group of entities)	PT Koba Tin and Kajuara Mining Corporation
34.2	Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the extity (or group of entities) for the current period to the date of loss of control		$(50.7 \text{ million})$
34.3		Date to which the profit (loss) in item 14.2 has been calculating
34.4	corresponding period	Consolidated profit (loss) from ordinary activities and extraordinary items after tax of the controlled entity (or group of entities) while controlled during the whole of the previous
14.5	Contribution to consolidated profit (loss) from ordinary activities and extraordinary items from sale of interest leading to loss of control		$$0.8$ million

Dividends (in the case of a trust, distributions)

15.1	Date the dividend (distribution) is payable	28 April 2003
15.2	"Record date to determine entitiements to the dividend (distribution) (ie, on the basis of proper) instrument of transfer received by 5.00 pm if "securities are not "CHESS approved, or security holding balances established by 5.00 pm or such fater time permitted by SCH Business Rufes if "secorities are "CHESS approved)	9 April 2003
15.3	If it is a final dividend, has it been declared? (Preliminary final report only)	Yes

Amount per security

			Amount per security Franked amount per		Amount per security of
				security at 30% tax	foreign source dividend
	(Preliminary final report only)
15.4	Final dividend:	Current year	12.00c	0.00c	-4
15.5		Previous year	12.00¢	1.00c
	(Half yearly and preliminary final reports)
15.6	Interim dividend:	Current vear	10.00c	2.00d	-4
15.7		Previous year	10.00¢	1.00¢

Total dividend (distribution) per security (interim plus final) (Preliminary final report only)

		Corrent year	Previous year
15.8	"Ordinary securities	22.004	22.00¢
15.9	Preference "securities	N/A	N/A

Half yearly report - interim dividend (distribution) on all securities or Preliminary final report - final dividend (distribution) on all securities

		Corrent period - \$A'm	Previous corresponding period - IsA'm
15.10	"Ordinary securities (each dass separately)	27.7	26.1
15.11	Preference "securities (each class separately)
15.12	Other equity instruments (each class separately)
15.13	Total	27.7	26.1
	The "dividend or distribution plans shown below are in operation.

Both the Dividend Reinvestment Plan and Bonus Plan are currently suspended The last date(s) for receipt of election notices for the "dividend or distribution plans $\mathsf{N}/\mathsf{A}$ Any other disclosures in relation to dividends (distributions). (For half yearly reports, provide details in accordance with paragraph 7.5 (d) of AASB 1029 Interim Financial Report)

Details of aggregate share of profits (losses) of associates and joint venture entities

Croup's share of accoriates and inint venture entities:

	Group's share of associates and joint venture entities:	Current period \$A'm	Previous corresponding period - \$A'm
16.1	Profit (loss) from ordinary activities before income tax	N/A	N/A
16.2	Income tax on ordinary activities
16.3	Profit (loss) from ordinary activities after income tax
16.4	Extraordinary items net of tax
16.5	Net profit (loss)
16.6	Adjustments
16.7	Share of net profit (loss) of associates and joint venture entities	N/A	N/A

ILUKA RESOURCES EINSTED
31/32/2002

Material interests in entities which are not controlled entities

The economic entity has an interest (that is material to it) in the following entities. If the interest was acquired or disposed of during either the current or previous
corresponding period, indicate date of acquisition (

	Name of Entity	Percentage of ownership interest held at end of period or date of disposal		Contribution to net profit (foss) ( item 1.9 )
17.1	Equity accounted associates and joint venture entities	Current period Previous corresponding period \$A'm		Current period	Previous corresponding period - \$A'm
		N/A
17.2	Total
17.3	Other material interests	N/A
17.4	Total

Issued and quoted securities at end of current period

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Category of "securities	Total number	Number guoted	Issue price per security (see note) 14) (cents)	Amount paid up per security (see note 14) (cents)
18.1	Preference *securities (description)
18.2	Changes dering current period (a) Increases through issues
	(b) Decreases through returns of capital, buybacks, redemotions.
18.3	+ Ordinary securities	217,311,238	217,311,238
18.4	Changes dering current period (a) Increases through issues	15,503,111	15,503,111
	(b) Decreases through returns of capital, buybacks
18.5	+ Convertible debt securities (description and conversion factor)
18.6	Changes dering current period (a) Increases through issues
	(b) Decreases through securities matured, converted
18.7	Options (description and conversion factor)			Exercise Price	Expiry date (if any)
18.8	Issued during current period *	300.000		4.41	31/12/2004
18.9	Exercised during current period
18.10	Expired during current period *	(100,000)		4.41	27/11/2002
18.11	Debentures (description)
18.12	Changes during current period (a) Increases through issues
	(b) Decreases through securities matured, converted
18.13	Unsecured notes (description)
18.14	Changes dering current period (a) Increases through issues
	(b) Decreases through securities matured, converted
		*Note: During the period the company extered into an agreement to issue 300,000 options to senior executives,

subsequently 100,000 options have been cancelled. Options will not be quoted on the Stock Exchange.

Reports for industry and geographical segments

Information on the business and geographical segments of the entity must be reported for the current period in accordance with AASB 1005: Segment Reporting and for the half year report, AASB 1029. Interim Financial Reporting. Because of entities different structures a pro forma is not provided. Segment information in the layout employed in the entities accounts should be completed reported and attached to this report.

Segments

Refer Attachment B

Comments by directors

Comments on the following matters are required by ASX or, in relation to the half yearly report, by AASB 1029: Interim Financial Reporting. The comments do not take the place of the directors' report and statement (as required by the Corporations Act) and may be incorporated into the directors' report and statement. For both half yearly and preliminary final reports, if there are no comments in a section, state NIL. If there is insufficient space to comment, attach notes to this report

Basis of accounts preparation

$19.1$ If this report is a half yearly report, it is a general purpose financial report prepared in accordance with the listing rules and AASB 1029: Interim Financial Reporting. It should be read in conjunction with the last * annual report and any announcements to the market made by the entity during the period. The financial statements in this report are "condensed financial statements" as defined in AASB 1029: Interim Financial Reporting. This report does not include all the notes of the type normally included in an annual financial report. [Delete if prefiminary final statement.]

$39.2$ Material factors affecting the revenues and expenses of the economic entity for the current period.

Refer to Appendix D.

19.3 A description of each event since the end of the current period which has had a material effect and is not related to matters already reported, with financial effect quantified (if possible)

N/A

19.4 Franking credits available and prospects for paying fully or partly franked dividends for at least the next year

The \$37.2 million of franking credits available to the consolidated entity includes \$35.7 million for the Consolidated Rutile Limited group which is 50.15% owned. The \$37.2 million includes franking credits attributable to the tax provision as at 31 December 2002. Distribution of the majority of frasking credits by the company is subject to the receipt of fully franked dividends from Consolidated Rutile Limited.

19.5 Unless disclosed below, the accounting policies, estimation methods and measurement bases used in this report are the same as those used in the last annual report. Any changes in accounting policies, estimation methods and measurement bases since the last annual report are disclosed as follows. (Disclose changes in the half yearly report in accordance with AASB 1029: Interim Financial Reporting. Disclose changes in accounting policies in the prefiminary final report in accordance with AASB 1001: Accounting Policies-Disclosure.)

During the period the company reviewed its accounting treatment of expenditure associated with the removal of mine overburden. As a result of this review. \$2.0 million has been deferred and will be amortised to the statement of financial performance as measured against the ore removed from the related area.

The Company also reviewed the level of un-booked future income tax benefits attributable to tax losses and timing differences and has brought to account un-booked tax losses as it is considered that the virtual certainty criteria for recognition of tax losses has been satisfied. As a result an incremental tax credit of A\$9.9 million for the period is shown in the statement of financial performance. Please refer to Attachment A for further details.

In accordance with changes to AASB 1012: Foreign Currency Transactions, from 1 January 2002 the consolidated entity is required for transactions intended to hedge specific purchases or sales, to recognised the following in the Statement of Financial Position:

Cost or gains arising at the time of entering into the transactions; and

(ii) Exchange differences, to the extent that they arise up to date of purchase or sale.

This does not represent a significant change in the current reporting period as the consolidated entity on acquisition of RGC Limited in 1998, marked to market the inherited complex foreign exchange derivatives portfolio and recognised a provision for loss in the Statement of Financial Position.

$196$

Revisions in estimates of amounts reported in previous interim periods. For half yearly reports the nature and amount of revisions in estimates of amousts reported in previous *annual reports if those revisions have a material effect in this half yea

N/A

Change in contingent liabilities or assets. For half yearly reports, changes in contingent liabilities and contingent assets since the last "annual report.

At year end the company had performance and finance guarantees that existed and had changed since the fast annual report \$43.6 million (December 2001: \$33.9 million)

Additional disclosure for trusts

20.1	Namber of units held by the management company or responsible entity or
	their related parties.

$20.2$ A statement of the fees and commissions payable to the management company or responsible entity.

• ídentify:
  * initial service charges
• in management fees * other fees

Annual meeting (Preliminary final report only)

4

$N/A$

(Preliminary final report only)
The annual meeting will be held as follows:
Place	The Westin Sydney, Martin Place, Sydney
Date	14 May 2003
Time	9.30am EST
Approximate date the "annual report will be available	11 April 2003

N/A

Approximate date the "annual report will be available

Compliance statement

Views or other standards acceptable to ASX (see note 12).	This report has been prepared in accordance with AASB Standards, other AASB authoritative pronouncements and Broent Issues Group Consensus
Identify other standards used	-N/A

$\overline{2}$ This report, and the "accounts upon which the report is based (if separate), use the same accounting policies.

$\overline{3}$ This report does give a troe and fair view of the matters disclosed (see note 2).

This report is based on "accounts to which one of the following applies.

$\Box$ The $\check{ }$ accounts have been audited.

$\boxed{\times}$ The faccounts are in the process of being

audited or subject to review.

• The faccounts have been subject to review.
• $\Box$ The "accounts have not yet been audited or reviewed.

5 If the audit report or review by the auditor is not attached, details of any qualifications will follow immediately they are available*. (Half yearly report only - the audit report or review by the auditor must be attached to this report if this report is to satisfy the requirements of the Corporations Act.)

The entity has a formally constituted audit committee. $\hat{\kappa}$

Sign here:		Date:
	(Company Secretary)

Print name: Ian Gregory

Notes

$\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\over$

• For announcement to the market The percentage changes referred to in this section are the percentage changes calculated by comparing the current period's figures with those for the previous corresponding period. Do not show percentage changes if the change is from profit to loss or loss to profit, but still show whether the change was up or down. If changes in accounting policies or procedures have had a material effect on reported Figures, do not show either directional or percentage changes in profits. Explain the reason for the omissions in the note at the end of the .
  announcement section, Entities are excouraged to attach notes or fuller explanations of any significant changes to any of the items in page 1. The area at the end of the announcement section can be used to provide a cross reference to any such attachment.
• $\mathbf{2}$ True and fair view If this report does not give a true and fair view of a matter (for example, because compliance with an Accounting Standard is required) the entity must attach a note providing additional information and explanations to give a true and fair view.

3, Condensed statement of financial performance

them 1.1

The definition of "revenue" and an explanation of "ordinary activities" are set out in A4SB 1004: Revenue, and A4SB 1018: Statement of financial performance them 1.6 ing the matement of manual performance.
This item refers to the total tax attributable to the amoust shown in item 1.5. Tax includes income tax and capital gains tax (if any) but excludes taxes treated as expenses from ordinary activities (eq. frisge benefits tax).

Income tax If the amount provided for income tax in this report differs (or would differ but for compensatory items) by more than 15% from the 4. amount of income tax prima facie payable on the profit before tax, the entity must explain in a note the major items responsible for the difference and their amounts. The rate of tax applicable to the franking amount per dividend should be inserted in the heading for the column "Franked amount per security at % tax" for item 15.4 to 15.7.

Condensed statement of financial position Ę,

Format. The format of the consolidated balance sheet should be followed as closely as possible. However, additional items may be added if oreated clerity of exposition will be achieved, provided the disclosure still meets the requirements of AASB 1029: Interim Financial Reporting, and AASB 1040: Statement of Financial Position. Also banking institutions, trusts and financial institutions may substitute a clear liquidity ranking for the Current/Non-Current classification

Basis of revaluation If there has been a material revaluation of non-current assets (including investments) since the last "annual report, the entity must describe the basis of revaluation adopted. The description must meet the requirements of AASB 1010. Accounting for the Revaluation of Non-Current Assets. If the entity has adopted a procedure of regular revaluation, the basis for which has been disclosed and has not changed, no additional disclosure is required.

• 6, Condensed consolidated statement of cash flows For definitions of "cash" and other terms used in this report see AASB 1026: Statement of Cash Flows. Entities should follow the form as closely as possible, but variations are permitted if the directors (in the case of a trust, the management company) believe that this presentation is inappropriate. However, the presentation adopted must meet the requirements of AASB 1026. ^* Mining exploration entities may use the form of cash flow statement in Appendix 5B.
• $\overline{7}$ . Net tangible asset backing Net tangible assets are determined by deducting from total tangible assets all claims on those assets ranking ahead of the ordinary securities (ie, all liabilities, preference shares, outside equity interests etc). *Mining entities are not required to state a net tangible asset hacking nec ordinary security.
• $\mathbf{a}$ Gain and loss of control over entities The gain or loss must be disclosed if it has a material effect on the "accounts. Details must include the contribution for each gain or loss that increased or decreased the entity's consolidated profit (loss) from ordinary activities and extraordinary items after tax by more than 5% compared to the previous corresponding period.
• 1. Rounding of figures This report anticipates that the information required is given to the nearest \$1,000. However, an entity may report exact Figures, if the \$A000 headings are amended. If an entity qualifies under ASIC Class Order 98/0100 dated 10 July 1998, it may report to the nearest million dollars, or to the nearest \$100,000, if the \$A'000 headings are amended.
• Comparative figures Comparative floures are to be presented in accordance with AASB 1018 or AASB 1029: Interim Financial Reporting as 10. appropriate and are the unadjusted figures from the latest annual or half yearly report as appropriate. However, if an adjustment has been made in accordance with an accounting standard or other reasons or if there is a lack of comparatibility, a note explaining the position should be attached. For the statement of financial performance, AASB 1029: Interim Financial Reporting sequises information on a yeas to date basis in addition to the current interim period. Normally an Appendix 4B to which AASB 1029: Interim Financial Reporting applies would be for the half year and consequently the information in the current period is also the year to date. If an Appendix 4B Half yearly version is produced for an additional interim period (eg because of a change in reporting period), the entity, must provide the year to date information and the comparatives required by AASB 1029: Interim Financial Reporting. This should be in the form of a multi-column version of the consolidated statement of financial performance as an attachment to thi
• $11.$ Additional information An entity may disclose additional information about any matter, and must do so if the information is material to an understanding of the reports. The information may be an expansion of the material contained in this report, or contained in a note attached to the report. The requirement under the listing rules for an entity to complete this report does not prevent the entity issuing reports more frequently. Additional material lodged with the "ASIC under the Corporations Act must also be given to ASX. For example, a directors' report and declaration, if lodged with the "ASIC, must be given to ASX.
• $12.$ Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if one) must be complied with.
• Cornorations Act financial statements. This report may be able to be used by an entity required to comply with the Corporations Act as part of its $13.$ half-year financial statements if prepared in accordance with Australian Accounting Standards.
• 1. Issued and quoted securities The issue price and amount paid up is not required in items 18.1 and 18.3 for fully paid securities.
• 1. Details of expenses AASB 1018 requires disclosure of expenses from ordinary activities according to either their nature or function. For foreign entities, their are similar requirements in other accounting standards accepted by ASX. AASB ED105 darifies that the disclosure required by AASB 1018 must be either all according to nature or all according to function. Entities must disclose details of expenses using the layout (by nature or function) employed in their *accounts

The information in lines 1.23 to 1.27 maybe provided in an attachment to Appendix 48.

Relevant Items AASB 1018 requires the separate disclosure of specific revenues and expenses which are not extraordinary but which are of a size, nature or incidence that disclosure is referant in explaining the financial performance of the reporting entity. The term "relevance" is defined in AASB
1018. There is an equivalent requirement in AASB 1029: Interim Financ accounting standards normally accepted by ASX.

1. \$ Dollars If reporting is not in A\$, all references to \$A must be changed to the reporting currency. If reporting is not in thousands of dollars, all references to "000" must be changed to the reporting value.

Discontinuing operations

$\overline{17}$ .

Half yearly report

All entities must provide the information required in paragraph 12 for half years beginning on or after 1 July 2001

Prefiniinary final report

Entities must either provide a description of any significant activities or events relating to discontinuing operations equivalent to that required by
paragraph 7.6 (g) of AASB 1029: Interim Financial Reporting, or, the de

If any case the information my be provide as an attachment to this Appendix 4B.

Format This form is a Word document but an entity can reformat the document into Excel or a similar application for submission to the Companies
Announcement Office in ASX. $\bar{\bf 18}.$

¹ See chapter 19 for defined terms

ILUKA RESOURCES LIMITED Attachment A

	2002	2001
	Sm	\$m
Income tax (a) Prima facie income tax expense calculated at 30% (2001: 30%) on the profit from ordinary activities	30.6	18.9
Tax effect of permanent differences:
Depreciation and amortisation - non deductible	10.0	12.9
Write down of PT Koba Tin assets for sale		11.3
Net foreign exchange gains/losses	(0.9)	1.5
Non deductible expenses	3.0	1.1
Foreign expenditure - non deductible	0.6	1.0
Non assessable recovery on hedging	(9.8)	(8.5)
Non assessable profit on sale of Sierra Rutile Holdings Limited		$\langle 2.0 \rangle$
United States operations - depletion allowance	(0.5)	(3.4)
Effect of different tax rates on overseas income	0.5	(1.2)
Investment write-off	(0.3)
Other permanent differences	(0.8)	0.1
Income tax expense on operating result	30.4	31.7
Income tax under provided in prior years	(0.1)	0.4
Benefit of carried forward tax losses brought to account	(9.9)
Tax benefits not previously brought to account	(28.5)	(26.8)
Total income tax (benefit) expense	(8.1)	5.3

ILUKA RESOURCES LIMITED Attachment B 2002 Segmental Analysis

	Continuing Operations		Discontinued Operations
Primary reporting - business segments	Titanium Minerals and Zircon	Coal	Tin	Inter-segment eliminations/ unallocated	Consolidated
	\$m	\$m	\$m	\$m	\$m
Continuing Industry segments
Sales to external customers	805.1	31.7	57.7		894.5
Total sales revenue	805.1	31.7	57.7		894.5
Other revenue	34.1	0.2	0.2	1.2	35.7
Total segment revenue	839.2	31.9	57.9	1.2	930.2
Segment result	139.4	9.5	(1.4)	$\omega$	147.5
Unallocated revenue less unallocated expenses					(45.4)
Profit from ordinary activities before income tax					102.1
Income tax					8.1
Net profit					110.2
Segment assets	1,657.8	31.0			1,688.8
Unallocated assets					32.6
Total assets					1,721.4
Segment liabilities	(339.7)	(4.1)			(343.8)
Unallocated liabilities					(498.6)
Total liabilities					(842.4)
Acquisition of P,P & E and other non-current assets	(150.7)	(0.2)	(1.4)		(152.3)
Depreciation and amortisation expense	(92.2)	(2.7)	(2.7)		(97.6)
Other non-cash expenses	(3.6)	(0.5)			(4.1)

Secondary segment - geographical segments

	Sales to external customers	Segment assets	Acquisition of P.P & E and other non-current assets
	\$ m	\$ m	\$ m
Australia	731.3	1,449.1	(88.7)
United States	105.5	272.3	(62.2)
Indonesia	57.7	٠	(1.4)
	894.5	1,721.4	(152.3)

• See chapter 19 for defined terms

ILUKA RESOURCES LIMITED $31/12/02$

ILUKA RESOURCES LIMITED
Attachment B

2001 Segmental Analysis
-------------------------	--	--

		Continuing Operations		Discontinued Operations
Primary reporting - business segments	Titanium Minerals and Zircon	Coal	Tin	Lime	Inter-segment eliminations/ unallocated	Consolidated
	\$m	\$m	\$m	\$m	\$m	\$m
Continuing Industry segments
Sales to external customers	737.8	34.9	125.2	$2.9 -$		900.8
Total sales revenue	737.8	34.9	125.2	2.9		900.8
Other revenue	12.4	$\overline{\phantom{a}}$	2.9	1.3	7.8	24.4
Total segment revenue	750.2	34.9	128.1	4.2	7.8	925.2
Segment result	156.2	12.8	(49.9)	(10.4)		108.7
Unallocated revenue less unallocated expenses						(45.7)
Profit from ordinary activities before income tax						63.0
Income tax						(5.3)
Net profit						57.7
Segment assets	1,470.4	32.6	53.9	3.0		1,557.9
Unallocated assets						7.8
Total assets						1,565.7
Segment liabilities	(373.3)	(4.4)	(18.7)	(0.2)		(396.6)
Unallocated liabilities						(411.9)
Total liabilities						(808.5)
Acquisition of P,P & E and other non-current assets	(122.5)	(0.2)	(2.0)			(124.7)
Depreciation and amortisation expense	(90.9)	(2.8)	(19.4)	(0.1)		(113.2)
Other non-cash expenses	(5.3)	(0.6)				(5.9)

Secondary segment - geographical segments

	Sales to external customers	Segment assets	Acquisition of P,P & E and other non- current assets
	字价	\$m	\$ 191
Australia	641.2	1,260.2	(72.7)
United States	134.4	251.6	(50.0)
Indonesia	125.2	53.9	(2.0)
	900.8	1,565.7	(124.7)

ILUKA RESOURCES LIMITED Attachment B

Segmental analysis

Segmental analysis		Profit from				Net Profit Attributable
	Sale of Goods	ordinary activities before income tax expense	Total assets	Depreciation expense	Acquisitions of property, plant and equipment	to the members of Iluka Resources
	2002 \$m	2002 \$m	2002 \$m	2002 $\mathbf{sm}$	2002 \$m	2002 \$m
Continuing industry segments
Titanium minerals and zircon
Western Australia operations*	611.5	138.4	1,249.2	61.4	81.1	152.2
United States operations	105.5	(7.5)	272.3	19.6	60.1	(7.5)
Consolidated Rutile operations **	88.1	8.5	168.9	11.2	4.5	2.3
Total titanium minerals and zircon	805.1	139.4	1,690.4	92.2	145.7	147.0
Coat	31.7	9.5	31.0	2.7	0.2	6.5
Corporate and unallocated
Net interest		(26.3)				(25.7)
Corporate administration		(19.9)				(19.1)
Net profit on sale of PT Koba Tin		0.8				0.8
Total continuing industry segments	836.8	103.5	1,721.4	94.9	145.9	109.5
Discontinuing industry segments
Tin	57.7	(1.4)		2.7	1.4	(0.5)
Total discontinuing industry segments	57.7	(1.4)		2.7	1.4	(0.5)
Total group industry segments	894.5	102.1	1,721.4	97.6	147.3	109.0

* Includes the write down of assets (\$8.2 million) to recoverable amount.

** Financial disclosure includes Iluka Resources Limited fair value adjustments relating to the acquisition of Consolidated Rutile Limited (CRL). All disclosure represents 100% of CRL (ownership interest is 50.1% from 7 March 2002 to 31 December 2002, previously 48.9%), except Net Profit Attributable to the Members of Iluka Resources Limited.

Geographical segments
Australia	731.3	156.4	1,449.1	75.3	85.8	161.0
United States	105.5	(7.5)	272.3	19.6	60.1	(7.5)
Indonesia	57.7	(1.4)	$\overline{\phantom{0}}$	2.7	1.4	(0.5)
Corporate and unallocated
Net interest	-	(26.3)		$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	(25.7)
Corporate administration	۰	(19.9)	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	(19.1)
Net profit on sale of PT Koba Tin		0.8		$\overline{\phantom{a}}$		0.8
Total group geographical segments	894.5	102.1	1,721.4	97.6	147.3	109.0

(a) Intersegment pricing is on an "arms-length" basis.

(b) The asset segments for each operating division comprise cash, receivables, inventories, other financial assets, tax assets, property plant and equipment, and other assets.

Not Drofit

ILUKA RESOURCES LIMITED Attachment B

Segmental analysis

	Sale of Goods	Profit from ordinary activities before income tax expense		Depreciation expense	Acquisitions of property, plant and equipment	Attributable to the members of Iluka Resources
	2001 \$m	2001 \$m	2001 \$m	2001 \$m	2001 \$m	2001 \$m
Continuing industry segments Titanium minerals and zircon
Western Australia operations	513.1	126.3	1,053.0	57.2	61.5	128.4
United States operations	134.4	9.2	251.6	23.8	50.0	8.0
Consolidated Rutile operations *	90.3	20.7	173.6	9.9	11.0	6.5
Total titanium minerals and zircon	737.8	156.2	1,478.2	90.9	122.5	142.9
Coat	34.9	12.8	32.6	2.8	0.2	9.9
Corporate and unallocated
Net interest		(25.4)				(24.6)
Corporate administration		(17.9)				(16.5)
Sale Proceeds and Project Expenditure		2.6				1.1
Write off of Information Technology Project		(5.0)				(5.0)
Total continuing industry segments	772.7	123.3	1,510.8	93.7	122.7	107.8
Discontinuing industry segments
Tìn	125.2	(49.9)	53.9	19.4	2.0	(33.7)
Lime	2.9	(10.4)	1.0	0.1		(10.4)
Total discontinuing industry segments	128.1	(60.3)	54.9	19.5	2.0	(44.1)
Total group industry segments	900.8	63.0	1,565.7	113.2	124.7	63.7

* Financial disclosure includes Iluka Resources Limited fair value adjustments relating to the acquisition of Consolidated Rutile

Limited (CRL). All disclosure represents 100% of CRL (ownership interest is 49% from 30 August 2001 to 31 December 2001, previously 43%)

Geographical segments
Australia	641.2	149.4	1,260.2	70.0	72.7	134.4
United States	134.4	9.2	251.6	23.8	50.0	8.0
Indonesia	125.2	(49.9)	53.9	19.4	2.0	(33.7)
Corporate and unallocated
Net interest	$\overline{\phantom{a}}$	(25.4)	$\overline{\phantom{a}}$	$\overline{\phantom{0}}$	$\overline{\phantom{a}}$	(24.6)
Corporate administration		(17.9)		$\overline{\phantom{a}}$	$\qquad \qquad \blacksquare$	(16.5)
Sale Proceeds and Project Expenditure	-	2.6	-	$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	1.1
Write off of Information Technology Project		(5.0)		$\overline{\phantom{a}}$	$\overline{\phantom{a}}$	(5.0)
Total group geographical segments	900.8	63.0	1,565.7	113.2	124.7	63.7

(a) Intersegment pricing is on an "arms-length" basis.

(b) The asset segments for each operating division comprise cash, receivables, inventories, other financial assets, tax assets, property plant and equipment, and other assets.

ILUKA RESOURCES LIMITED
Attachment C - Continuing/Discontinuing Operations
Consolidated Profit and Loss Account

	Continuino Operations	Discontinuing Operations	Total	Continuing Operations	Discontinuing Operations	Tota1
	2002 字科	2002 乡陵	2002 李陵	2001 ŞΜ	2001 \$M	2001 ςM
Revenue from ordinary activities	872.3	57.9	930.2	792.9	132.3	925.2
Expenses from ordinary activities	(743.3)	(59.3)	(800.6)	(642.7)	(192.6)	(835.3)
Borrowing costs	(27.5)		(27.5)	(26.9)		(26.9)
Profit (loss) from ordinary activities before tax	103.5	(1.4)	102.1	123.3	(60.3)	63.0
Income tax on ordinary activities	7.4	0.7	8.3	(8.1)	2.8	(5.3)
Net profit (toss)	110.9	(0.7)	110.2	115.2	(57.5)	57.7
Net (profit) loss attributable to outside equity interests	(1.4)	0.2	(1.2)	(7.4)	13.4	6.0
Net profit (loss) for the period attributable to members	109.5	(0.5)	109.0	107.8	(44.1)	63.7

ILUKA RESOURCES LIMITED
Attachment C - Continuing/Discontinuing Operations
Consolidated Balance Sheet

	At ead of current period	As shown last annual report	As in last half year
	Total Continuing Operations	Continuing Operations	Discontinuing Operations	Total
	2002	2003	2001	2001	Operations 2002
	\$M	\$ M	539	\$ M	\$M
Current assets
Cash	21.3	22.5	5.7	28.2	7.2
Receivables	238.5	171.9	7.8	179.7	219.4
Inventories	129.9	174.9	25.4	200.3	156.2
Tax assets	0.3	0.4	1.3	1.7
Other (Deferred maintenance costs, deferred losses on foreign exchange derivatives and land held for sale)	28.1	47.6		47.6	17.9
Total current assets	418.1	417.3	40.2	457.5	400.7
Non-current assets
Receivables	15.3	14.2	0.5	14.7	17.8
Other investments		1.2		1.2	2.3
Inventories	2.0	0.9	0.2	1.1	1.7
Exploration and evaluation expenditure capitalised	106.7	91.2	L	91.2	96.7
Development properties	24.4	63.1		63.1	48.0
Other property, plant and equipment (net)	1,065.5	887.4	14.0	901.4	903.4
Intangibles (net) (SREP patents and licenses)	17.6	J.		J.
Tax assets	32.6	7.8		7.8	9.8
Other (Deferred maintenance costs and deferred losses on foreign exchange derivatives)	39.2	27.7		27.7	27.0
Total non-current assets	1,303.3	1,093.5	14.7	1,108.2	1,106.7
Total assets	1,721.4	1,510.8	54.9	1,565.7	1,507.4
Current liabilities
Payables	94.9	71.8	7.1	78.9	53.1
Interest bearing liabilities	76.2	0.1		0.1	0.1
Tax liabilities	3.1	6.0		6.0	1.2
Provisions exc tax liabilities	83.1	135.2	0.6	135.8	92.1
Total current liabilities	257.3	213.1	7.7	220.8	146.5
Non-current liabilities
Interest bearing liabilities	393.3	388.9	L,	386.9	438.2
Tax liabilities	26.4	14.7	2.2	16.9	10.0
Provisions exc tax liabilities	165.4	170.7	11.2	181.9	149.5
Total non-current liabilities	585.1	574.3	13.4	587.7	597.7
Total liabilities	842.4	787.4	21.1	808.5	744.2
Net assets	879.0	723.4	33.8	757.2	763.2

ILUKA RESOURCES LIMITED Attachment C - Continuing/Discontinuing Operations
Consolidated Statement of Cash Flows

	Continuing Operations	Discontinuing Operations	Total	Continuing Operations	Discontinuing Operations	Total
	2002 \$ M	2002 \$ M	2002 \$ M	2001 \$ M	2001 \$М	2001 \$ M
Cash flows related to operating activities
Receipts from customers	762.6	50.8	813.4	730.6	127.7	858.3
Payments to suppliers and employees	(628.4)	(52.4)	(680.8)	(577.0)	(127.5)	(704.5)
Interest and other items of similar nature received	1.2		1.2	1.5	0.1	1.6
Interest received from PT Koba Tin	$\cdot$	y.	$\ddot{\phantom{0}}$	0.4	(0.4)
Interest and others costs of finance paid	(27.5)		(27.5)	(26.9)	$\mathbf{u}$	(26.9)
Income taxes paid	(7.6)	(0.1)	(7.7)	(4.1)	(2.0)	(6.1)
Other (GST received, exploration expenditure and hedge restructure costs)	23.2		23.2	8.4	0.2	8.6
Net operating cash flows	123.5	(1.7)	121.8	132.9	(1.9)	131.0
Cash flows related to investing activities
Payments for property, plant and equipment
Proceeds from sale of property, plant and equipment	(133.4) 6.1	(1.4) 0.2	(134.8) 6.3	(91.4) 1.7	(2.0) 4.5	(93.4) 6.2
Payment for purchases of equity investments
- Basin Minerals Limited (net of cash acquired)	(56.6)		(56.6)	(1.2)		(1.2)
- Consolidated Rutile Limited	(2.7)		(2.7)	(10.6)		(10.6)
Proceeds from sale of equity investments (proceeds on sale of PT Koba Tin net of cash disposed)	22.7	(2.4)	20.3	0.1	1.4	1.5
Loans to other entities	0.3	(0.3)		(1.6)	(1.3)	(2.9)
Other (purchase of SREP patents and licences)	(17.6)	i,	(17.6)		$\ddot{\phantom{a}}$
Net cash flows from investing activities	(151.2)	(3.9)	(185.1)	(103.0)	2.6	(100.4)
Cash flows related to financing activities
Proceeds from issues of securities (shares, options, etc.)				3.4		3.4
Proceeds from borrowings	310.2		310.2	102.5		102.5
Repayment of borrowings	(199.9)		(199.9)	(88.0)		(88.0)
Dividends paid	(53.6)		(53.6)	(53.9)	٠.	(53.9)
Net financing cash flows	56.7	۰	56.7	(36.0)	۰	(36.0)
Net increase (decrease) in cash held	(1.0)	(5.6)	(6.6)	(6.1)	0.7	(5.4)
Cash at beginning of period	22.5	5.7	28.2	28.2	4.7	32.9
Exchange rate adjustments	(0.2)	(0.1)	(0.3)	0.4	0.3	0.7
Cash at end of period	21.3	$\overline{\phantom{a}}$	21.3	22.5	5.7	28.2

ILUKA RESOURCES LIMITED Attachment D - Discussion and Analysis of Appendix 4B

REVIEW OF OPERATIONS AND RESULTS

The consolidated entity's 2002 results reflect a sound level of performance despite difficult and uncertain global trading conditions as a result of international events. Both mineral sands and coal production were in line with expectations. Mineral sands sales exceeded both volume and revenue expectations mainly as a result of record synthetic rutile sales and increased zircon sales compared with 2001. Sales were also partly underpinned by relatively high opening inventory levels which were progressively drawn down during the year. Coal sales were in line with contractual requirements.

The consolidated entity's 2002 total revenues (including proceeds from the sale of PT Koba Tin) increased by A\$5.0 million (0.54%) to A\$930.2 compared with 2001. Actual sales revenues were A\$894.5 million and consisted of A\$805.1 million from titanium minerals and zircon sales (an increase of A\$67.3 million), coal sales of A\$31.7 million (a decrease of A\$3.2 million) and tin sales of A\$57.7 million (a decrease of A\$67.5 million).

On a regional basis, minerals sands sales revenues from the Western Australian operations increased by A\$98.4 million to A\$611.5 million which was offset by US sales revenues decreasing by A\$28.9 million to A\$105.5 million. Consolidated Rutile Limited's sales revenues (100% level) decreased by A\$3.8 million (2.2%) to A\$88.1 million during the period.

The consolidated entity achieved an net profit of A\$109.0 million which is inclusive of a contribution of A\$9.9 million from previously un-booked tax losses being brought to account and a write-off of A\$6.6 million of assets associated with a project to develop iron oxide residue conversion technology.

This result represents an increase of A\$45.3 million (71%) compared with a net profit of A\$63.7 million in 2001 after allowing for a A\$44.1 million loss associated with discontinued businesses in that period. For comparison purposes the consolidated entity's net profit from continuing operations was A\$109.5 million in 2002 compared with A\$107.8 million in 2001.

The basic earnings per share of the consolidated entity for the year was 48.6 cents (2001; 29.3 cents).

On a comparative basis the second half operating profit of the consolidated entity in 2002 was A\$67.9 million compared with A\$17.6 million in the corresponding period in 2001. The major contributing factor associated with this improvement was the write down of PT Koba Tin assets of A\$37.5 million in the second half of 2001.

Debt increased by A\$80.5 million to A\$469.5 million at the end of the year. This debt primarily consists of syndicated bank debt of A\$151.4 million and unsecured private placement notes of US\$150 million (A\$264.6 million). Gearing was 33.8% at the end of 2002 compared with 32.3% at the end of 2001.

Equity increased by A\$121.8 million to A\$879.0 million. The increase is reflective of the A\$109.0 million profit attributable to the members of the company, after allowing for the distribution of interim and final dividends of A\$51.1 million. In addition the company issued 15.5 million ordinary shares in satisfaction of the Basin Minerals acquisition amounting to A\$76.4 million.

As part of the acquisition, the consolidated entity acquired the underlying assets of Basin Minerals Limited and its subsidiaries, which are reflected in the statement of financial position.

Net cash inflow from operating activities declined by \$A9.2 million in 2002 due to late shipping activities in November and December 2002. This is reflected in an increase in trade debtors at year end.

Net cash outflow from investing activities increased by A\$84.7 million, the mator factors being the acquisition of Basin Minerals Limited for A\$56.6 million (net of cash acquired) and payment for purchase of SREP patents and licenses of A\$17.6 million, offset by proceeds from the sale of PT Koba Tin for A\$20.3 million.

During the year the company undertook a major capital expenditure program. The incremental expenditure in property, plant and equipment is attributable to the Georgia project, completion of the mid-west zircon finishing plant and the Old Hickory expansion.

Net cash inflow from financing activities of A\$56.7 million in 2002 compares to a net outflow of A\$36.0 million in 2001. A net increase in debt drawn from facilities of A\$95.8 million was to meet the capital expenditure programs and the acquisition of Basin Minerals Umited.

DIVIDENDS

A final unfranked dividend of 12 cents per share will be paid on 28 April 2003 to all shareholders registered at 9 April 2003. Together with the interim dividend of 10 cents per share this makes a 2002 total dividend of 22 cents per share (franked to 2 cents) which is unchanged compared with the 2001 total dividend of 22 cents.

CHANGES IN THE STATE OF AFFAIRS

Sale of PT Koba Tin

On 1 November 2001 the company announced the sale of its 75% stake in PT Koba Tin to Malaysia Smelting Corporation Berhad. The sale was completed on 9 April 2002. Sale proceeds consist of US\$13.7 million in cash and a deferred component of up to US\$4.0 million (2001; US\$6.0 million) over three years, contingent on London Metal Exchange tin prices. The deferred sales proceeds component has not been recognised in the accounts.

As at 31 December 2001, the carrying value of PT Koba Tin's assets were written down by A\$37.5 million to align their value with expected sale proceeds. After income tax expense and outside equity interests, this represents a loss attributable to the members of Buka Resources Umited of A\$26.8 million. In Note that you can be a complete the service of the deferred component of up to US\$6.0 million as this represents a contingent asset.

Increased ownership of Consolidated Rutile Limited

The company via it's wholly owned subsidiary Ikika Corporation Limited increased its interest in Consolidated Rutile Limited to 50.1% in March 2002 via onmarket purchases.

Write Off of Iron Oxide Residue Conversion Technology

During the year the company completed a review of recoverable assets in accordance with Australian Accounting Standards and subsequently chose to write off A\$6.6 million of assets associated with a project to develop iron oxide residue conversion technology. While Iluka intends to continue to develop this technology and expects to be successful in the future, the decision to write-down the asset was made in recognition of the uncertainty associated with the timing and successful application of the technology.

Basin Minerals Limited ("Basin Minerals") Acquisition

On 29 May 2002, the company made a joint announcement for the takeover of Basin Minerals. On 22 October 2002, the company announced that it had acquired 100% of Basin Minerals' shares.

SREP Settlement

In late 2002, Iluka and Rio Tinto Iron and Titanium Inc. agreed to end all litigation between the two companies with respect to the synthetic rutile enhancement process (SREP), HYBRID and RUTILE patents. The agreement ends a dispute between Rio Tinto and RGC Mineral Sands over the SREP patent and ownership issues which date back to 1994. The SREP patent is now jointly owned by the two companies and in return Iluka made a payment of US\$10 million to Rio Tinto in December 2002 and will make a second payment of US\$5 million in March 2003.

Unbooked Future Income Tax Benefits

During the year the company reviewed the level of unbooked future income tax benefits attributable to tax losses and timing differences. As a result, the company has brought to account the balance on unbooked tax losses amounting to A\$9.9 million as a tax credit as it is considered that the virtual certainty test criteria for recognition of tax losses has been satisfied.