ILUKA RESOURCES LIMITED — Investor Presentation 2021

Feb 24, 2021

Iluka Resources Limited 2020 Full Year Results Presentation Tom O’Leary, Managing Director

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Disclaimer and Compliance Statement

This presentation has been prepared by Iluka Resources Limited (Iluka). By accessing this presentation you acknowledge that you have read and understood the following statement.

This document provides an indicative outlook for the Iluka business in the 2021 financial year. The information is provided to assist sophisticated investors with the modelling of the company, but should not be relied upon as a predictor of future performance. The current outlook parameters supersede all previous key physical and financial parameters.

This information is based on Iluka forecasts and as such is subject to variation related to, but not restricted to, economic, market demand/supply and competitive factors. It is Iluka’s approach to modify its production settings based on market demand, and this can have a significant effect on operational parameters and associated physical and financial characteristics of the company.

Forward Looking Statements

This presentation contains certain statements which constitute “forward-looking statements”. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as “may”, “will”, “expect”, “plan”, “believes”, “estimate”, “anticipate”, “outlook” and “guidance”, or similar expressions, and may include, without limitation, statements regarding plans; strategies and objectives of management; anticipated production and production potential; estimates of future capital expenditure or construction commencement dates; expected costs or production outputs; estimates of future product supply, demand and consumption; statements regarding future product prices; and statements regarding the expectation of future Mineral Resources and Ore Reserves.

Where Iluka expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and on a reasonable basis. No representation or warranty, express or implied, is made by Iluka that the matters stated in this presentation will in fact be achieved or prove to be correct.

Forward-looking statements are only predictions and are subject to known and unknown risks, uncertainties, assumption and other important factors that could cause the actual results, performances or achievements of Iluka to differ materially from future results, performances or achievements expressed, projected or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date thereof. Such risks and factors include, but are not limited to: changes in exchange rate assumptions; changes in product pricing assumptions; major changes in mine plans and/or resources; changes in equipment life or capability; emergence of previously underestimated technical challenges; increased costs and demand for production inputs; and environmental or social factors which may affect a licence to operate, including political risk.

Capital estimates include contingency and risk allowances commensurate with international estimating classification systems.

To the extent permitted by law, Iluka, its officers, employees and advisors expressly disclaim any responsibility for the accuracy or completeness of the material contained in this presentation and exclude all liability whatsoever (including in negligence) for any loss or damage which may be suffered by a person as a consequence of any information in this presentation or any error or omission therefrom. Iluka does not undertake to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

No independent third party has reviewed the reasonableness of the forward looking statements or any underlying assumptions.

Iluka cautions against reliance on any forward-looking statements or guidance, particularly in light of the current economic climate and the significant volatility, uncertainty and disruption caused by COVID-19.

Non-IFRS Financial Information

This document contains non-IFRS financial measures including cash production costs, non production costs, Mineral Sands EBITDA, Underlying Group EBITDA, EBIT, free cash flow, and net debt amongst others. Iluka management considers these to be key financial performance indicators of the business and they are defined and/or reconciled in Iluka’s annual results materials and/or Annual report. Non-IFRS measures have not been subject to audit or review.

All figures are expressed in Australian dollars unless stated otherwise.

Mineral Resources and Ore Reserves Estimates

As an Australian company with securities listed on the Australian Securities Exchange (ASX), Iluka is subject to Australian disclosure requirements and standards, including the requirements of the Corporations Act and the ASX. Investors should note that it is a requirement of the ASX listing rules that the reporting of ore reserves and mineral resources in Australia comply with the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”) and that the Ore Reserve and Mineral Resource estimates underpinning the production targets in this presentation have been prepared by a Competent Person in accordance with the JORC Code 2012.

Information that relates to Mineral Resources estimates has been announced to ASX on 25 February 2021 in the 2020 Annual Report , 21 February 2019 in 2018 Annual Report , on 24 July 2019 in Eneabba Mineral Sands Recovery Project Updated Mineral Resource Estimate, and on 20 February 2017 in Updated Mineral Resource and Ore Reserve Statement, all available at www.iluka.com/investors-media/asx-disclosures. Iluka confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. Iluka confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcements.

Production outlook

Production outlook and the basis thereof are noted within the relevant disclosure. The outlook included in this presentation is indicative only and should not be construed as guidance. The information is subject to changes in market and operating conditions; political risk; and any significant unplanned operational issues.

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Delivering Sustainable Value

Disciplined Performance in 2020

• Prioritised safety of people and communities

• Operational settings flexed to market conditions

• Measures implemented to maintain cashflow

• Preservation of margins

Well Placed for 2021

Promising Future

• Net cash position and significant funding headroom

• Emerging position in rare earths

• Positive indicators in mineral sands markets

• Encouraging trial of new technology at Balranald

• Operations retain flexibility to meet demand

• Progressing processing solution for Wimmera

• • Hydraulic mining trial scheduled for Sembehun

• Maturing project pipeline

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Cataby, Western Australia
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2020 Financial Result

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	Result underpinned by disciplined performance	Underlying group EBITDA $423 million despite challenging global macroeconomic environment (2019: $616 million) NPAT $2.4 billion including earnings from the demerger of Deterra Royalties (2019: $300 million loss) Underlying NPAT of $151 million (2019: $279 million) Declared 2 cents per share dividend, fully franked (2019: 13 cents per share)
	Preservation of healthy product margins	Mineral sands EBITDA margin 36%, down from 45% in 2019 Margins supported by relatively stable pricing, with a modest decline in zircon prices of 8% from Q4 2019 while stable throughout H2 Rutile1 prices up 7% year-on-year
	Deterra Royalties demerger completed	Mining Area C royalty earnings of $81 million (2019: $85 million) Completed demerger of MAC royalty asset, creating ASX listed Deterra Royalties - the ASX’s largest resource royalty business Iluka retains a 20% interest in Deterra, as a long-term investment, adding to Iluka’s financial strength
	Flexible operational settings	Achieved operational continuity across all assets, during period of pandemic related movement restrictions Altered operational settings at Narngulu mineral separation plant in response to COVID-19 impacts on market conditions FY20 Z/R/SR production of 585 thousand tonnes (2019: 702 thousand tonnes)
	Emerging rare earths market position	Eneabba Phase 1 began operations in April producing monazite-zircon concentrate Eneabba Phase 2 project progressed to execute, set to deliver 90% monazite concentrate in H1 2022
	Strong balance sheet maintained	Net cash of $50 million as at 31 Dec 2020 ($43 million net cash 31 December 2019) Total debt facilities of $500 million

1. Rutile prices exclude HYTI

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Iluka’s Commitment to Sustainability

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South West, Western Australia
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Key Pillars of Iluka’s Sustainability Approach

• Health and Safety

• Our People

• Our Communities

• Environmental Stewardship

• Governance and Integrity

• Value Creation

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2.8 TRIFR

(2019: 2.9)

28%

Indigenous Employment at Jacinth-Ambrosia

20%

Reduction in Serious Potential Incidents (2020: 61, 2019: 76)

TCFD alignment

Year 2 of 3

576

hectares rehabilitated

Female representation

38% 29% Exec. Mgt. Board

Financial Results

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Key metrics

$2,410m Reported NPAT ($300m loss 2019)

$151m Underlying NPAT ($279m 2019)

$423m Group EBITDA ($616m 2019)

	Units	2020	2019	% change
Z/R/SR production	kt	585.2	702.4	(16.7)
Z/R/SR sales	kt	517.5	680.8	(24.0)
Mineral sands revenue	$m	947.0	1,193.1	(20.6)
Mineral sands EBITDA	$m	342.0	530.9	(35.6)
Underlying Group EBITDA1	$m	423.1	616.0	(31.3)
Profit (loss) for the period (NPAT) – Reported	$m	2,410.0	(299.7)	-
Profit (loss) for the period (NPAT) – Underlying	$m	151.2	278.7	(45.7)
Operating cash flow	$m	183.8	408.1	(55.0)
Free cash flow2	$m	36.3	139.7	(74.0)
Dividend	cps	2	13	(84.6)
		At 31 Dec	At 31 Dec
		2020	2019
Net cash	$m	50.2	43.3	15.9
Gearing ratio3	%	n/a	n/a	-

1. Underlying Group EBITDA excludes non-recurring adjustments including write-downs, Sierra Rutile Limited transaction costs, the gain on the demerger of Deterra Royalties, and changes to rehabilitation provisions for closed sites.

2. Free Cash Flow is determined as cash flow before refinance costs, proceeds/repayment of borrowings and dividends paid in the year.

3. Gearing ratio = Net debt / net debt + equity

Underlying NPAT – 2020 versus 2019

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Main features

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$m
300
• Reduced sales volumes due to the impact of COVID-19
on markets and synthetic rutile contractual dispute
• Higher unit cost of goods sold reflecting:
250 ‒ lower ore grade at Jacinth-Ambrosia
( 31 ) ‒
transition to higher cost Cataby ilmenite as
synthetic rutile feed
‒
unplanned outages at Sierra Rutile
200
23 ‒ costs of managing COVID-19 at Sierra Rutile
6
5
45
150
( 98 )
279
10 11
17
7
100
( 91 ) ( 4 )
( 7 )
151
( 20 )
50
0
31 Dec 2019 Price Volume Mix FX Ilmenite and Unit Idle & Other Major Government Mining Area Corporate Interest Unwind Tax 31 Dec 2020
Other COGS Projects royalties C & other
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• Reduced sales volumes due to the impact of COVID-19 on markets and synthetic rutile contractual dispute

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Net Cash 31 December 2019 to 31 December 2020

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$m
350
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FY 2020 free cash inflow of $36 million
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Main features:

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92 • Operational setting changes to reduce cash
costs and preserve operating cash flow
300 (10) (3) • $71 million capital expenditure to progress
key projects, including Eneabba, Sembehun
studies and Cataby works
250
•
183 Tax payments inclusive of $98 million 2019
final tax payment
•
200 Balranald T3 field trial expensed ($34 million)
150
(165)
100
14
5
(71) (9) 3 50
50
(33)
43 50
0
Opening net Operating cash MAC royalty Exploration Interest Tax Capex Government AASB 16 LeasesLeases- Asset sales Dividends Other Closing net cash
cash flow subsidy reclass 30 Dec 2020
31 Dec 2019
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• Operational setting changes to reduce cash costs and preserve operating cash flow

• $71 million capital expenditure to progress key projects, including Eneabba, Sembehun studies and Cataby works

• Tax payments inclusive of $98 million 2019 final tax payment

• Balranald T3 field trial expensed ($34 million)

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Balance Sheet

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Iluka maintained a strong balance sheet during 2020, preserving a net cash position while investing in key projects, in line with stated target of zero net debt over the cycle

$50m net cash at 31 December 2020 ($43m net cash 31 December2019)

Net Debt, Gearing and Total Facilities

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$m
Gearing %
1000 40
800
30
600
20
400
10
200
0
0
Total facilities available Net debt (cash) Gearing
-200 -10
H1 14 H2 14 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H2 19 H1 20 H2 20
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$500m total facilities Maturity July 2024

Significant funding headroom $462m undrawn facilities

• Net debt / net debt + equity

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Mining Area C Royalty and Demerger of Deterra Royalties

Iluka successfully completed the demerger of its royalty business, creating Deterra Royalties in November 2020 and retains a 20% stake in Deterra Royalties as a source of financial strength

$81m MAC royalty EBITDA (2019: $85m)

• Pre demerger: Iluka received royalty payments from BHP up to September quarter

• Post demerger: Iluka’s received $0.1 million equity accounted profits from its 20% stake in Deterra Royalties (net of $1.3 million notional depreciation). Deterra Royalties’ Q4 result was impacted by transaction costs associated with the demerger.

• The cash flow of Iluka’s dividend receipt from Deterra Royalties will occur in H1 2021

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Mineral Sands Markets

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Zircon Market Key Features

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2020 sales

2020 sales 2020 price 240kt US$1,319/t 2019: 274kt 2019: US$1,487/t (zircon premium and standard)

Result Overview

• Demand levels remain down on previous years but conditions improved over course of 2020

• Increased purchasing evident in Q4, a typically subdued period

• Iluka changed operational settings at Narngulu to reduce zircon output and finished goods inventory in the year

• Limited inventory held by customers

• Pricing relatively stable given challenging market conditions

FY20 Z/R/SR Sales Revenue

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Zircon
49%
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Zircon (premium and standard) net realised FOB price US$/t

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US$/t
1600
1200
800
400
0
H1 16 H1 17 H1 18 H1 19 H1 20
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Zircon Market Key Features

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Sales by Region

• Chinese ceramics market affected by lockdowns in H1, returning to ~60% capacity for remainder of year

• Europe, Middle East and India tile plants closed for much of Q2 but recovered strongly to 80-90% capacity in H2

• Minimal inventories held by customers promoted buying when underlying demand improved

• Concentrate sales to China weighted to H2

Half yearly zircon sales by region

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kt
200
150
100
50
0
H1 19 H2 19 H1 20 H2 20
China EMEI Other Asia Americas
EMEI = Europe, Middle East, India
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Sales by Industry

• Sales to ceramics market recovered strongly in H2

• Fused zirconia customer purchases were second-half weighed after weak first half impacted by pandemic

• Increased demand for Chinese exports of zircon chemical products

• Foundry and refractory markets impacted by reduced manufacturing activity in H1

Half yearly zircon sales by industry

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kt
200
150
100
50
-
H1 19 H2 19 H1 20 H2 20
Ceramics Chemicals Fused zirconia
Refractories Foundry Other
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High Grade Titanium Feedstock Market Key Features

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2020 sales 2020 price 278kt US$1,220/t 2019: 407kt 2019: US$1,142/t Rutile (excluding HYTI)

Result Overview

• Pigment and paint market affected by initial lockdowns but were subsequently buoyed by strong demand for DIY and professional paint

• Pigment markets showing further signs of recovery in H2 with high utilisation rates and price increases

• Synthetic rutile sales affected by contractual dispute with major customer, Chemours

• In early 2021, Chemours has taken its first shipment of synthetic rutile (4kt in late January), in line with the contract

• Sales into welding market strong

FY20 Z/R/SR Sales Revenue

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Synthetic rutile
21%
Rutile
30%
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Rutile net realised FOB price US$/t

US$/t 1600

1200 800 400 0 H1 16 H1 17 H1 18 H1 19 H1 20

High Grade Titanium Feedstock Market Key Features

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Sales by Region

Sales by Industry

• US pigment industry demand recovery lead by increased DIY paint market

• The pigment industry improved during H2

• Iluka’s pigment sales were down due to the contractual dispute with major pigment producer

• European market improved in H2 despite pandemic lockdowns

• China’s chloride pigment growth accelerated in H2 2020

• Welding demand strong due to increased infrastructure spending in SE Asia

• Ti sponge negatively impacted by reduced aerospace demand

Half yearly high grade sales by industry

Half yearly high grade sales by region

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kt kt
250 250
200 200
150 150
100 100
50 50
0 0
H1 19 H2 19 H1 20 H2 20 H1 19 H2 19 H1 20 H2 20
China EMEI Other Asia Americas Pigment Welding Sponge and Other
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EMEI = Europe, Middle East, India

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Magnet Rare Earths Market Outlook

End Market Applications

Global End Market Growth

NdPr Market Balance

Forecast Passenger EV Sales (m)

Passenger, commercial vehicles. Electric trains and other transportation. Approx. 1kg NdPr per EV[1]

Electric vehicle motors

Consumer

Smart speakers, computer speakers, headphones. Fridges, air conditioners.

electronics and appliances

Automotive parts Micromotors, sensors, and sensors speakers

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Electric motors At least 150kg per MW[2]

Wind generation

Industrial electronics

Robots, welders, elevators, escalators

Source: 1. Adamas Intelligence, UBS. 2. Adamas Intelligence.

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40
Government policies supporting switch to EV’s .
EVs currently ~6% of passenger vehicle sales, forecast
30 ~40% by 2030 or ~30.5 million new EVs requiring ~30,000
tonnes of NdPr (equal to ~50% of total 2020 demand).
20
10
0
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
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Forecast Wind Power Installation (GW)

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100
2020 to 2030 forecast additional 35.7 GW installed
90 turbines, equivalent to ~6,000 tonnes of NdPr.
80
70
60
50
40
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
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Forecast NdPr Oxide market balance (kt)

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5 0 -5 -10 -15 -20 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: Adamas Intelligence

• NdPr supply shortage to occur in 2022-2023

• 2020-2030 demand growing at 9.6% p.a.

Source: Adamas Intelligence

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Mineral Sands Operations

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Operational Flexibility

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Iluka has a portfolio of operations weighted towards premium zircon and high-grade titanium products. Operational configuration is geared to: optimise production in response to market conditions; minimise costs and improve cash flow; and maintain flexibility in line with market conditions.

2020 adjusted settings

Flexibility in early 2021

• Narngulu plant reduced zircon production in line with market conditions

• Mine move from Ambrosia to Jacinth at lower unit cost, improving cash flow and delaying further capital spend

• Synthetic rutile kiln idled from February 2021 for 3 to 6 months to reduce inventory levels

• Narngulu plant returned to full operations

• Eneabba commenced production of monazite-zircon concentrate

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Cataby / South West

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Large chloride ilmenite rich mine, commissioned in 2019. Ilmenite feeds synthetic rutile kiln with material zircon and rutile production.

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Jacinth-Ambrosia / Mid West

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Jacinth-Ambrosia is one of the world’s largest zircon mines, discovered and developed by Iluka and operating since 2009. Narngulu mineral separation plant processes Jacinth-Ambrosia and Cataby nonmagnetic products.

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Eneabba

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Processing and sale of monazite concentrate from a strategic stockpile. Operations began April 2020 and is now world’s highest grade monazite operation. Further developments involving additional value addition being progressed.

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Sierra Leone

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World’s largest rutile mine, operating since 1960s. Acquired by Iluka 2016 and expansion projects completed 2019.

Mineral Sands Operations – Inventory Position

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Increased inventory due to subdued market conditions and synthetic rutile contractual dispute

• Increase in total inventory to $616 million (December 2019: $425 million)

• Increase in synthetic rutile finished goods stocks of 112kt

• Stocks of other finished goods declined

• Increased work in progress stocks with amended operational setting at Narngulu resulting in some build of intermediate products, including heavy mineral concentrate (HMC)

Total Inventory

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$ million
1000
Finished Goods Work in Progress
800
600
400
Normalised inventory level
200
0
Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20
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• Includes ilmenite and consumables

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Other
Ilmenite
Zircon
Finished Goods
(DecZircon-20)
Synthetic
rutile
Rutile
Other Ore
Work in progress
-
(Dec 20)
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HMC
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Eneabba Operations Production and Financial Parameters

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	Phase 11	Phase 21
Capex	<$10 million	~$35 million
Average annual production cash costs	~$4 million	$35-40 million
Payback period	~6 months	<1 year
Average annual production	~50ktpa 20% monazite-zircon concentrate	16-20ktpa 90% monazite concentrate 7-9ktpa zircon, ~20ktpa ilmenite, ~1ktpa HYTI90
First production	April 2020	H1 2022
Project life	2 years before transitioning to Phase 22	~10 years2
Pricing	Fixed price offtake contract for 50ktpa for 2 years Price received reflects contained monazite, less processing cost and margin for processor. Zircon component sold by Iluka	Under negotiation with customers

1. All values approximate. Production figures stated as estimated recovered mineral in the concentrate. Payback period based on externally sourced long term monazite price forecast and internal mineral sands prices

2. Based on Ore Reserve and production rates given. ASX release “Eneabba Mineral Sands Recovery Project Ore Reserve Estimate” 18 Feb 2020, available at www.iluka.com Iluka confirms that it is not aware of any new information or data that materially affects the information in the original market announcement and that all the material assumptions and technical parameters underpinning the Ore Reserve estimate have not materially changed.

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Port of Geraldton, Western Australia
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Projects

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Project Pipeline Summary

The company develops and progressively gates projects towards execution subject to: (i) improving confidence and satisfaction with the risk-return attributes, (ii) continued strategic alignment, and (iii) sequencing to take advantage of economic and market outlook.

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ASSESS SELECT DEVELOP EXECUTE PRODUCING
Region Mineral Resource [1]
Scoping Study Preliminary Feasibility Study Definitive Feasibility Study Project execution Operate and maximise
345Mt @ 4.8% HM for Jacinth-
Eucla Basin Atacama
16.6Mt In Situ HM Ambrosia
195Mt @ 17.2% HM for
Murray Basin Wimmera Balranald
33.4Mt In Situ HM
South
Mid West / South 986Mt @ 5.6% HM for Eneabba SR1 Kiln Eneabba Eneabba
West WA 54.9Mt In Situ HM West (Phase 3) Restart (Phase 2) (Phase 1) Cataby
Deposits
715Mt @ 1.1% Rutile for
Sierra Leone Sembehun Lanti Gangama
7.9Mt In Situ Rutile
Stage description: Determine what it could be Determine what it should be Determine what it will be Deliver the project Grow and improve
Estimate Accuracy Range (at
-30% to +60% -15% to +30% -10% to +15% n/a n/a
end of phase):
No Resource estimate Resource estimate Reserve estimate Other
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1. Refer to the 2020 Annual Report for additional information. The Mineral Resource (MR) information on this indicative growth pipeline summary is extracted from the company’s previously published MR statements and are available at: www.iluka.com.au . Iluka confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements and, in the case of estimates of Mineral Resources or Ore Reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. Iluka confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. All Mineral Resource figures are estimates. This slide should be read in conjunction with disclaimers and compliance statement on slide 2.

Eneabba, Western Australia

24

Eneabba Phase 1 delivered and operating. Phase 2 in execute and due for completion H1 2022. Iluka also actively exploring the potential for the downstream processing of rare earths in Australia.

Project Overview

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The Eneabba project in Western Australia involves the extraction, processing and sale of a strategic stockpile rich in monazite (a mineral containing rare earth elements) and zircon. Phase 1 of operations is producing a mixed monazite-zircon concentrate (~20% monazite).

Phase 2 of the project is currently in execute and will produce two separate concentrates: a dedicated ~90% monazite concentrate, suitable as a direct feed to a downstream rare earths refinery; and a zircon-ilmenite concentrate, which will be processed into finished products (zircon and ilmenite) at Narngulu.

Works completed in 2020

Phase 1 began operations in April and shipped 44kt of zircon-monazite concentrate over the year. Phase 2 received Board approval in October and is in execute.

Outlook for 2021

The project team is focussed on delivering Phase 2 and engaging with customers.

Iluka is actively exploring the potential for the downstream processing of rare earths in Australia (Phase 3) and has commenced a feasibility study for a fully integrated rare earths refinery.

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Balranald, New South Wales

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Third technology trial completed and confirmed effectiveness of the underground mining method. Work has commenced to scope the Definitive Feasibility Study (DFS).

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Project Overview

Balranald and Nepean are two rutile-rich deposits in the northern Murray Basin, New South Wales. Owing to their relative depth, Iluka is assessing the potential to develop these deposits via a novel, internally developed, underground mining and backfilling technology.

Works completed in 2020

Field activities associated with the third trial (T3) of Iluka’s innovative underground mining method were completed late in 2020. The trial confirmed the effectiveness of the underground mining method and validated key elements of the mining unit design. Continuous backfilling of tailings was not achieved. This is not considered a fatal flaw, with traditional on-surface placement a low-risk alternative.

Work is ongoing to analyse the data generated during the trial.

Outlook for 2021

Iluka has begun scoping a DFS for the project. A decision whether to proceed with the DFS will be made mid-2021.

Wimmera, Victoria

26

Wimmera is a large-scale deposit with the potential to produce ceramic-grade zircon and rare earth products. Project work is focussed on finding a processing solution to remove impurities from the zircon in the deposit.

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Project Overview

The Wimmera project involves the mining and beneficiation of a fine grained heavy mineral sands ore body in the Victorian Murray Basin for the potential long term supply of zircon and rare earths.

Works completed in 2020

One characteristic shared by the fine grained mineral sands deposits located in Western Victoria (those held by Iluka and other project proponents) is higher levels of impurities in their zircon. Absent a processing solution to remove these impurities, the zircon is ineligible for sale into the ceramics market. Iluka’s study work for Wimmera is focussed on validating such a processing solution.

Outlook for 2021

Iluka is sufficiently encouraged with results of its test work in relation to product purity and is now refining its flow sheet to focus on value and efficiency.

If this technology proves successful it is likely applicable to other types of challenging zircon beyond Wimmera/Western Victoria (including, for example, in converting Iluka’s stocks of chemical zircon to premium grade).

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Sembehun, Sierra Leone

27

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Travel restrictions limited site access but planning for the hydraulic mining continued and is now planned for H1 2021.

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Project Overview

The Sembehun group of deposits are situated 20 to 30 kilometres north-west of the existing Sierra Rutile operations. Sembehun is one of the largest and highest quality known rutile deposits in the world.

Works completed in 2020

Travel restrictions into Sierra Leone limited site work for much of 2020. Desktop work continued on critical activities that did not require site access and plans for the hydraulic mining trial are well advanced.

Outlook for 2021

The hydraulic mining trial will commence in H1 2021. If this trial is successful, it has potential to complement production at the current mining area and validate hydraulic mining as an option for Sembehun.

Iluka has also commenced a process to identify third parties willing to invest in the next phase of Sierra Rutile’s growth.

Summary and Outlook

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29

2021 Outlook

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Iluka enters 2021 with a strong balance sheet and pipeline of projects to deliver future value. The company will continue to optimise operational settings in line with market conditions, focus on preserving cashflow and exercise capital discipline.

2021 Outlook:

• Building on momentum in market recovery to support volume growth and margins across Iluka’s product suite

• Cautious optimism in mineral sands markets reflected in US$70/tonne zircon price increase effective 1 April

• Realise benefits of efficiency and cost review to deliver strong financial performance and generate cash flow

• Progress key elements of the project pipeline:

• Delivering major project work of Eneabba Phase 2

• Assessment of potential for downstream rare earths processing in Australia

• Progressing Balranald project to potential DFS

• Validate processing solution for Wimmera zircon

• Sembehun hydraulic mining trial and progressing next stage of development

Outlook for 2021 – Group

30

for 2021 – Group
Key Parameters	2019	2020	20211	Comments
Annual production
Zircon kt	322	185	285	Production includes 60kt of zircon in concentrate.
Rutile2 kt	184	173	200	Rutile production assumes improved performance from SRL and higher production from Narngulu
Synthetic Rutile kt	196	227	115 - 175	Range based on SR2 kiln idling for 3-6 months
Total Z/R/SR kt	702	585	600 - 660
Average annual unit costs
Unit cash costs of production $/t Z/R/SR	753	918	785 - 820
Unit cost of goods sold $/t Z/R/SR	889	1,032	950
Capital investment
Capital expenditure $m	198	71	95	Includes: • Eneabba Phase 2 execute • Balranald DFS (subject to satisfactory outcomes of trial study and Board approval) • Cataby and SR2 kiln maintenance and equipment upgrades • Sembehun hydraulic trial and studies expenditure • Progression of studies and sustaining capex across sites

1. Indicative only. Production settings are able to be adjusted and are dependent on market demand conditions. This slide should be read in conjunction with the disclaimer on forward looking statements on slide 2.

2. Includes HYTI

Outlook for 2021 – Group

31

Key Parameters	2019	2020	2021	Comments
Cash costs ($m)
Cash costs of production (Z/R/SR)	529	537	500 -520	Range of cash costs relate to costs for a three month vs six month idling of the SR2 kiln, and includes lower site costs and lower HMC transport costs between Cataby and South West.
Ilmenite concentrate and by-product costs	11	22	20	Eneabba costs in line with 2020, while costs for other by products expected to be lower in 2021.
Restructure and idle costs	20	21	20 - 30	Predominantly related to SR2 kiln idling, as well as Murray Basin an d US idled operations.
Resource development	42	62	50	Includes expenditure to advance rare earth options and other technical work
Corporate	48	55	50
Marketing, selling and royalty costs	74	50	n/a	Dependent on sales prices / volumes and activity
Total cash costs	724	748	n/a
Non cash costs ($m)
Depreciation and amortisation	163	185	155
Rehabilitation for closed sites	3	7	-
Rehabilitation unwind	21	15	12
Total non-cash costs	187	207	167

1. Indicative only. This slide should be read in conjunction with the disclaimer on forward looking statements on slide 2.

2. Costs exclude inventory movement; FX gains/losses; net interest and bank fees; and tax.

Outlook for 2021 – Sierra Rutile

32

Key Parameters	2019	2020	2021	Comments
Annual production
Rutile kt	137	120	145	Requires higher level of consistency in operational performance
Zircon kt	9	7	7
Total Z/R kt	146	127	152
Ilmenite kt	59	46	54
Annual unit costs & capital expenditure
Cash costs of production US$m	121	127	125
Unit cash costs of production US$/t Z/R	823	1,002	810
Capital expenditure US$m	49	14	10	Sembehun hydraulic trial and study work

1. Indicative only. This slide should be read in conjunction with the disclaimer on forward looking statements on slide 2

Supplementary Information

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34

Supplementary Information – Production, Sales, Costs, Revenue

	2020 2019 % change
Production Zircon kt Rutile kt Synthetic rutile kt Total Z/R/SR production kt Ilmenite – saleable and upgradeable kt Total production volume kt Heavy mineral concentrate produced kt Heavy mineral concentrate processed kt Sales Zircon kt Rutile kt Synthetic rutile kt Total Z/R/SR kt Ilmenite kt Total sales volumes kt Revenue and Cash Costs Mineral sands revenue1 $m Total cash cost of production $m Unit cash production cost per tonne of Z/R/SR produced2 $/t Unit cost of goods sold per tonne of Z/R/SR sold $/t Revenueper tonne of Z/R/SR sold$/t	185.2 322.1 (42.5) 172.6 184.1 (6.2) 227.4 196.2 15.9
	585.2 702.4 (16.7) 455.9 318.6 43.1
	1,041.1 1,021.0 2.0
	1,182 1,087 8.7 1,008 961 4.9 239.6 274.0 (12.6) 162.1 200.1 (19.0) 115.8 206.7 (44.0)
	517.5 680.8 (24.0) 256.1 170.8 49.9
	773.6 851.6 (9.2)
	947.0 1,193.1 (20.6) 539.6 558.7 3.4 918 753 21.9 1,032 889 16.1 1,625 1,654 (1.8)

1. Includes revenues derived from other materials not included in production volumes, including activated carbon products and iron concentrate. Iluka received a royalty payment from the Mining Area C iron ore royalty to September quarter. This is not reported as part of quarterly reports but is disclosed in the financial statements.

2. Excludes ilmenite and by-products.

35

Supplementary Information – Summary Group Results

$ million	2020	2019	% change
Mineral sands revenue	947.0	1,193.1	(20.6)
Mineral sands EBITDA	342.0	530.9	(35.6)
Mineral sands EBITDA margin %	36.1%	44.5%	(18.9)
Mining Area C royalty EBITDA / Share of profit from associate	81.1	85.1	(4.8)
Underlying group EBITDA1	423.1	616.0	(31.3)
Underlying group EBITDA margin %	41.2%	48.2%	(14.5)
Depreciation and amortisation	(184.8)	(163.2)	(13.2)
Gain on sale of MAC Demerger	1,808.1	n/a	n/a
Gain on change of ownership of MAC Demerger	452.0	n/a	n/a
Sierra Rutile write-down expense	n/a	(414.3)	n/a
Group EBIT	2,539.2	50.8	n/a
Profit (loss) before tax	2,505.5	(1.0)	n/a
Tax expense	(95.5)	(298.7)	68.0
Profit (loss) after tax - reported	2,410.0	(299.7)	n/a
EPS (cents per share)	570.4	(71.0)	n/a
Profit (loss) after tax - underlying	151.2	278.7	(45.7)
Free cash inflow (outflow)	36.3	139.7	(74.0)
Free cash inflow (outflow) (cents per share)	5.2	33.0	(84.2)
Dividend – fully franked (cents per share)	2.0	13.0	(84.6)
Net (debt) cash	50.2	43.3	15.9
Gearing (net debt / net debt + equity) %	n/a	n/a	n/a
Return on capital % (annualised)	311.3	6.8	n/a
Return on equity % (annualised)	283.7	(24.5)	n/a
Average A$/US$ exchange rate	69.1	69.5	(0.6)

1. Underlying Group EBITDA excludes non-recurring adjustments including write-downs, Sierra Rutile Limited transaction costs, the gain on the demerger of Deterra Royalties, and changes to rehabilitation provisions for closed sites.

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Supplementary Information – Income Statement

A$ million	2020 2019 % change
Z/R/SR revenue Ilmenite and other revenue Mineral Sands Revenue Cash costs of production Inventory movement - cash Restructure and idle capacity charges Government royalties Marketing and selling costs1 Asset sales and other income Exploration and resource development Corporate and other costs Foreign exchange Mineral sands EBITDA Mining Area C EBITDA Share of profit in associate Underlying Group EBITDA2 Depreciation and amortisation Inventory movement - non-cash Rehabilitation for closed sites Demerger transaction costs Gain on sale of MAC Demerger Gain on change of ownership of MAC Demerger Gain on remeasurement of Put Option Impairment of Sri Lanka interests Sierra Rutile write-down expense Group EBIT Net interest costs and bank charges Rehabilitation unwind and other finance costs Profit (loss) before tax Tax expense Profit (loss) for the period (NPAT)	841.0 1,128.7 (25.5) 106.0 64.4 64.6
	947.0 1,193.1 (20.6) (558.7) (539.6) (3.5) 142.3 63.4 124.4 (20.9) (19.7) (6.1) (22.3) (39.4) 43.4 (27.7) (35.0) 20.9 (1.5) (3.5) 57.1 (62.3) (42.2) (47.6) (54.6) (48.0) (13.8) 0.7 1.8 (61.1)
	342.0 530.9 (35.6) 81.0 85.1 (4.8) 0.1 - -
	423.1 616.0 (31.3) (184.8) (163.2) (13.2) 39.9 15.5 157.4 7.2 (3.2) n/a (13.3) - n/a 1,808.1 - n/a 452.0 - n/a 19.4 - n/a (12.4) - n/a - (414.3) n/a
	2,539.2 50.8 n/a (7.1) (13.8) 48.6 (26.6) (38.0) 30.0
	2,505.5 (1.0) n/a (95.5) (298.7) 68.0
	2,410.0 (299.7) n/a

1. Freight revenue and expenses are included as a net number in marketing and selling costs.

2. Underlying Group EBITDA excludes non-recurring adjustments including write-downs, Sierra Rutile Limited transaction costs, the gain on the demerger of Deterra Royalties, and changes to rehabilitation provisions for closed sites.

Supplementary Information – Reconciliation of non-IFRS information

37

Reconciliation of non-IFRS financial information to profit before tax

Reconciliation of non-IFRS	financial information to profit before tax
	JA/MW C/SW US/MB SRL Expl & Oth Corp Mineral Sands MAC Group
Mineral sands revenue AASB 15 freight revenue Expenses Mining Area C Share of profit in associate FX Corporate costs EBITDA Depn & Amort Inventory movement - non-cash Rehabilitation for closed sites Demerger Gain Gain on re-measurement of Put Option Impairment EBIT Net interest costs Rehab unwind and other finance costs Profit Before tax Segment result	389.0 300.4 34.5 223.1 (0.0) - 947.0 - 947.0 20.6 8.5 6.1 7.8 - - 43.0 - 43.0 (139.4) (145.8) (30.5) (204.5) (73.9) - (594.1) - (594.1) - - - - - - - 81.0 81.0 - - - - - 0.1 0.1 - 0.1 - - - - - 0.7 0.7 - 0.7 - - - - - (54.6) (54.6) - (54.6)
	270.2 163.1 10.1 26.4 (73.9) (53.8) 342.1 81.0 423.1 (36.2) (72.3) (0.4) (72.2) (0.3) (3.1) (184.5) (0.3) (184.8) 9.8 29.1 (0.9) 1.9 - - 39.9 - 39.9 1.7 0.2 2.2 3.1 - - 7.2 - 7.2 - - - - - 2,246.8 2,246.8 - 2,246.8 - - - - - 19.4 19.4 - 19.4 - - - - (12.4) - (12.4) - (12.4)
	245.5 120.1 11.0 (40.8) (86.6) 2,209.3 2,458.5 80.7 2,539.2 (1.0) (0.5) (0.1) (0.2) - (5.3) (7.1) - (7.1) (2.5) (2.8) (11.1) (10.2) - - (26.6) - (26.6)
	242.0 116.8 (0.2) (51.2) (86.6) 2,204.0 2,424.8 80.7 2,505.5 242.0 116.8 (0.2) (51.2) n/a n/a 307.4 80.7 388.1

Supplementary Information - Prices

38

Weighted Average Price US$/tonne FOB	Full year 2019	H1 2020	Q3 2020	Q4 2020	H2 2020	Full year 2020
Zircon Premium and Standard	1,487	1,354	1,311	1,291	1,301	1,319
Zircon (all products including zircon in concentrate)1	1,380	1,265	1,271	1,144	1,194	1,217
Rutile
(excluding HYTI and TIC)2	1,142	1,246	1,195	1,199	1,197	1,220
Synthetic rutile3	-	-	-	-	-	-

Notes:

1: Zircon prices reflect the weighted average price for zircon premium, zircon standard and zircon-in-concentrate. The prices for each product vary considerably, as does the mix of such products sold period to period. In 2020, the split of zircon sand and concentrate by zircon sand-equivalent is approximately: 78%:22%. (2019: 70%:30%).

2: Included in rutile sales volumes reported elsewhere in this Quarterly Review are lower titanium dioxide products, HYTI and titanium-in-concentrate (TIC). HYTI that typically has a titanium dioxide content of 70 to 91%. This product sells at a lower price than rutile, which typically has a titanium dioxide content of 95%. 2020 full year sales of the lower grade HYTI material were 29% of rutile sales (2019: 23%).

3: Iluka’s synthetic rutile sales are, in large part, underpinned by commercial offtake arrangements. The terms of these arrangements, including the pricing arrangements are commercial in confidence and as such not disclosed by Iluka. Synthetic rutile, due to its lower titanium dioxide content than rutile, is priced lower than natural rutile.

For more information contact:

Luke Woodgate Group Manager, Investor Relations and Corporate Affairs investor.relations@iluka.com +61 (0) 477 749 942

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