ILUKA RESOURCES LIMITED — Management Reports 2017

Jan 30, 2017

30 January 2017

This document provides an indicative guide to key physical and financial parameters expected for the Iluka business in the 2017 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.

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. In the case of part of the guidance, it also relates to the Sierra Rutile operation, for which the company has recently taken control of and where a more extended period of operational involvement will enable more definition of appropriate operational and cost settings. As such, the guidance should be viewed as broad parameters, subject to modification.

The following excludes the Mining Area C iron ore royalty. In the case of Metalysis Ltd, Iluka equity accounts for this investment. A $1.4 million loss was recorded as at 30 June 2016. The current guidance parameters supersede all previous key physical and financial parameters.

Supplementary information contained in the appendices to this document includes:

Appendix 1 Cost of Goods Sold and Inventory Methodology Appendix 2 Production and Cost Trends Appendix 3 Production Settings Appendix 4 Historical Production, Sales and Prices Appendix 5 SRL Physicals and Financials Appendix 6 Operating Mine – Physical Data

Disclaimer

Forward Looking Statements

This document contains certain statements which constitute “forward-looking statements”. These statements include, without limitation, estimates of future production and production potential; estimates of future capital expenditure and cash costs; 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 risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. 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; and

• environmental or social factors which may affect a licence to operate.

To the extent permitted by law, Iluka, its officers, employees and advisers 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 any person as a consequence of any information in this presentation or any error or omission there from. Iluka does not undertake any obligation to release publicly any revisions to any forward-looking statement to reflect events or circumstances after the date of this paper, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

Non-IFRS Financial Information

This document uses non-IFRS financial information including mineral sands EBITDA, mineral sands EBIT, Group EBITDA and Group EBIT which are used to measure both group and operational performance. Non-IFRS measures have not been subject to audit or review.

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Physical Parameters

Production - Iluka Group

2016 figures exclude any contribution from Sierra Rutile. The acquisition of Sierra Rutile was finalised on 7 December 2016.

Production settings are able to be adjusted and are dependent on market demand conditions, cash cost and inventory monetisation considerations.

Production (kt)	2016	2017	2017	2017	2017
		Guidance	Guidance	Guidance	Commentary
		Iluka only	Sierra Rutile	Iluka group
			only
Zircon	347	~275	-	~275	Lower production reflects
					continued processing of
					heavy mineral concentrate
					from the Murray Basin and
					Jacinth-Ambrosia, facilitating
					inventory draw-down. Sales
					expected to be higher than
					production.
Rutile	109	~90	~150	~240	Continued processing of
					Murray Basin concentrate.
					Sierra Rutile below 3 year
					guidance range of ~160- 175kt 1. Lower ore grade due
					to mine schedule changes
					prior to change of control; to
					be addressed through
					revised mine plan and
					increased mine rates. 3 year
					production guidance
					expected to be retained
					following completion of this
					activity. In 2018, rutile
					production is expected to be
					lower associated with the
					cessation of the dredge
					operation. Associated with
					the factors above, average
					2017-2019 rutile production
					is expected to be at the
					lower end of the guided
					range.
Synthetic rutile	211	~205	N.A.	~205	Operation of synthetic rutile
(SR)					kiln 2 (SR2).
Total Z/R/SR	667	~570	~150	~720
Ilmenite	326	Not guided	~40	Not guided	Ilmenite produced can be
					sold directly or used as a
					feed for synthetic rutile
					production.
					It is expected that the
					majority of non Sierra Rutile
					internal ilmenite production
					will be used for synthetic
					rutile production in 2017.

1. Three year average annual guidance for 2017-2019, as disclosed on 9 December 2016.

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Sales - Iluka Group

Guidance parameters based on inclusion of Sierra Rutile. 2016 sales exclude Sierra Rutile

Sales Volumes	2016	2017	2017
(kt)		Guidance	Commentary
Zircon	339	Not guided	Iluka 2017 combined Z/R/SR sales are expected to
Rutile	154		exceed Iluka 2016 combined Z/R/SR sales. In addition, Sierra Rutile sales in 2017 are likely to be
Synthetic rutile	187		matched to 2017 guided production levels.
Total Z/R/SR	680

Explanatory notes:

• In 2016 zircon sales constituted ~47% premium product, ~33% standard product and ~20% zircon in concentrate . In 2017 the structure of zircon sales is expected to be similar. Refer table on page 13 for an indication of 2016 price variations by product grade.

• Rutile sales include some lower titanium dioxide product, referred to as Hyti. HyTi, due to its lower titanium dioxide content (~91% TiO2), sells at a lower price than rutile (~95% TiO2). In 2016, ~91% of sales volumes classified as rutile was rutile and ~9% was Hyti. These product weightings are expected to be similar in 2017.

• In addition to the main mineral sands products of ziron, rutile and synthetic rutile, Iluka also generates revenue from, and incurs production costs related to, ilmenite and by-product streams, including iron concentrate and activated carbon. In 2016, this ilmenite and other revenue was $30 million.

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Financial Parameters

Iluka Group

2016 data excludes Sierra Rutile.

The following guidance is also provided as a worked example of an income statement, refer to Iluka Simplified Profit and Loss Model 2017 at Iluka Mineral Sands Briefing Papers.

	2016	2017	2017	2017	2017
	(excl.	Guidance	Guidance	Guidance	Commentary
	SRL)	Iluka only	Sierra	Iluka group
			Rutile only
Cash Costs $m
Production cash costs	243	~215	~115	~330	Iluka only production settings similar
Z/R/SR (excluding ilmenite concentrate and by-					to 2016. Production costs lower with Jacinth-Ambrosia idled for whole year (relative to 9 months in 2016) and lower overburden movements at
products)					Tutunup South.
					Sierra Rutile costs of ~A$115m
					(~US$87m) are above three year
					average guidance range of US$75- 85m 1due to mine schedule changes
					prior to change of control, as
					referred to previously.
					Refer note 1
Ilmenite concentrate	8	~10	-	~10	Higher iron concentrate costs due to
and by-product costs					additional shipments from the Mid West. Costs also include those
					associated with activated carbon (a
					co-product with revenue stream from
					synthetic rutile production).
Total Cash Costs	251	~225	~115	~340
of Production
Other cash costs2	~190	~120	~20	~140	Costs expected to be lower than 2016
Includes: royalties, marketing and selling, exploration, resource development and corporate support					levels with reduced expenditure following the sustainable business review in corporate, resource development, exploration, marketing areas.
					Balranald project costs to be
					capitalised in 2017 (expensed in
					2016).
					Refer note 2
Restructure, idle		~60	-	~60	Refer note 3 and 4
capacity,
rehabilitation &
holding costs3
Total Cash Costs		~405	~135	~540
Unit cash costs per tonne of Z/R/SR produced (excluding by-	364	~375	~760	~460	Iluka only unit costs at similar level to 2016 reflecting unchanged operational settings.
product costs) ($/t)

1 Three year average annual guidance for 2017 - 2019, as disclosed on 9 December 2016.

2 2016 non-production costs of $190 million were guided , (2016 actuals for other cash costs will be released at the time of the full year results) including a guided non-recurring ~$35 million item for research expenditure on the Balranald unconventional mining method and an actual $14 million for Sierra Rutile transaction costs (previously $18 million of which $2 million re- classified as interest expense in relation to a deal contingent forward, with the balance mainly a SRL management payment made prior to change of control).

3 2016 to be released in 2016 Full Year Results

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Unit cost of goods	691	~730	~975	~775	2017 is indicative only and will be
sold per tonne of Z/R/SR ($/t)					dependent on sales mix and other factors during the year.
					Refer note 5
Non Cash Costs
Depreciation & amortisation3		~80	~40	~120	Iluka has changed to a straight-line depreciation method. Assets will be depreciated in periods when idled (previously depreciation halted
					during idling).
					Refer note 6 re. Sierra Rutile D&A
Other3		~20	-	~20	Includes rehabilitation unwind and
					other finance costs.
					Refer note 7
Capital **Expenditure3 **		~190	~70	~260	The magnitude and timing of capital expenditure in 2017 will depend on a final Board execute decision for the
					Cataby project. This guidance
					assumes commitment to Cataby
					during 2017.
					As outlined at the time of acquisition,
					planned capital expenditure at Sierra
					Rutile includes safety and
					operational improvements and Lanti
					and Gangama dry mine expansions.
					Capital expenditure for 2017 also
					includes progressing the alternative
					mining method development
					approach for the Balranald project
					and several other projects.
					Refer note 8

Notes to Key Physical and Financial Parameters

Note 1 – Product cash costs of production include the following main components:

• mining and concentrating costs; transport of heavy mineral concentrate; mineral separation; synthetic rutile production and costs for externally purchased ilmenite and production overheads. This category excludes Australian State Government royalties.

Note 2 - Other cash costs include:

• royalties, marketing and selling costs (including marketing overheads and port costs), exploration expenditure expensed, resource development expenditure and corporation and other support costs.

Note 3 - Restructure costs/plant idling costs

Refer Note 6 (d) of Notes to Iluka’s Financial Statements of the 2015 Annual Report for further description of this item.

Note 4 - Rehabilitation and holding costs for closed sites

Refer Note 3 (ii) of Notes to Iluka’s Financial Statements of the 2015 Annual Report and Note 6 (e) Annual Report for further description of this item.

Note 5 – Cost of goods sold

COGS comprise the cash costs of production, excluding by-product costs, plus depreciation and amortisation (D&A), plus or minus inventory movement. Refer Appendix 1.

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Note 6 – Depreciation and Amortisation

Sierra Rutile includes charges for depreciation of plant and equipment plus amortisation of mine reserves arising from the purchase price of the acquisition. Depreciation of mine plant and equipment reflects the age and wear and tear of the assets however the company expects to review the asset lives in conjunction with plans to extend the life of the mine beyond current deposits in operation. Mine reserves are amortised over the life of mine consistent with Iluka standards.

Depreciation and amortisation of most assets is charged over the life of the relevant mine or asset, whichever is the shorter. Iluka currently adopts a unit of production depreciation policy for all mine specific plant and mine reserves. All other assets are depreciated using the straight-line method. As a result, all mine specific plant, such as mining units, concentrators and mineral separation plants, do not incur any depreciation charges when they are not in use (i.e. when they are idle). Given Iluka’s approach to flexing production to meet market demand, sometimes for extended periods, the Board has resolved to change the depreciation method for mine specific plant to straight-line, with effect from 1 January 2017. This will result in additional depreciation charges of ~$12 million in 2017. Mine reserves will continue to be depreciated using units of production, consistent with common industry practice.

Included in the depreciation and amortisation of the $120 million is $20 million of depreciation relating to idle assets. This $20 million includes the $12 million mentioned above. This amount does not get charged to inventory; i.e. is reflected directly in the P&L.

Note 7 - Other non-cash costs

Includes the unwind of the discount on rehabilitation provisions which are recognised as a liability at net present value which is reported as a finance cost.

Note 8 – Capital Expenditure

Future capital commitments are dependent on the outcome of feasibility studies, market conditions and in the context of company balance sheet management. The level of capital expenditure in any given year will be determined by the final project scope, approvals and phasing of expenditure.

Other items:

Interest and Tax

Given a higher debt level in 2017 following the acquisition of SRL in December 2016, interest payments are expected to be higher. The average interest rate payable on Iluka’s debt will ultimately depend on the relative weighting of debt drawn from Australian dollar and US dollar denominated facilities as well as future interest rates. Based on current US LIBOR and Australian Bank Bill swap rates, Iluka expects the average interest rate for 2017 to be in the range of 2.8 to 3.0 per cent. In addition, the company pays commitment fees for any undrawn facilities.

The majority of Iluka’s taxable income is Australian based with a prevailing corporate tax rate of 30 per cent. Average tax rate paid can vary from this due to factors including minimal tax benefits recognised for any US losses incurred and non-deductible expenses, specifically in relation to overseas exploration and transaction costs. As at 30 June 2016, Iluka incurred an income tax expense of $2.4 million on an operating loss before tax of $18.5 million which reflected no tax benefit recognised in respect of the US operating loss and international exploration expenditure, partially offset by the benefit of research and development tax offsets.

Iluka is in a tax paying position in Australia and as such generates franking credits from the payment of tax.

The main features of the fiscal regime of Sierra Leone are:

• 4 per cent royalty on export sales;

• corporate income tax payable at the higher of 3.5 per cent of turnover and the prevailing corporate income tax rate on taxable profits post utilisation of tax losses; and

• prevailing corporate income tax rate of 30 per cent but Sierra Rutile Act caps any increase to the corporate income tax rate to 37.5 per cent

As at 31 December 2015, SRL had unused tax losses of $464.3 million available for offset against future profits, of which $63.2 million were recognised as a deferred tax asset (source: SRL 2015 Annual Report)

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Mining Area C Iron Ore Royalty

The Key Physical and Financial Parameters information relates to Iluka’s mineral sands business. It does not include the royalty from Iluka’s ownership of BHP Billiton’s Mining Area C iron ore royalty. The royalty is based on 1.232% of Australian dollar revenues from Mining Area C and an A$1 million one-off capacity payment for each 1 million tonne increase in production.

Sierra Rutile

Iluka completed the acquisition by statutory merger of Sierra Rutile Limited on 7 December 2016. Appendix 5 provides recent physical and financial information for SRL. The following link provides access to a spreadhseet with historical information on the company, November 2016 - SRL Historical Physical and Financial Data.

For enquiries, please contact:

Dr Robert Porter, General Manager, Investor Relations Phone: +61 3 9225 5008 Mobile: + 61 (0) 407 391 829 Email: robert.porter@iluka.com

APPENDIX 1 – PRODUCTION SETTINGS

The following table sets out Iluka’s production settings in 2016, along with expected production settings in 2017. Iluka’s approach is to flex production in line with market demand and operational settings are subject to change.

	2016	2017
Jacinth-Ambrosia mining	Mining and concentrating activities	Mining and concentrating idle. Concentrate
South Australia	suspended from April for a period of 18 –	continued to be processed at Hamilton and
	24 months; Jacinth-Ambrosia concentrate	Narngulu mineral separation plants.
	continued to be processed at Hamilton and
	Narngulu mineral separation plants. Refer
	ASX Release 16 February2016.
Murray Basin mining	Mining ceased. Concentrate continued to	Continue to process existing concentrate.
Victoria	be processed.
Tutunup South mining	100% utilisation	100% utilisation. Tutunup South is a principal
South West, Western		source of ilmenite feed for the SR kiln 2 at
Australia		Capel.
SR kiln 2	100% utilisation	100% utilisation
	Ilmenite feed source from Tutunup South,
	Jacinth-Ambrosia, Murray Basin and an
	external source
3 other SR kilns	Idle	Idle
US Mining (Virginia)	Idle - Mining and processing operations	Closed 31 December 2017
	were idled at the end of 2015
	Iluka has evaluated two mineral sands
	deposits in the US – Hickory and Aurelian
	Springs.
Stony Creek MSP, Virginia	Idle	Closed 31 December 2017

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APPENDIX 2 - COST OF GOODS SOLD AND INVENTORY METHODOLOGY

Cost of Goods Sold

Mineral sands earnings reflect the difference between revenue and COGS, rather than the cash costs of production and depreciation incurred in a period. COGS is the inventory value of each tonne of finished product sold. All production is added to inventory at cost, which includes direct costs and an appropriate portion of fixed and variable overhead expenditure, including depreciation and amortisation, allocated to each product on the basis of relative sales value.

The inventory value recognised as COGS for each tonne of finished product sold is the weighted average value per tonne for the stockpile from which the product is sold.

Iluka provides guidance on cash and non-cash costs of production, as well as finished goods production volumes, which in periods of low and stable inventory levels will be a surrogate for COGS . However, in periods of drawdown from large inventory balances, the unit cost of inventory drawn has a more significant influence on COGS , than current year production costs.

Production settings for 2017 are provided in Appendix 3. There is no planned heavy mineral concentrate (HMC) production from Jacinth-Ambrosia, Murray Basin or the US. As a result, HMC inventory will be drawn down further during 2017 (as with 2016) as it is processed into finished products through the mineral separation plants and not replenished from mining.

Iluka’s COGS was $691 per tonne (cash and non-cash costs) of Z/R/SR in 2016. 2017 COGS is expected to be marginally higher than this, but is dependent on sales mix and can, as such, vary. In periods of large expected movements in inventory, it can be simpler to model COGS on a unit basis, with the unit COGS ($/t) multiplied by the expected Z/R/SR sales volumes (kt).

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The diagram below illustrates how costs of production (both cash and non-cash) are built up on the balance sheet in both work in progress and finished goods inventory and then transferred to the profit or loss (cost of goods sold) as finished product is sold.

Balance Sheet Profit & Loss

==> picture [460 x 308] intentionally omitted <==

Notes:

• Production costs (cash costs and depreciation) are allocated to inventory on the balance sheet as incurred

• Inventory is held at various stages through the production process and accumulates further cost at each stage

• Typical inventory stages (and type of costs accumulated):

• Work in progress (WIP): ore mined (overburden and ore mining costs)

• WIP: HMC at mine (ore mined costs plus concentrating costs)

• WIP: HMC at mineral separation plants (ore and concentrating previously allocated, plus transport costs)

• Finished products: Z/R/SR/I (all prior HMC, plus separation and finished product handling costs)

• For each tonne of finished product sold, the average cost to produce a tonne (COGS as $/t) is charged to the P&L

• The annual balance sheet inventory movement is therefore:

• annual production costs incurred to produce new WIP and finished products; less

• production costs of finished products sold transferred from inventory to the P&L (COGS)

• The annual cost of goods sold in the P&L represents the unit cost of products sold drawn from inventory, multiplied by the sales volume

• Non-production costs (e.g. corporate, exploration, idle capacity and restructure) are expensed to P&L as incurred

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APPENDIX 3 PRODUCTION AND COST TRENDS

The chart below illustrates historical production, total cash costs of production and unit cash costs, with indicative 2017 trends based on guidance parameters provided above. It should be noted that 2017 guidance parameters include Sierra Rutile. Prior years do not include Sierra Rutile.

Figure 1. Iluka Group Cash Production Costs, Unit Cash Costs and Unit Cost of Goods Sold

==> picture [460 x 267] intentionally omitted <==

----- Start of picture text -----

kt A$/tonne
1,600 1400
1,400 1200
1,200
1000
1,000
800
800
600
600
400
400
200
200
- 0
2012 2013 2014 2015 2016 2017 Guidance
Synthetic rutile production Rutile production
Zircon production Unit cash costs per tonne Z/R/SR produced excl by-products (RHS)
Revenue per tonne Z/R/SR sold (RHS) Unit cost of goods sold per tonne Z/R/SR (RHS)
----- End of picture text -----

Figure 2. Sierra Rutile Cash Production Costs and Unit Cash Costs

==> picture [460 x 267] intentionally omitted <==

----- Start of picture text -----

kt US$/tonne
160 800
140 700
120 600
100 500
80 400
60 300
40 200
20 100
- 0
2012 2013 2014 2015 2016 2017 Guidance
Rutile production Unit cash costs per tonne (US$) (RHS)
----- End of picture text -----

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APPENDIX 4 HISTORICAL PRODUCTION, SALES AND PRICES

2012 - 2016 Historical Iluka Production Volumes (2016 excludes SRL)

Annual Volume (kt)	2012	2013	2014	2015	2016
Zircon	343	285	357	389	347
Rutile	220	127	177	136	109
Synthetic rutile	248	59	-	165	211
Total Z/R/SR	811	471	534	690	667
Ilmenite	674	584	365	466	326

2012 - 2016 Historical Iluka Sales Volumes (2016 excludes SRL)

Annual Volume (kt)	2012	2013	2014	2015	2016
Zircon	214	370	352	346	339
Rutile	105	168	182	134	154
Synthetic rutile	170	46	82	171	189
Total Z/R/SR	489	584	616	651	680
Ilmenite	443	337	317	300	18

In 2016 zircon sales constituted ~47 per cent premium product, ~33 per cent standard product and ~20 pr cent zircon in concentarte.

Rutile sales include some lower titanium dioxide product, referred to as Hyti. In 2016, ~91 per cent of sales volumes was rutile and ~9 per cent Hyti.

2012 – 2016 Iluka Weighted Average Prices

The following table provides weighted average received prices for Iluka’s main products on an annual basis between 2012 and 2016.

Prices are influenced by product specifications and quality, lot size sold, contractual and customer arrangements. In recent years a higher proportion of sales of lower grade zircon (concentrate and tailings material) and Hyti (~90 per cent TiO2 product) have impacted average received prices. In some cases, the sale of this product is monetisation of residual material.

In 2016, approximately 80 per cent of zircon sales were premium or standard grade zircon and approximately 9 per cent of rutile sales were Hyti.

Iluka Price US$/tonne FOB		2012	2013	2014	2015	2016
Zircon – Premium and Standard		2,080	1,150	1,033	986	810
Zircon – (all products including concentrate and tailings material)	1	na	na	na	961	773
Rutile 2		2,464	1,069	777	721	716
Synthetic rutile		1,771	1,150	750	Not disclosed	Not disclosed
Average AUD/USD (cents)		103.6	96.8	90.3	75.2	74.4

Notes:

1. Zircon prices reflect the weighted average price for zircon premium and zircon standard, also with a weighted average price for all zircon materials, including zircon in concentrate and zircon tailings. The prices for each product vary considerably, as does the mix of such products sold period to period. In 2016 the split of premium, standard and concentrate by zircon sand-equivalent was approximately: 47%;33%;20%.

2. Includes Hyti sales. Hyti is ~90 per cent TiO2 relative to Rutile of 95 per cent TiO2.

Iluka’s synthetic rutile sales are, in large part, underpinned by commercial off take 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, typically is priced lower than natural rutile.

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APPENDIX 5 SRL Physicals and Financials

**Physicals kt **		2012	2013	2014	2015
Rutile production		94	120	114	126
Rutile sales volume		81	111	130	118
Financial Performance US$m
Total revenue		179	123	118	106
Operating costs		(71)	(88)	(103)	(90)
EBITDA		108	35	15	16
EBIT		92	17	(6)	(5)
NPAT		84	10	(9)	(13)
EBITDA margin		60%	28%	13%	15%
Averagerutile price 1		2,041	1,044	799	775
US$m
Cash flow from operations		66	41	9	19
Cash flow from investing activities		(60)	(40)	(20)	(31)
Free cash flow		5	1	(11)	(12)
Production cash cost (US$/t)		704	644	643	614

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APPENDIX 6 OPERATING MINES – PHYSICAL DATA – 2012 - 2016

The following table provides a summary of Iluka’s physical flow – from mining to processing of finished products over the period 2012 to 2016. The data will enable a view of operational settings as Iluka has flexed production over this period of time, including reducing level of synthetic rutile production. 2016 excludes Sierra Rutile

	Group	Group	Group	Group	Group
	Total	Total	Total	Total	Total
	2012	2013	2014	2015	2016
Mining
Overburden Moved
kbcm	13,342.8	11,874.3	16,306	3,630	819
Ore Mined kt	29,738.2	19,300.3	14,689	13,815	4,348
Ore Grade HM %	7.2	10.7	13.5	9.1	8.8
VHM Grade %	4.9	9.3	12.1	7.9	7.8
Concentrating
HMC Produced kt	1,529.7	1,538.3	1,305	1,137	371
VHM Produced kt	1,213.9	1,326.7	1,135	978	325
VHM in HMC
Assemblage %	79.4	86.2	87.0	86.0	87.6
Zircon	26.9	34.9	36.7	38.2	31.4
Rutile	13.5	14.2	21.6	9.0	5.7
Ilmenite	36.8	36.1	28.6	38.7	50.5
Processing (HMC to finished product at a mineral separation plant)
HMC Processed kt	1,468.1	1,044.2	968.0	1,206	942
Finished product kt
Zircon	343.2	285.1	357.6	388.6	347.0
Rutile	220.3	127.0	177.2	136.5	108.8
Ilmenite
(saleable/upgradeable)	674.1	584.5	365.4	466.1	326.2
Synthetic Rutile
Produced kt	248.3	59.0	-	164.9	210.9

An explanation of the Iluka’s physical flow information can be obtained from Iluka’s Briefing Paper - Iluka Physical Flow Information on the company’s website www.iluka.com, under Investor & Media, Briefing Papers & Presentations, 2010. The nature of the Iluka operations base means that HMC from various mining locations can be processed at various mineral separation plants.

Explanatory Comments on Terminology

Overburden moved (bank cubic metres) refers to material moved to enable mining of an ore body. Ore mined (thousands of tonnes) refers to material moved containing heavy mineral ore.

Ore Grade HM % refers to percentage of heavy mineral (HM) found in the ore mined.

VHM Grade % refers to percentage of valuable heavy mineral (VHM) - titanium dioxide (rutile and ilmenite) and zircon found in a deposit.

Concentrating refers to the production of heavy mineral concentrate (HMC) through a concentrating process at the mine site, which is then transported for final processing into finished product at one of the company's two Australian mineral processing plants, or the Virginia mineral processing plant.

HMC produced refers to HMC, which includes the valuable heavy mineral concentrate (zircon, rutile, ilmenite) as well as other non-valuable heavy minerals (gangue).

VHM produced refers to an estimate of valuable heavy mineral in heavy mineral concentrate produced.

VHM produced and the VHM assemblage - provided to enable an indication of the valuable heavy mineral component in HMC. HMC processed provides an indication of material emanating from each mining operation.

Finished product provides an indication of the finished production (zircon, rutile, ilmenite) attributable to various mining operations. The difference between the VHM produced and finished product reflects differences in the amount of HMC produced and processed in a given period and finished product recovery losses at the processing stage.

Ilmenite is produced for sale or as a feedstock for synthetic rutile production.

Typically, 1 tonne of upgradeable ilmenite will produce between 0.56 to 0.60 tonnes of SR. Iluka also purchases external ilmenite for its synthetic rutile production process.

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