Iluka Resources Limited. Jacinth Ambrosia Site Visit 26 November 2009 Breakfast Briefing Adelaide

Transcription

1 Iluka Resources Limited Jacinth Ambrosia Site Visit 26 November 2009 Breakfast Briefing Adelaide

2 Disclaimer Forward Looking Statements This presentation contains forward-looking statements that are subject to risk factors associated with exploring for, developing, mining, processing and sale of minerals. Forward-looking statements include those containing such words as anticipate, estimates, should, will, expects, plans or similar expressions. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a range of variables and changes in underlying assumptions which could cause actual results or trends to differ materially. These include, but are not limited to: price and currency fluctuations, actual supply versus demand, production results, reserve and resource estimates, loss of market, industry competition, environmental risks, physical risks, legislative and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates. Specific Risks & Sensitivities The information contained in this presentation is subject to, but not exclusively to, the following: 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 Environmental or social pressures which impact licence to operate All currency referred to is Australian denominated unless otherwise indicated. 2

3 Introductory Comments David Robb, Managing Director Jacinth-Ambrosia s Context in Iluka s Portfolio

4 Jacinth-Ambrosia Positioning in Portfolio Pivotal new source of global zircon supply - constitutes ~ 25% of global zircon supply - largest new zircon source since Eneabba, WA High quality, long life source of production - high revenue per tonne - estimated 1 st quartile revenue:cash cost ratio positioning in the industry - attractive project economics High quality, long life source of production Jacinth-Ambrosia & Murray Basin to represent majority of Iluka s production 4

5 Summary Physical Characteristics Jacinth - Ambrosia Mineral Resources HM Reserve 9.5 million tonnes of HM 6.4 million tonnes of HM Avg Reserve HM Grade 6.5% Avg HM Assemblage Development Capex 50% zircon 28% ilmenite 5% rutile <$390 million (original budget $420 million) Expected Mine Life At least 2020 Total Finished Product Targetted peak production 2.8 million tonnes of zircon 1.5 million tonnes ilmenite (saleable) 0.35 million tonnes of rutile 300,000 tpa zircon Staged ramp up in 1 st year 5

6 Assemblage Characteristics Globally Highest Zircon Assemblage Mineral Sands Deposit Iluka Jacinth-Ambrosia Zircon to titanium tioxide ratio Namakw a Australian Zircon Gunson Resources Iluka Mid West Iluka Virginia Iluka Murray Basin DuPont CRL Ticor SA RBM Tiw est JV MDL Grande Cote BeMax Tiomin Iluka South West QIT Kenmare Titanium doxide production (thousand tonnes) Iluka Producers New Projects Potential Projects Industry Average (0.21) 6

7 Asset Configuration Expected Asset Configuration 1 Expected to complete 2011 with Douglas MUP/WCP decommissioned/redeployed 2 Expected to complete 2013 with Concord MUP/WCP decommissioned/redeployed 3 Potential mine development, subject to Board approval. Indicative timing: 2013 commencement 4 Additional SR capacity available with two idled kilns in the Mid West of Western Australia 7

8 Major Producers Zircon Production Zircon produced (ktpa) RBM Namakwa KZN Iluka MW Iluka SW Iluka MB Zircon (ktpa) / TiO2 (ktpa) RBM Namakwa KZN Iluka MW Iluka SW Iluka MB

9 Mineral Sands Supply Main Characteristics Limited new, high quality supply (ex Iluka s projects) Inducement of New Supply Project Ranking by NPV Illustrative Inducement Analysis Resources projects frequently late/take time to meet production expectations Funding and/or country risk beset a number of mooted projects Most new capacity ilmenite - does not compete with Iluka's key products Iluka s inducement analysis suggests very few projects logically induced at current zircon and rutile pricing Rutile Price (% Change) Ilmenite upgrading capacity is utilised/controlled by major players Zircon Price (% Change) Iluka s inducement analysis suggests prices would need to be significantly higher to warrant additional upgrading investment Iluka is logical producer of incremental zircon and high grade TiO2 supply faster, cheaper & at lower risk to customers 9

10 Industry Zircon:TiO2 Ratio Despite Advent of Jacinth-Ambrosia, Industry Z:TiO2 Ratio Remains Stable mt of TiO2 or Zircon TiO2 Historical Supply Zircon Historical Supply Ratio t Zircon/t TiO Zircon/TiO2 Ratio All Feedstock Producers (including J-A) Zircon/TiO2 Ratio Excluding Iluka F Decline in zircon:tio2 ratio forecast from existing producers (excluding Iluka) Despite Jacinth-Ambrosia (largest new supply source in 30 years) industry Z:TiO2 ratio stable Given zircon demand growth historically > TiO2, zircon availability may come under further pressure if projected TiO2 volumes do not materialise, and with limited new zircon supply (ex Iluka) 10 Source: TZMI and Iluka analysis

11 Zircon Demand Demand Influenced Predominantly by Developing/Urbanising Economies Global Zircon Consumption CAGR since 1990 is 3.4% while China s CAGR is 17.2% Zircon Consumption Trends Rest of World vs China Growth Zircon (kt) World China Rest of World CAGR = 3.4% China s Urban Residential Floorspace China used 2.8 bn sqm of tiles in 2008 Future growth in China s urban floorspace will influence increases in China s tile use, along with expected increase in ceramics quality Total Floorspace bn sqm Installed CAGR = 2.8% CAGR = 1.3% CAGR = 17.2% Zircon Demand Growth Demand 3.4% CAGR globally China demand CAGR of 17.2%; largest global consumer of zircon: - largest producer & exporter of ceramics; - largest producer of zirconium oxychloride; and - import dependent Urbanisation & construction are strong indicators to demand growth Demand profile strengthening from low base in BRICs and developing Asian economies Zircon kg / Tile sqm Source: McKinsey Consultants Zircon Intensity of Use Intensity of zircon per tile currently low in China This is forecast to rise as quality of tiles produced and demand in China and for exports increases Global Zircon Intensity of Use (LHS) % Chinese Tile Production (RHS) % % 35% 30% 25% 20% China Tile Production (% of Total)

12 Mineral Sands Price Relativity Historical Pricing of Various Commodities Mineral sands has not seen comparable price appreciation compared with infrastructure stage commodities. Similar factors are at work resource scarcity, strong demand from developing economies and, in the case of high quality mineral sands products, medium term supply tightness to 2009, US$, Index 2004= Index 2004= Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Gold (US$/oz) Copper (US$/t) Nickel (US$/t) Zinc (US$/t) Lead (US$/t) Rutile (US$/t Aus. FOB) Zircon (US$/t Aus. FOB) Silver (US$/oz) Source: TZMI and Bloomberg Notes: Monthly average prices, zircon and rutile annual average prior to

13 Product Attributes and End Applications Victor Hugo General Manager, Product and Technical Development

14 Product Market Application Premium grade zircon - low impurity levels suitable for ceramics market - similar to Eneabba quality for ceramics use, which will not be available end application for casting, zirconium chemicals and zirconia applications - Rutile - low in sulphur and phosphorous - welding sector application Chloride grade ilmenite - capable of sale as final product - investigating the use of this product as an SR feedstock 14

15 Production and Financial Components Robert Porter General Manager, Investor Relations

16 Jacinth-Ambrosia Production and Financial Characteristics Operating mines will produce HMC - includes mining, separation and transportation costs to mineral separation plant Final product processing of HMC will occur at one or more mineral separation plants (Narngulu or Hamilton) Consequently, revenue, EBIT reporting will not occur in future at operating mine level (ex Virginia) Iluka intends to provide sufficient information to enable approximation of indicative cash cost of production to produce HMC + indicative processing costs = total cash costs of production attributable to operating assets More comprehensive disclosure planned early 2010 on trends in Iluka business 16

17 Production & Financial Characteristics Indicative Figures Based on Targeted Production & Current Planning Assumptions, Subject to Ramp Up and Operational Experience All Figures are Approximate Annual Data Ore Mined million tonnes Ore Grade % VHM Grade% HMC produced kt VHM produced kt VHM Assemblage % -Zircon -Rutile - Ilmenite ~630 ~ VHM indicates that proportion of HMC expected to be recovered as saleable product Indicative Attributable Final Production kt - Zircon -Rutile - Saleable Ilmenite Difference between VHM assemblage and attributable product reflects recovery levels through the processing phase Indicative Cash Costs of HMC Production $m (includes HMC transport to WA) Indicative J-A Component of Processing Costs $m

18 Production and Financial Components Indicative Figures Based on Targeted Production & Current Planning Assumptions, Subject to Ramp Up and Operational Experience Cash production costs to produce HMC include mining, separation and transportation costs of HMC from Port Thevenard and to Geraldton - transportation of HMC a major part of J-A s mining and concentrating costs (~1/2) Cash cost of production not the key differentiator in mineral sands Jacinth-Ambrosia cash costs of production influenced by: - remote location - high transportation component - deliberate project trade-off in terms of opex for lower capex (brownfield development approach) reducing significant capex for new mineral separation plant But produces significantly higher revenue per tonne and highly attractive revenue:cash cost ratio Sustaining capex minimal (<$5 million per annum) Mine move (MUP from Jacinth to Ambrosia pit) in ~2017 Assumed 10 year economic life SA royalties payable on value of HMC produced - 1.5% for first 5 years - 3.5% for remainder on mine life 18

19 Project Overview Hans Umlauff General Manager, South Australian Development

20 Jacinth-Ambrosia Project Objectives 1. Safety -There is nothing more important 2. Urgency - Every day counts 3. Building a Business - Not just a project 4. Cost Minimisation - Fitness for purpose 5. Licence to operate - Build trust and respect 20

21 Jacinth-Ambrosia Location 21

22 Regional Location 22

23 Project Planning & Execution Integrated project team Iluka & Parsons Brinckerhoff Assembled for completion of DFS and Execution phase Project team co-located, best person for job Key Iluka appointments include: - Project Manager - Operations Manager - EH&S Manager - Procurement Manager - Commercial Manager - HR Manager 330 personnel on site at peak workforce, now 130 Contracting strategy use of mid tier contractors No lost time injuries No breaches of environmental licence conditions No lost time due to I.R. First HMC production achieved 16 November

24 Project and Operations Closing Slide Overview Allen Cauvin, Project Manager Andrew Whatham, Operations Manager Closing Statement

25 Scope of Project Accommodation village Water - designed to accommodate 160 persons (~ 300 construction) - Water transported from borefield to site 32 km in GRP - potable water produced by reverse osmosis plant Unsealed airfield - fly-in-fly-out from Ceduna / Adelaide Diesel fuel supply BOO Power Station ( MW) HMC transported 270km by road to Port Thevenard Portion of Ooldea Rd upgraded to high quality unsealed New 40km section to connect Ooldea Rd to Eyre Highway B -Triple 96 tonne trucks 40,000 tonne storage facility at Port to be established 2

26 Water Pipeline 3

27 Village and Airstrip 4

28 Process Plant Site Area 5

29 Operational Overview Mining Two contiguous deposits Located within Yellabinna and Nullabor Regional reserves First mining on mixed use reserves in South Australia Initial mining of Jacinth with mine mining unit plant move to Ambrosia planned in 2017 Total area disturbed by mining and infrastructure 610 hectares Native Vegetation Plan to guide vegetation clearance and management Top soil to be stripped and stockpiled for use in rehabilitation includes vegetation removal/seed collection significant environmental benefit ( SEB ) for native vegetation cleared 6

30 Resources & Reserves Eucla Basin Total (includes Tripitaka) The statement of Mineral Resources and Ore Reserves presented in this Briefing has been produced in accordance with the Australasian Code for Reporting of Mineral Resources and Ore Reserves, December 2004 (the JORC Code). The information in this Briefing relating to Mineral Resources and Ore Reserves is based on information compiled by Iluka staff under the supervision of Mr Ian Warland (Mineral Resources) and Mr Andrew Whatham (Ore Reserves) who are Members of the Australasian Institute of Mining and Metallurgy and are full time employees of Iluka. Mr Warland and Mr Whatham have sufficient experience which is relevant to this style of mineralisation to qualify as Competent Persons as defined in the 2004 Edition of the JORC Code and they consent to the inclusion in this Briefing of the information in the form and context in which it appears. All of the Mineral Resource and Ore Reserve Figures presented in this Briefing represent estimates at 31 December All tonnes and grate information has been rounded, hence small differences may be present in the totals. All of the Mineral Resource information is inclusive of Ore Reserves (i.e. Mineral Resources are not additional to Ore Reserves). 7

31 Development Overview 8

32 Operational Overview Mine Plan Mining Method Conventional dry mining in large open pit Overburden removal by truck and excavator Dozer trap mining Mining unit plant in pit Physical Properties 900m wide by 5 km long Free running, fine grained sand Low in moisture; no groundwater Average overburden ~8 metres Overburden minimal in mid to upper part of Jacinth and deeper at Southern end where higher grade exists Ore at average thickness of 20 metres with a maximum depth of 45 metres Jacinth average grade 7.5%HM and higher at Southern end, Ambrosia average grade 4.9%. Strip ratio 0.5:1 Jacinth Pit 9

33 Jacinth-Ambrosia Test Pit Test pit successfully completed in Dec- Feb thousand cubic metres excavated Purpose to test geotechnical characteristics of overburden and ore Confirmed assumptions regarding trafficability and geotechnical characteristics (stability of walls) 10

34 Project Overview Mining Contactor Exact Mining appointed in Mid year contract Mining fleet to include: Hitachi Excavator - 4 x 777 Caterpillar Haul trucks - 3 x D10 Dozers - 16H Grader Caterpillar Excavator Water Cart Predominantly fixed rate contract Tails Storage Facility nearing completion Starter Pit excavated and Dozer push mining commenced Overburden excavated for initial 3 months mining Various pit sequence scenarios modeled and assessed Approximate ore to be mined per annum ( ) 8.6 million tonnes 11

35 Project Overview Dozer Trap Ore pushed by dozer into mobile mining unit plant (dozer trap) MUP capacity Up to 1400 tph Slurry (-10 mm) pumped to wet concentrator plant Secondary screening at concentrator (-2 mm) 12

36 Mining Approach Initial Phase Mining starts at the North of the main creek line around the middle of the deposit Opportunity to move further north to lower grade or progress into Southern Jacinth sooner for higher grade Readily achievable with minimal additional cost 13

37 Project Overview Processing On site processing of ore into a Heavy Mineral Concentrate ( HMC ) Utilisation of wet concentrator plant relocated from USA Ore slurry sent by pipeline to WCP - current distance of 1 km, extending to 7 kms for Ambrosia WCP capacity of 1000 tonnes per hour - rateable to produce up 120 tonnes of HMC per hour Hypersaline water used for processing Key WCP modifications for operating environment included: - new CD tank to improve Process - introduction of 2 x Up Current Classifiers to remove fine silica - introduction of Modified Co-disposal tailings system - use of corrosion resistant materials where possible Storage and thickener tanks located nearby Waste slurry returned to mine void for eventual rehabilitation following overburden replacement 14

38 Project Overview Wet Concentrator Plant Fit for purpose 5 years old, concentrator relocated from Georgia Utilisation in keeping with equipment re-use & risk mitigation Capex saving of approx $30 million Onsite storage capacity for HMC of 50,000 tonnes 15

39 Project Overview Water Hyper saline water drawn from paleochannel Bore field 34 kms from process plant Paleochannel aquifer is distinct from Eucla Basin - remote from Nullabor Cave system No groundwater dependent ecosystems associated with J-A water supply source ~ 7 GL/annum raw water requirement - Iluka consumes ~6% volume over mine life Transferred to mine site in glass reinforced pipe Water serves as on-site fire retardation Reverse osmosis plant supplies potable water 16

40 Project Overview Transportation HMC transported 270km by road to Port Thevenard Portion of Ooldea Rd upgraded to high quality unsealed New 40km section to connect Ooldea Rd to Eyre Highway B -Triple 96 tonnes trucks, approx. 18 per day Transport provider Kalari 17

41 Project Overview Transportation Long term contractual arrangement to utilise ABB ship loading facilities at Port of Thevernard 40,000 tonnes storage facility at Port Thevenard Time charter shuttle vessel established - payload of 25,000 tonnes - 16 day round trip to Gerladton, Western Australia Initial shipment expected December 2009 Majority of HMC to be processed at Narngulu; potential for HMC to be processed at Hamilton 18

42 Project Overview Site Infrastructure Accommodation village: accommodates 160 persons Pool Tennis courts Unsealed airfield Electrical demand between 6.8 MW and 9.4 MW Diesel fuel supply Build Own Operate ( BOO ) Power Station 19

43 Human Resources 100 operational personnel on site Fly-in-fly-out from Ceduna / Adelaide Roster - 8 days on 6 days off for fixed plant operators and Professionals - 2 weeks on 1 week off for Mining Contractor Employment policy - Employee collective agreement established pre July 2009 (non union) - Indigenous employment aspiration of 20% contained in Native Title Agreement - Current indigenous employment 20% for Iluka component of workforce Adelaide support staff for HR, Procurement, Commercial 20

44 Project Overview Final Processing Narngulu, Western Australia 21

45 Project Overview Final Processing Product processed at Iluka MSP at Narngulu, Western Australia Construction of new plant & equipment to transfer HMC from ships, reclaim from stockpile and wash saline residue from surface Existing MSP restored to dual train configuration by installation of a separation circuit - Plant 1 capable of treating both Jacinth-Ambrosia HMC and Eneabba HMC - 2nd processing train being upgraded & reconfigured to treat Jacinth-Ambrosia HMC only Zircon finishing plant upgraded to produce over 300kt of zircon 22

46 Wash Plant Building 23

47 SP Bins Conveyors and Trommel 24

48 Iluka Resources Limited For further information, contact: Robert Porter, General Manager, Investor Relations Iluka s website