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2 Iluka Review 212 Mieral sads: Urbaisatio, cosumptio-led growth, icreasigly diverse applicatios CREATE AND DELIVER VALUE FOR SHAREHOLDERS

3 Iluka Resources Limited 58th Aual Geeral Meetig of Shareholders will be held i River View Room 5 at The Perth Covetio ad Exhibitio Cetre, 21 Mouts Bay Road, Perth, Wester Australia o Wedesday, 22 May 213 commecig at 9.3am (WST).

4 Iluka Review 212 Features of 212 Health ad safety Total recordable ijury frequecy rate of 1.5 (per millio hours worked); a 3% decrease from 211 Lost time ijury frequecy rate of 1.9; a 39% decrease from 211 Severity rate of 46.7, a 1% decrease from 211 Evirometal maagemet 1,42 evirometal icidets i 212 versus 746 i 211, reflectig more extesive reportig policy 76% of evirometal icidets were classified as level 1, the lowest level 7% eergy usage reductio at ed of 5 year cycle Ore Reserves ad Mieral Resources Ore Reserves declied by 1.47 millio toes (mt) to mt (et of depletios) Approximately 14 years reserve cover relative to 212 depletio level Mieral Resources icreased by 1.9 mt to mt Challegig market coditios Weak demad ad difficult market coditios for zirco throughout year Zirco sales volumes of 214 thousad toes (kt), dow 58% from 211 Lower secod half demad for high grade titaium dioxide products Rutile sales of 16 kt, dow 6% from 211 Sythetic rutile sales of 17kt, dow 34% from 211 Higher weighted average prices received year-o-year Fiacial performace Mieral sads reveue of $1,69.8 millio Net profit after tax of $363.2 millio Mieral Sads EBITDA margi of 67.9% Retur o equity of 23.2% Retur o capital of 32.8% Balace sheet Free cash flow geeratio of $81.2 millio Net debt at year-ed of $95.9 millio Gearig (et debt/et debt+ equity) of 5.8% New bak debt facilities of $8 millio with 5 year term established Shareholder returs Disappoitig aual share price performace of egative 42% to 31 December year cumulative Iluka total shareholder retur of 173% ASX Materials Idex over the three-year period to 31 December 212 decreased 17% 35 cets per share total 212 divideds, fully fraked New productio O time ad o budget mie move from Kulwi to Woorack, Rowack ad Pirro (Murray Basi, Victoria) Balraald pre-feasibility study advaced (Murray Basi, New South Wales) Cataby pre-feasibility study advaced (Perth Basi, Wester Australia) Aurelia Sprigs pre-feasibility study advaced (North Carolia, Uited States) Old Hickory defiitive feasibility study completed; developmet work commeced (Virgiia, US) Exploratio commitmet Icreased exploratio expediture commitmet to Eucla ad Murray basis (Australia) Establishmet of two ew iteratioal exploratio areas (icludig Brazil teemet positio)

5 212 Fiacial Summary MINERAL SANDS SALES REVENUE MINERAL SANDS EBITDA 2 +$ $m , , c $m Average Average Average AUD:USD GROUP EBITDA (icludig Miig Area C) NET PROFIT AFTER TAX $m 6 7.% 63.7% $m Average 27.6% Average EBITDA MARGIN %

6 CASH FLOW NET (DEBT) CASH $m Average $m % (95.9) 5.8% (33.5) Average FREE CASH FLOW GEARING (Net debt/et debt + equity) FINANCIAL RATIOS % Average EPS (cps) ROC % ROE%

7 Mieral Sads Key Iflueces o Demad Urbaisatio Urbaisatio is a major global tred ifluecig demad for mieral sads products. Icreases i floor space uder costructio ad a cultural ad climatic preferece for ceramic tiles for floorig i may rapidly urbaisig coutries, as well as use of pait for costructio ad furishig, are likely to cotiue fuellig demad for zirco ad titaium based products. The world s populatio is trasformig o a scale possibly equivalet oly to the Idustrial Revolutio; this time led by usurpassed levels of urba populatio growth i developig ecoomies. Urbaisatio is a catalyst for ecoomic growth as cities offer icreased ecoomies of scale, lifestyle ad social opportuities. People livig i urba areas have a mea icome of up to three times those livig i rural settigs. Urbaisatio is a ifluetial tred for mieral sads demad as higher livig stadards ad cosumer aspiratios flow through to the use of pigmet (maily i the form of pait, but also i plastics, paper etc.), as well as icreased spedig o a rage of cosumer goods which cotai titaium ore feedstocks ad zirco as key compoets of their maufacture. McKisey 1 estimate that betwee 21 ad 225, urba areas will add the equivalet of 85 per cet of today s residetial ad commercial floor space, or more tha 8, square kilometres. Aroud 38 per cet, or 31, square kilometres, of this icrease is forecast to be i Chia. Apart from the resources required for floor space costructio, demad for cosumer goods such as cars, mobile phoes ad white goods is also forecast to rise with urbaisatio. McKisey estimate that the global car fleet will double to 1.7 billio by 23. The chart below idicates that there is forecast to be large icreases i the urba populatio, icludig i three of the top tile cosumig coutries of Chia, Idia ad Idoesia. Urbaisatio ad tile cosumptio CITIES ARE EXPECTED TO NEED TO BUILD FLOOR SPACE 2 EQUIVALENT TO 85 PER CENT OF TODAY S BUILDING STOCK BY 225 OR 8, SQUARE KILOMETRES AN AREA THE SIZE OF AUSTRIA. 3 9% 25 75% 2 6% 15 45% 1 3% 5 15% 1. Chia 2. Brazil 3. Idia 4. Ira 5. Vietam 6. Idoesia 7. Saudi Arabia 8. US 9. Russia 1. Mexico Urba Populatio (millios) Tile cosumptio (% chage) Urba populatio icrease (21-3) Percetage chage i tile cosumptio (27-211) Source: Ceramic World Review, UN ad IMF 1. Urba World: Cities ad the risk of the cosumig class, McKisey Global Istitute, Jue Floor space for commercial ad residetial buildigs, icludig buildig replacemet.

8 Cosumptio-led growth Developig ecoomies, such as Chia, are eterig a period where ecoomic growth will be comprised icreasigly of cosumptio rather tha ivestmet, as has bee the case for the past decade. This represets a positive tred for may applicatios for mieral sads products. Demad for cosumptio goods is icreasig at a rapid rate i developig ecoomies. Icreased demad for higher quality house ad apartmet fittigs ad appliaces, higher quality food ad cosumer goods, air travel ad cosumer electroics is a tred beig replicated o a massive scale i developig ecoomies. Zirco ad titaium, ofte referred to as late-cycle mieral commodities, are used i a rage of cosumer, maufacturig ad idustrial applicatios, the demad for which is iflueced by the twi forces of urbaisatio ad cosumptio-led growth. McKisey defies cosumers, or those with icome sufficiet to buy more tha the basic ecessities, as havig a household icome greater tha US$3,6 per aum. Betwee 21 ad 225, 2.8 billio people worldwide are forecast to joi this icome bracket. The growth i demad for may cosumer goods will exceed the expasio of the umber of cosumers, as at these icome levels spedig o certai goods ad services reaches a iflectio poit ad accelerates relative to icome growth. Differet goods ad services are estimated to have differet iflectio poits. For example, purchase of refrigerators accelerates at a aual icome from US$2,5 ad washig machies from US$6,. Cosumptio the cotiues to grow util adoptio reaches saturatio. 1 billio ew cosumers i emergig ecoomy cities by Risig icomes ad purchases of commo cosumer goods (Household peetratio by coutry, 27) % Peetratio Refrigerator Washig machie 5 Take-off poits Saturatio poits The accompayig chart shows the relatioship betwee risig icomes ad purchases of two commo cosumer goods. Cosumptio of such goods accelerates at lower icome levels ad reaches saturatio poit earlier tha goods cosidered luxury items. The shape of the peetratio curve varies across products, leadig to very differet market growth patters. Source: Euromoitor, McKisey Global Istitute aalysis. Per capita icome $ thousad, PPP 1. McKisey Global Istitute.

9 Icreasigly diverse applicatios Applicatios for mieral sads products are becomig icreasigly diverse ad ofte display growth rates higher tha the curret maistream ceramics ad pigmet based applicatios. Zirco i uclear fuel rods. Titaium dioxide i solar paels. Pigmet used i a rage of pait applicatios. Zirco i ceramic applicatios. Zirco ad titaium dioxide i medical applicatios. Titaium dioxide a key compoet of pigmet productio. The covetioal view of mieral sads applicatios focuses o pigmet based coatigs (pait, plastics, paper etc.) ad ceramics. These are clearly importat ed-uses ad have accouted for approximately 9 per cet ad 55 per cet of ed-use demad of titaium dioxide ad zirco respectively. However, demad ad icreasig ed-use applicatios, combied with the usual treds of thriftig ad techical chage, mea that the emergig dyamics of mieral sads product demad may chage appreciably i future years. Zirco used i the maufacture fibre optics. Rage of other high-tech applicatios. Zirco Zircoia ad zirco specialty chemicals (accoutig for aroud 18 per cet of zirco demad), is the fastest growig segmet of zirco demad ad is estimated by some idustry aalysts as likely to overtake zirco use i ceramics withi 5 years. Ed-use applicatios are diverse ad growig: catalytic coverters used to reduce emissios from automotive exhaust systems (the fastest growig applicatio i chemicals), water ad air purificatio products, additives to diesel for icreased fuel efficiecy, atiperspirats, zircoium metal for uclear reactors, fibre optics for telecommuicatios, motherboards ad capacitors i electroics, ad oxyge, pressure ad electric curret sesors, as well as a rage of uses i medical ad huma implat applicatios, ad i sportig goods maufacture, costitute part of the array of applicatios. High grade titaium dioxide Titaium metal accouts for aroud four per cet of titaium demad ad, i additio to beig used i aircraft frames ad egies, has varied ed uses. These iclude water coolig systems for power geeratio ad desaliatio plats, seawater ad storage compoets of off-shore oil ad gas rigs, ad boe joits ad replacemets. Titaium dioxide ao particles are fidig icreased applicatios i areas such as dye-sesitised solar cells, selfcleaig exteral coatigs, ati-bacterial ad deodorisig surface coatig treatmets, ad water ad air purificatio.

10 Iluka Review 212 Iluka s objective: to create ad deliver value for shareholders Cotets Chairma s ad Maagig Director s Reviews 2 Sales ad Productio Volumes 8 Ore Reserves ad Mieral Resources 1 Operatioal Overview 12 Exploratio 18 Ehaced Productio Project 2 Product ad Techical Developmet 21 Mieral Sads Market Coditios 22 Sustaiable Developmet 24 People 25 Safety ad Health 28 Evirometal Maagemet 3 Commuity ad Stakeholder Egagemet 36 Director Profiles 38 Leadership Team Profiles 4 Group Summary Fiacials 42 Five Year Physical ad Fiacial Iformatio 43 Operatig Mies Physical Data 44 Ore Reserves ad Mieral Resources Statemet 45 Eviromet, Health ad Safety Data 48 Corporate Iformatio 52 The 212 Iluka Review provides shareholders with a overview of Iluka s 212 fiacial year. More detailed iformatio i relatio to fiacial statemets, the Directors Report (icludig the Remueratio Report), ad Corporate Goverace Statemet ca be obtaied by referece to the 212 Aual Report available o Iluka s website Australia currecy is show i this documet uless otherwise specified. kt refers to thousad ( ) metric toes.

11 Chairma s Review The 212 fiacial year was challegig, with Iluka operatig i tough market coditios. The compay evertheless recorded the secod highest profit i its history. The reductio i the compay s 212 earigs to $363.2 millio from $541.8 millio i 211 represeted the adverse impact o reveues from markedly lower sales volumes across all of the pricipal products. The impact of lower sales volumes was compouded by a declie i received prices i the latter part of 212. While the declie i fiacial performace is disappoitig, it predomiatly represets the impact of cyclical factors. These cyclical factors will pass as busiess cofidece is restored ad as global ecoomic growth resumes. It remais the focus of the Board ad maagemet to esure the compay avigates the challegig coditios i the strogest possible positio, while preservig its optios ad balace sheet capability to be able to take advatage of appropriate growth or diversificatio opportuities. I this regard, the Board believes maagemet has respoded appropriately, ad put i place plaig optios for various busiess settigs i 213, give that the trajectory of demad recovery remaied ucertai eterig the New Year. As is usual i busiess, ad especially i difficult ad ucertai market coditios, areas have bee idetified where market isights could have bee more comprehesive, particularly further dow the mieral sads customer chai. I am cofidet that the compay s kowledge ad capabilities will further evolve. Despite the weakeig of fiacial performace from the historically high level of 211, the compay has bee able to record a retur o capital of 32.8 per cet ad a retur o shareholders equity of 23.2 per cet i the 212 fiacial year. Free cash flow geeratio reduced, but the compay eded the year with a modest level of et debt ad a gearig ratio (et debt/et debt + equity) of 5.8 per cet. The compay reewed its debt facilities i 212 ad ow has a $8 millio multilateral facility i place, with four years teor remaiig. The Maagig Director will discuss the factors affectig busiess performace i more detail, as well as the outlook for the mieral sads sector. But clearly there will be challeges i 213 as demad may take some time to recover. I would like to touch o a umber of matters of shareholder iterest ad goverace, which are areas of focus for the Board. Page 2

12 Iluka Review 212 Health ad safety performace, as well as high stadards of evirometal performace, are of pre-emiet importace to the Board. It has bee pleasig that, o key measures of health ad safety performace, such as the total recordable ijury frequecy rate, there have bee further improvemets, followig o from the iitiatio of a major compay-wide program i the first half of 211. I fact, sice the ed of 21, the lost time ijury frequecy rate ad the total recordable ijury frequecy rate, two of the key measures moitored, have declied by 5 per cet ad 38 per cet respectively. Apart from regular maagemet reportig, Directors take advatage of operatioal site visits to observe safety ad evirometal cultures, performace iitiatives ad practices across the compay. I 212 this ivolved a Board visit to the Virgiia operatios, to various exploratio areas ad to the Murray Basi operatios i Victoria. Returs to shareholders, both i terms of share price performace ad capital maagemet, such as divideds, are cetral give the compay s pricipal focus: to create ad deliver value for shareholders. The Iluka share price performace i 212 was poor both i absolute ad relative terms, followig two years of strog share price appreciatio. As shareholders will recall, the compay reistituted paymet of divideds at the ed of 21. The compay s policy is to pay a miimum of 4 per cet of free cash flow as divideds. Sice 21 to the ed of 212, Iluka has retured 68 per cet of free cash flow (after capital expediture) i the form of divideds, or a total of $1.18 per share. Over the same period, the compay s et debt reduced from $312.6 millio to $9. millio as at the ed of Jauary 213. The 212 divided paymets amouted to 35 cets per share, fully fraked. Goverace matters, such as compliace, risk ad remueratio, cosume a major part of the attetio of Directors. The Board is cofidet that the compay s remueratio policies ad practices remai cosistet with the attractio ad retetio of a high calibre workforce, ad that short ad log term icetive arragemets remai aliged to the delivery of growth objectives ad shareholder iterests. The Remueratio sectio of the Aual Report provides a detailed explaatio of 212 remueratio practices ad outcomes. The Board aouced the appoitmet of two ew Directors: James (Hutch) Rack ad Greg Marti. Hutch had a distiguished career with the major global group ad Iluka titaium dioxide customer, DuPot. Greg has had a career i the eergy, utility ad ifrastructure sectors, icludig as Maagig Director of AGL. Their appoitmets brig cosiderable corporate ad idustry experiece to the Board ad they are welcome additios, both of whom I am cofidet will serve shareholder iterests diligetly. I cocludig, I would like to ackowledge ad thak my fellow Directors for their professioalism ad cotributio durig 212. I would like to ackowledge David Robb ad his maagemet team for their efforts durig a difficult year, as well as the wider employee workforce for their commitmet ad efforts. It is regrettable that productio respose ad cost reductio actios aouced i February 213 meat that approximately 2 positios i the compay, as well as a umber of cotractor positios, were made redudat. The Directors ackowledge ad appreciate the cotiuig support of shareholders i what has clearly bee a urewardig year for them. I am cofidet that the factors which have affected your compay s performace i 212 are cyclical, although challeges will remai i 213 with cotiuig low sales volumes ad lower pricig impactig reveues ad fiacial outcomes. I am cofidet that Iluka is well positioed i terms of its idustry positio ad quality of products ad market presece, with favourable uderlyig demad dyamics over the medium to loger term. Joh Pizzey Chairma Page 3

13 Maagig Director s Review The Chairma has made referece to the cyclical ature of the resources sector ad it is apparet from the evets of 212 that Iluka s short term performace has bee iflueced markedly by such cyclical factors, as well as some oe-off structural impacts. This Iluka Review provides a overview of the mai features of Iluka s busiess ad its physical ad fiacial performace i 212. My commets will focus predomiatly o the market cotext for Iluka s mai products (zirco ad the high grade titaium dioxide products of rutile ad sythetic rutile); the approach that Iluka adopted i 212 to achieve the best possible fiacial outcome for shareholders i challegig ad volatile market coditios; ad the compay s perspective ad focus areas for 213. Iluka s pricipal objective is to create ad deliver value for shareholders. To facilitate this, a focus o evirometal, health ad safety performace is paramout, while the compay must cotiue to attract high quality people, provide traiig ad growth opportuities for existig employees, ad maitai a commitmet to diversity ad sustaiability priciples. The resources sector typically exhibits cyclicality. I 212 this has bee magified for Iluka as a result of a umber of factors referred to below. For Iluka maagemet, the focus is always o maagig through periods of cyclicality ad o achievig the best possible shareholder outcomes over the medium to loger term. This etails adoptig a appropriate risked-based approach to busiess plaig ad asset cofiguratio to take accout of ucertaities i global ecoomic performace ad the ature of associated demad swigs. It is also importat to preserve optios for future growth, whether i terms of marketig presece, ew products, operatioal flexibility, diversity or orgaisatioal ad employee capability. Recet market coditios have preseted challeges i each of these areas. Part of Iluka s sythetic rutile (ilmeite upgradig) capacity, Wester Australia. Page 4

14 Iluka Review 212 To use a aalogy which may be illustrative of recet busiess coditios, havig climbed the moutai to place Iluka i a much stroger fiacial positio i late 21 ad 211, ad havig delivered highly competitive shareholder returs with total shareholder returs over three ad five years of 173 per cet ad 185 per cet respectively, it is recogised that uder recet ecoomic ad market coditios, some retracemet to a base camp level was always a possibility. The retracemet has bee observed i the pressure o sales volumes ad pricig i 212. To cotiue the illustratio, our itet has bee to attempt to esure this base camp is positioed as high ad as securely as practicable o the moutai side, such that we preserve much of the hard wo gais ad positio the compay to take advatage of a retur to more favourable coditios, which will occur. I this regard, Iluka cotiues to believe i the positive medium to loger term demad dyamics for its products, iflueced by ecoomic growth i developig ecoomies ad by the trasformatioal treds of urbaisatio ad icreasig persoal cosumptio levels, as well as ew applicatios for zirco ad titaium dioxide products. 212 market coditios Market coditios i 212 for Iluka s products were iflueced by a combiatio of the followig factors: global ecoomic performace, icludig low growth i major markets of North America ad Europe, as well as volatile ecoomic ad political coditios i developig ecoomies i Asia, North Africa, the Middle East ad South America; while miimal ivetories of zirco were held directly dowstream of Iluka, a destockig ad workig capital adjustmet phase has bee evidet i the ceramics maufacturig sector. This, i combiatio with the adoptio of moder tile makig techiques i Chia, as well as some level of thriftig ad substitutio, had a impact o global zirco demad; i the case of high grade titaium dioxide, appreciably lower secod half demad for rutile ad sythetic rutile was associated with pigmet producers workig dow pigmet ivetories, which had built to high levels durig the first half of the year, ad efforts to maximise purchase ad cosumptio from remaiig low priced legacy cotracts, or other cheaper material; ad overall fragile busiess cofidece levels which, i the case of zirco i particular, led customers to operate o a just-i-time basis i orderig patters, ofte oly ruig plats whe back-to-back commercial arragemets were available to secure processig margis. The combiatio of these factors had a more serious overall impact o market demad for Iluka s products tha was the case i 29. Ulike 29 ad early 21, where a recovery i demad ad busiess cofidece levels was rapid ad aided by major fiscal stimulus measures implemeted by cetral govermets, the world ecoomy has had cotiuig challeges. Zirco Iluka has stated sice the fourth quarter of 211 that it expected softer demad coditios for zirco i 212. These coditios persisted loger tha evisaged. I a low demad eviromet, Iluka, as the major global zirco supplier, sought to reduce productio i lie with lower demad. This was based o the compay s view that soft demad was primarily iflueced by macroecoomic ad busiess cofidece factors, ad ot ecessarily product pricig levels. Iluka s approach is to take actios which achieve the best possible margi outcome practicable, if ecessary by cedig market share to smaller market participats, with the aim of recapturig market share with profitable ad higher margi volumes whe demad recovery occurs. Correspodigly, Iluka has bee prepared to build ivetory of fiished product ad itermediate cocetrate. The compay also adjusted its miig approach at its Jacith-Ambrosia mie i South Australia to mie i the lower grade part of the ore body. Through the first eight moths of 212, this approach meat that weighted average zirco price received by the compay remaied stable at approximately US$2,5/t (a level approximately 25 per cet higher tha the 211 weighted average zirco price). Sales volumes were low but, as idicated, Iluka assessed that lower pricig would ot have resulted i a et volume/reveue beefit. Icreased competitio resulted i the zirco prices decliig, iitially to US$2,/t ad the to approximately US$1,5/t i the latter part of the year. This was reflected i a reductio i zirco pricig such that Iluka s weighted average fourth quarter pricig was US$1,45/t. Page 5

15 Maagig Director s Review High grade titaium dioxide The 212 year was uusual i the high grade feedstock market. Iluka sold its major products of rutile ad sythetic rutile uecumbered by old-style legacy cotracts, which have bee a feature of the mieral sads idustry for may years. Some other producers are believed to have bee obliged to supply uder low priced legacy cotract arragemets through 212. This resulted i a multi-tiered pricig eviromet for high grade feedstocks, with Iluka s products geerally commadig the highest prices. I additio, it became apparet durig the first half that chloride pigmet ivetories were buildig, i part iflueced by a less robust tha aticipated North America paitig seaso ad a reductio i chloride demad iflueced by the availability of lower priced, Chiese sulphate pigmet. Uder these coditios, pigmet producers sought to reduce pigmet ivetories by lowerig productio. Oe meas to achieve this is to operate pigmet plats at lower capacity levels which typically results i the utilisatio of less of the higher grade feedstocks, such as rutile ad sythetic rutile, ad correspodigly a higher proportio of lower grade chloride slag i the feedstock bled. This resulted i weak Iluka secod half high grade titaium dioxide sales volumes ad some erosio of pricig outcomes, eve though weighted average year-o-rutile ad sythetic rutile prices were higher. 212 fiacial performace Lower mieral sads profitability reflected sigificatly lower sales volumes year-o-year, with combied zirco, rutile ad sythetic rutile (Z/R/SR) sales volumes dow 52.9 per cet to thousad toes, compared to 1,38.1 thousad toes i 211. Higher average product prices year-o-year, despite a sigificat fall i prices received i the latter part of the third quarter ad ito the fourth quarter, resulted i reveue per toe of Z/R/SR sold durig 212 of $1,991 per toe, 41.6 per cet higher tha the correspodig 211 figure of $1,46 per toe. Miig Area C (MAC) iro ore royalty earigs were $72.3 millio (211: $88.1 millio), icludig capacity paymets of $3. millio (211: $1. millio). Operatig cash flow for the year was $368.7 millio (211: $76.2 millio), reflectig lower secod half sales reveue associated with lower sales volumes for rutile ad sythetic rutile. Free cash flow of $81.2 millio was well dow o the record $589.6 millio geerated i the previous correspodig period, due maily to lower mieral sads reveues ad a icrease i workig capital due maily to higher fiished goods ivetories. Iluka successfully refiaced its debt arragemets durig the year ad established facilities of $8 millio, with a five year teor. Net debt at 31 December 212 was $95.9 millio with a gearig ratio (et debt/et debt + equity) of 5.8 per cet, compared to et cash of $156.7 millio at 31 December 211. Udraw facilities at 31 December 212 were $718.2 millio ad cash at bak was $54.3 millio. Net debt at 31 Jauary 213 was $9. millio. Sustaiability Iluka s sustaiability activities i 212 icluded the followig: Jacith-Ambrosia, South Australia. a breakthrough i safety performace, through the compay s Safe Productio Leadership program. This program resulted i the total recordable ijury frequecy rate decliig by 3 per cet year-o-year; the compay s cotiuig commitmet to diversity priciples, with a Diversity Committee established uder my Chairmaship; further progress o rehabilitatio activities associated with the cessatio of miig activities, with over 7 per cet more lad rehabilitated i 212 compared with the average over the previous four years; ad Iluka s sposorship of a foudatio professorial Chair i Vegetatio Sciece ad Biogeography at the Uiversity of Wester Australia. Page 6

16 Iluka Review 212 Outlook Key i 213 is the timig ad pace of demad recovery. The cotiuatio of a weak demad ad lower pricig eviromet will obviously see a cotiuatio of the weaker fiacial performace characteristics which were a feature of the secod half of 212. I eterig 213, it remaied difficult to determie with cofidece the ature ad pace of demad recovery. There are, however, several specific, positive, early idicatios for improved demad i 213 for Iluka s mai products. The apparet resolutio of the US fiscal cliff, the smooth trasitio of the Chiese leadership ad a more saguie view about evets i Europe, combied with icreasigly positive lead idicators, such as Chiese property sales ad US housig commecemets, may idicate that the low poit of the curret ecoomic cycle has bee reached. Risks, oetheless, remai ad prudece i plaig is warrated. For zirco, Iluka s Jauary ad February customer iquiries globally were the strogest i all mai markets, except Europe, for may moths. I Iluka s view, sigificat productio adjustmets, plus early sigs of improved demad, mea that precoditios for a period of zirco price stability ad potetially price recovery appear to be i place. I the case of high grade titaium dioxide, demad i the first half of the year is still likely to be sluggish, as customers cotiue with low plat utilisatio regimes while also workig through remaiig lower priced, log term cotract materials. However, commetary from several North America pigmet ad pait producers idicates that they expect more ormal demad ad operatig coditios to emerge as the year progresses, uderpied by a cotiued recovery i the Uited States housig market, which, together with reduced market availability of low priced legacy cotract supply, would be a positive for demad for Iluka s high grade titaium products. Notably also, recet idustry aoucemets regardig productio cuts are a positive for market dyamics. I Iluka s assessmet, these could amout, o a aualised basis, to a zirco productio reductio of approximately 35 per cet compared to idustry productio i 211. I the case of high grade titaium dioxide, it could represet a approximate 2 per cet reductio. Despite positive idicatios geerally, risks remai i terms of both global ecoomic performace ad specific busiess coditios for the mieral sads sector ad Iluka s plaig seeks to take accout of such risks ad ucertaities. The compay s productio cuts ad cost reductio measures are focussed upo maitaiig the lowest possible uit cost give reduced operatioal activity levels, targetig fiished ivetory draw dow, reducig overheads ad capital expediture, while maitaiig the flexibility to respod to market recovery. I respose to lower demad, Iluka iteds to reduce productio ad costs ad has disclosed a umber of productio respose iitiatives across its operatios. These are material ad regrettably have come with a cosequet impact o employmet levels. I the cotext of the 212 year ad with customers eterig 213 ucertai about the ecoomic ladscape for their busiesses, Iluka s busiess plaig approach has the followig key features: targetig sales greater tha productio, with ivetories progressively draw dow; reducig cash operatig costs ad other, o productio cash costs, to ehace cash flow geeratio; reducig capital expediture, while preservig growth optios via the compay s iterally idetified opportuities, a global exploratio program ad via carefully evaluated opportuities outside the mieral sads sector; ad a cotiued focus o ivestmet i market growth ad market share iitiatives, icludig the expasio of Iluka s global market presece, exteded logistics capabilities ad ehaced customer offers, icludig through product ad techical developmet, as well as support for idustry iitiatives such as the Zirco Idustry Associatio. I would like to thak employees for their commedable efforts i challegig times. I would also like to thak shareholders for their support ad covey my cotiued appreciatio to our customers ad our cotractors ad suppliers. These all remai pivotally importat relatioships to Iluka. David Robb Maagig Director Page 7

17 Sales ad Productio Volumes Sales 212 Iluka s 212 sales volumes were adversely affected by the soft global market demad coditios detailed elsewhere i the Iluka Review. Year-o-year combied sales of Iluka s mai products of zirco, rutile ad sythetic rutile declied by 52.9 per cet compared with 211 levels. As show i the five year historical sales volume chart, 212 sales volumes i aggregate may reflect a cyclical low poit i demad, with aggregate volumes lower tha 29, a year adversely affected by the global fiacial crisis. Zirco sales volumes for 212 were thousad toes (211: thousad toes). Rutile sales volumes were 15.5 thousad toes (211: thousad toes). Sythetic rutile sales volumes were thousad toes (211: thousad toes). Ilmeite sales volumes for 212 were thousad toes (211: 57.9 thousad toes). Ilmeite saleable volumes ca vary depedig o level of ilmeite which is utilised as part of feedstock for the compay s sythetic rutile productio. 212 ilmeite sales icluded sulphate ilmeite product sourced from the Murray Basi. This material is typically sold ito the Chia market. FIVE YEAR HISTORICAL SALES VOLUMES ZIRCON RUTILE Sales volumes (kt) Sales volumes (kt) Sales volumes (kt) Zirco Ilmeite (saleable) Rutile Sythetic Rutile average SYNTHETIC RUTILE average ILMENITE (Saleable) Sales volumes (kt) Sales volumes (kt) average average Page 8

18 Iluka Review 212 Productio 212 Lower 212 productio levels reflect the weaker demad eviromet ad efforts by Iluka to exercise productio flexibility i light of these coditios. Zirco productio was thousad toes (211: 61.5 thousad toes). The lower productio resulted maily from Iluka s approach to flexig productio at its Jacith- Ambrosia operatio, by movig to the low grade part of the ore deposit, ad processig less heavy mieral cocetrate. Rutile productio was 22.3 thousad toes (211: thousad toes). Lower rutile productio reflected a umber of factors: the plaed move from the Kulwi to Woorack, Rowack ad Pirro mie i the Murray Basi, which resulted i miig ceasig for approximately three moths, ad the operatio of oe mie i the Murray Basi i 212, compared with three mies i 211 (the Douglas ad Echo mies came to the ed of their ecoomic lives i 211). Sythetic rutile productio was thousad toes (211: thousad toes). Durig 212, Iluka operated two of its four sythetic rutile kils. The largest kil, sythetic rutile kil 2, was operated o a reduced capacity basis i the secod half i light of weaker secod half demad. Sythetic rutile kil 3 uderwet a scheduled maiteace betwee September to November. Iluka idled its sythetic rutile kils over the 212 Christmas period, with sythetic rutile kil 3 out of operatio util market coditios warrat reactivatio. ZIRCON RUTILE Productio volumes (kt) Productio volumes (kt) average average 4 3 Productio volumes (kt) 2 SYNTHETIC RUTILE Productio volumes (kt) 4 ILMENITE (Saleable ad Upgradeable) average average Page 9

19 Ore Reserves ad Mieral Resources The followig table provides a summary of Iluka s Ore Reserves ad Mieral Resources as at 31 December 212. Iluka s complete Ore Reserves ad Mieral Resources statemet, reported i accordace with the JORC Code 24, is available o pages 45 to 47 ad o Iluka s website Summary Ore Reserves Opeig Reserves Productio/depletios (2.3) New Ore Reserves/adjustmets.57 Closig Ore Reserves Ore Reserves et chage (1.47) Numbers may ot add due to roudig Toes (millios) Summary Mieral Resources Opeig Mieral Resources Productio/depletios (2.3) New Mieral Resources/adjustmets 3.94 Closig Mieral Resources Mieral Resources et chage 1.9 Toes (millios) Ore Reserves decreased by 1.47 millio toes of heavy mieral, followig miig depletio ad adjustmets. Mieral Resources icreased by 1.9 millio toes of heavy mieral, et of miig depletio ad adjustmets (sale, reliquishmet, exploratio discovery ad developmet ad write-dows). Ore Reserves cover (Ore Reserves divided by aual depletio) is approximately 14 years at 212 depletio rates, while the amout of Mieral Resources (which is iclusive of Ore Reserves) is approximately four times the Ore Reserve level. Page 1

20 Iluka Review 212 The material chages i Ore Reserves ad Mieral Resources are described below. Eucla Basi, South Australia Eucla Basi Ore Reserves decreased by.44 millio toes of heavy mieral associated with miig depletio from the Jacith deposit. Eucla Basi Mieral Resources icreased by 1.78 millio toes of heavy mieral, iclusive of miig depletio at Jacith of.45 millio toes of heavy mieral, offset by the additio of a ew resource, amed Soora (2.2 millio toes of heavy mieral). Iluka is udertakig scopig studies for the Atacama ad Typhoo resources, which are located i close proximity to the Jacith-Ambrosia operatio, while further evaluatio of developmet optios for the small but zirco-rich Tripitaka deposit is proceedig. Perth Basi, Wester Australia The Perth Basi Ore Reserves ad Mieral Reserves decreased by.5 millio toes of heavy mieral, iclusive of miig depletio of.49 millio toes of heavy mieral from the Eeabba ad Tutuup South operatios. Iluka recommeced miig ad processig operatios at Eeabba at the ed of 211 with the compay aoucig, early i 213, its itetio to agai idle this mie due to market coditios. The Cataby deposit is subject to a pre-feasibility study which may lead to developmet of this large, chloride ilmeite ad associated zirco ore body. Murray Basi, Victoria / New South Wales Murray Basi Ore Reserves decreased by.77 millio toes of heavy mieral due pricipally to miig depletio (.77 millio toes of heavy mieral). Murray Basi Mieral Resources decreased by 1.35 millio toes of heavy mieral due pricipally to miig depletio (.77 millio toes of heavy mieral) ad the write-off of Mieral Resources for fialised miig operatios (.58 millio toes of heavy mieral). Iluka is udertakig a pre-feasibility study for the large rutile-rich Balraald ad Nepea deposits i south wester New South Wales. Atlatic Seaboard, Virgiia / North Carolia, Uited States Iluka s Uited States Ore Reserves icreased by.25 millio toes of heavy mieral, associated with miig depletio (.32 millio toes of heavy mieral) ad adjustmets of.58 millio toes. Mieral Resources icreased by 1.98 millio toes of heavy mieral, iclusive of miig depletio (.32 millio toes of heavy mieral) offset by adjustmets of 2.31 millio toes of heavy mieral from the additio of ew resources for the Hickory ad Brik deposits. Page 11

21 Operatioal Overview Iluka coducts miig, cocetratig ad processig operatios i Australia ad the Uited States. The compay s operatioal base is highly itegrated, allowig heavy mieral cocetrate produced from various mies to be utilised i oe or both of the compay s mieral separatio plats ad for ilmeite produced from multiple sources to be upgraded to a higher quality, higher titaium dioxide product sythetic rutile. North America Belgium Europe US operatios Nashville Jacksoville Wilmigto Delaware Virgiia Spai Chia Qigdao Chia Shaghai Chia Xiame Chia Malaysia Rio de Jaeiro Warehouse ad small lot distributio facility Miig ad processig facility Durba Miig Area C Perth Basi Perth Australia operatios Adelaide Murray Basi Melboure Eucla Basi Other asset Corporate/marketig/exploratio offices Page 12

22 Iluka Review 212 The itegrated ature of the compay s operatios provides flexibility to adjust productio i light of market coditios ad to supply multiple products to defied specificatios to customers o a reliable basis. Iluka s iteratioal marketig presece, icludig sales office locatios ad warehousig ad logistics capabilities i Chia, Asia, Europe ad North America, also eables the compay to offer flexibility i product delivery arragemets to customers. Iluka operates a olie sales portal for small lot sales to customers. Australia miig operatios are: Jacith-Ambrosia i the Eucla Basi, South Australia a major source of both the compay s ad global zirco supply; Woorack, Rowack ad Pirro deposits i the Murray Basi, Victoria Iluka s pricipal source of rutile supply, with a major zirco ad ilmeite productio stream; ad Tutuup South ad Eeabba (the latter idled i March 213) i the Perth Basi, Wester Australia both mies are pricipally ilmeite supply sources for Iluka s sythetic rutile capacity. Iluka has idetified multiple developmet opportuities withi its portfolio (three curretly at feasibility stage) which provide additioal productio opportuities if market coditios ad ecoomic criteria warrat. Iluka operates two mieral separatio facilities i Australia: at Hamilto, Victoria ad Nargulu, Wester Australia. The compay has four sythetic rutile kils, two of which were operatioal durig 212, with the other two able to be reactivated if market coditios warrat. These kils use ilmeite to produce various sythetic rutile products, with a titaium dioxide cotet betwee 85 to 95 per cet. Iluka s Uited States miig operatios are at Cocord ad Brik, Virgiia, with a mieral separatio plat at Stoy Creek, Virgiia. Iluka s pricipal ports for export i Australia are Geraldto i Wester Australia, where the compay has dedicated storage ad ship loadig facilities, as well as the Port of Portlad i Victoria. Other Australia ports are utilised, while the compay typically holds fiished product i multiple sites outside of Australia to facilitate expeditious ad flexible delivery arragemets to customers. Iluka s Virgiia productio primarily services the US domestic market. Iluka s Product ad Techical Developmet area maitais a focus o techical work which is desiged to ehace recoveries, facilitate iovative ad more effective meas to develop deposits (particularly satellite deposits), as well as develop products for ew market segmets. I this regard, work proceeded i 212 o the potetial developmet of a sulphate pigmet feedstock, referred to as Acid Soluble Sythetic Rutile (ASSR). The compay maitais a close itegratio betwee its operatioal, sales ad marketig ad product ad techical developmet fuctios, as this ehaces operatioal plaig outcomes as well as product developmet for customers, ad ew market peetratio. Woorack, Rowack ad Pirro, Murray Basi, Victoria. Page 13

23 Operatioal Overview Australia operatios Miig operatios at the Jacith-Ambrosia (Eucla Basi, South Australia) deposits were cocetrated i a low grade part of the Jacith ore body for most of 212, i light of lower zirco demad. Iluka moved back to ormal miig settigs at the deposit i early 213. Heavy mieral cocetrate produced at Jacith-Ambrosia was stockpiled o site durig 212, with the compay havig the ability to cotiue to stockpile material i advace of processig to itermediate or fial product, depedet o market coditios. At the Nargulu mieral separatio plat i Wester Australia, lower levels of Jacith-Ambrosia heavy mieral cocetrate were processed. Feedstocks (both from Jacith-Ambrosia ad from Eeabba i the Mid West, Wester Australia) were alterated through the two processig trais at Nargulu. This also had the beefit of producig more ilmeite for sythetic rutile feed productio, while producig less zirco. Miig operatios ceased at the Douglas ore body i the Murray Basi, Victoria, at the ed of Jauary 212. Miig at the first of the orther Murray Basi deposits, Kulwi, also ceased i mid-february, as plaed, with the relocatio of the miig ad processig equipmet to the Woorack, Rowack ad Pirro group of deposits. Commissioig of Woorack, Rowack ad Pirro commeced i mid April, with heavy mieral cocetrate productio i early May ahead of schedule ad withi budget. The productio o site of wet high itesity magetic separatio ilmeite commeced i September. Plat alteratios ad istallatio of additioal equipmet at the ed of the year allowed Iluka to produce a combiatio of sulphate ad chloride ilmeite, available for sale or for use i sythetic rutile upgradig. This represets the commercialisatio of a sigificat quatity of ilmeite withi the deposit previously cosidered to have o commercial value. Miig at Eeabba cotiued through 212, after recommecig i December 211, with processig of Eeabba sourced heavy mieral cocetrate at the Nargulu mieral separatio plat commecig from the first quarter of 212. The Nargulu mieral separatio plat was upgraded to accommodate a additioal 3 thousad toes of Eeabba heavy mieral cocetrate. Miig operatios at Tutuup South i the South West of Wester Australia cotiued durig 212. This mie is a ilmeite feed source for sythetic rutile kil 2. Iluka operated its mai kil, sythetic rutile kil 2, i the South West of Wester Australia at a reduced feed rate of approximately 6 per cet of capacity. This was cosistet with reducig high grade feedstock productio, give lower demad i the secod half of the year. Iluka also deferred its plaed recommecemet of its sythetic rutile kil 1 (the third of its four kils) from the fourth quarter of 212. A trial parcel of Virgiia ilmeite was processed through sythetic rutile kil 3 i the Mid West. Prelimiary results idicate a high titaium dioxide grade is achievable alog with other favourable product characteristics. Iluka sells iro oxide tailigs from its Wester Australia operatios ad durig 212 shipped approximately 2 thousad toes to customers. Uited States operatios Miig operatios i Virgiia i 212 icluded successfully completig major miig uit moves at both sites (Cocord ad Brik). These moves eabled a trasitio from the historically higher grade areas of mieralisatio, to shallow ad lower grade miig areas idetified through the re-optimisatio of existig mieral leases. Historic mieral recoveries have bee maitaied from the lower grade material through the cocetrator plats, ad upgrades at the mieral separatio plat have further improved product recovery. Upgrades to the mieral separatio plat have also eabled the productio of higher quality, low alumia ilmeite, ad the efficiecy of the mieral separatio process has also bee icreased through improvemets to the plat temperature cotrol system. The plat cotiues to produce oe of the world s highest quality zirco products. A defiitive feasibility study was completed for the Hickory project, a potetial third mie ad mieral cocetrator located 19 kilometres west of the Stoy Creek mieral separatio plat. The project has moved to a iitial executio phase, which etails completio of detailed egieerig desig ad costructio plas, detailed miig plas ad securig of all permits i 213. A pre-feasibility study has also bee progressed for a large chloride ilmeite deposit located i Aurelia Sprigs, North Carolia, approximately 9 kilometres south of Stoy Creek. Curret plas are to relocate the Cocord miig uit ad cocetrator plat to Aurelia Sprigs i the first quarter of 215. A defiitive feasibility study is plaed to commece i 213 to complete detailed egieerig desig ad secure the required operatig permits. Page 14

24 Iluka Review 212 Iluka operatios 212 ad 211 productio levels Productio Australia operatios Eucla / Perth Basis Zirco Rutile 5 56 Ilmeite saleable Ilmeite upgradeable Sythetic rutile Murray Basi Zirco Rutile Ilmeite saleable 96 Ilmeite upgradeable Australia operatios total Zirco Rutile Ilmeite saleable Ilmeite upgradeable Sythetic rutile kt kt Uited States operatio Zirco 49 6 Ilmeite saleable Ilmeite upgradeable 12 Note: Numbers are rouded to earest whole umber. Jacith-Ambrosia wet cocetrator plat, Eucla Basi, South Australia. Page 15

25 Operatioal Overview Murray Basi, Victoria / New South Wales SOUTH AUSTRALIA Broke Hill Murray Basi NEW SOUTH WALES Adelaide Woorack, Rowack & Pirro Mildura Eusto deposit Ouye Kulwi Nepea Balraald Echo Bodi East Douglas Portlad Hamilto MSP Port of Portlad VICTORIA Melboure Port of Melboure Perth Basi, Wester Australia Port of Geraldto Nargulu MSP WESTERN AUSTRALIA Eeabba Cataby Perth Perth Basi Tutuup Bubury North Capel Yogaup Exteded Tutuup South Page 16

26 Iluka Review 212 Eulca Basi, South Australia / Wester Australia WESTERN AUSTRALIA SOUTH AUSTRALIA Eucla Basi Kalgoorlie Eucla Jacith-Ambrosia Port of Theverard Atacama Typhoo Soora Tripitaka Cedua Esperace Atlatic Seaboard, Virgiia / North Carolia, Uited States LEGEND Port Mie Mieral separatio plat Sythetic rutile kil Proposed mie site Heavy mieral deposit Rail (capability) Road Former mie site VIRGINIA Cocord Brik Richmod Hickory Stoy Creek MSP Aurelia Sprigs Raleigh NORTH CAROLINA Page 17

27 Exploratio Durig 212, Iluka sigificatly icreased its exploratio focus outside of Australia, with drillig programs udertake i the Uited States ad Brazil ad early stage recoaissace carried out i Africa ad Asia. I additio to exploratio offices i Perth ad Adelaide, Iluka ow has offices i Nashville i the Uited States, Rio de Jaeiro i Brazil ad Durba i South Africa. While Iluka will cotiue to explore i Australia, the Perth, Eucla ad Murray Basis are icreasigly mature mieral sads exploratio provices, resultig i the eed to accelerate exploratio activities i ew areas elsewhere i Australia ad iteratioally. Eucla Basi, South Australia Iluka holds the majority of exploratio teemets i the Eucla Basi i the same regio as the zirco-rich Jacith-Ambrosia mieral sads operatio. Iluka s teemets cover a area of approximately 38 thousad square kilometres ad accout for approximately 5 per cet of Iluka s total teemet holdigs. Iluka s substatial teemet holdig covers the prospective margi of the Eucla Basi i South Australia. The compay s curret mieral resource ivetory i the Eucla Basi is 2.1 millio toes of heavy mieral icludig a miig depletio of approximately 1.9 millio toes of heavy mieral from the Jacith-Ambrosia operatio. The origial mieral edowmet for the Eucla Basi, takig miig depletio ito accout, is 22. millio toes of heavy mieral. I the order of 95 per cet of the total heavy mieral resources discovered i the Eucla Basi is withi 15 kilometres of the Jacith-Ambrosia mie site. 212 exploratio activity i the Eucla Basi icluded: upgradig of the Typhoo deposit to measured resource category, delieatio drillig over the Tripitaka deposit to idicated status ad delieatio drillig at the Soora deposit to a iferred status. These extesios, combied with additioal resources idetified as part of the ehaced productio project, have resulted i a 1 per cet icrease from the 211 resource positio for the Eucla Basi (et of miig depletio); browfield exploratio drillig withi 15 kilometres of Jacith-Ambrosia accouted for approximately 15 per cet of total drillig ad resulted i delieatio of additioal heavy mieral at the Atacama deposit; over 136 thousad metres of drillig o the Eucla Basi teemets with 4 per cet of that drillig o greefields targets. Greefields exploratio drillig primarily focussed o areas orth of the Atacama deposit, the Bay of Plety, east of the Mojave prospect ad the Maraliga-Barto Rage teemets orth of the tras Australia railway lie; ad completio of a detailed aeromagetic/radiometric survey over a area of 7 square kilometres. This survey has idetified gravity ad magetic aomalies with potetial for base metals. First pass recoaissace drillig was completed late i the year o areas approved for drillig. The results of this drillig will be followed up i 213. I 213, Iluka will cotiue exploratio i the Eucla Basi with follow up drillig o a umber of mieralised targets idetified i 212. Eucla Basi, South Australia WESTERN AUSTRALIA EUCLA BASIN Eucla Ambrosia Jacith SOUTH AUSTRALIA Atacama Typhoo Soora Tripitaka Cedua Streaky Bay Port Augusta Port Pirie LEGEND Mie Heavy mieral deposit Iluka teemets Port Licol Adelaide Mildura Ouye Hamilto Portlad Page 18

28 Iluka Review 212 Murray Basi ad Easter Regio Iluka s secod mai area of curret exploratio commitmet is o the compay s Murray Basi teemet holdigs across Victoria, easter South Australia ad ito the south west portio of New South Wales; a teemet holdig area of approximately 2 thousad square kilometres. Over 7 thousad metres of drillig o Murray Basi teemets was completed with 6 per cet focussed o greefield activities. The 212 exploratio activities icluded: exploratio i Victoria which was focussed alog the souther margi ad i the cetral area of the Murray Basi to test ew areas where Iluka is seekig to locate stratigraphy suitable for hostig mieral sads; greefield exploratio was udertake to assess ew targets i south easter South Australia alog the wester margi ad cetral portios of the Murray Basi; greefield exploratio also cotiued i the orth west portio of the Murray Basi i New South Wales; browfield exploratio was udertake i the regio surroudig the Balraald deposit to idetify additioal heavy mieral occurreces; ad mieral resource delieatio programs cotiued o both the Nepea ad Balraald deposits as part of studies for the potetial developmet of these large rutile-domiated deposits. Additioal delieatio programs were completed at the Woorack, Rowack ad Pirro sites. Other Iteratioal 2% Brazil US EXPLORATION EXPENDITURE 212 $34.4 millio 11% 8% Admistratio & other costs 11% 68% Australia ILUKA TENEMENT POSITION - 31 DECEMBER 212 Total 76,925km 2 Perth Basi 1% Eucla Basi Other 18% 49% Iteratioal 6% 26% Murray Basi & Easter Regio Murray Basi ad Easter Regio SOUTH AUSTRALIA Broke Hill NEW SOUTH WALES Mildura Nepea MURRAY BASIN Adelaide Eusto Ouye LEGEND Woorack, Rowack & Pirro Mie Mieral separatio plat Proposed mie site Heavy mieral deposit Iluka teemets Joit veture teemets Hamilto MSP Portlad Balraald Balraald VICTORIA Melboure Gippslad Basi Page 19

29 Ehaced Productio Project Iluka cotiues to assess its ability to ehace its productio profile, or exted the ecoomic life of deposits, by the developmet of ew deposits withi its portfolio. The compay udertakes this through what it refers to as the Ehaced Productio Project. Work udertake durig 212 was focussed o progressig 13 potetial mieral sads opportuities to pre-feasibility stage. The projects idetified represet Mieral Resources or Ore Reserves additios withi the existig Iluka portfolio ad, i most cases, it is expected that developmet approaches may be able to make use of existig ifrastructure. Three of the opportuities are i the Uited States, ad the remaider i Australia. The icreased project developmet workload has bee maaged iterally ad maagemet of the various studies ad subsequet implemetatio is uderway. Some of the projects, such as Balraald ad Cataby, have project teams i place ad are well advaced at pre-feasibility assessmet stage. Iluka s iteral developmet optios may eable Iluka to either icrease its rutile ad zirco productio or exted productio profiles. Associated with additioal zirco ad rutile productio, additioal chloride ilmeite availability would be expected, to further support sythetic rutile operatios. The assessmet of sulphate ilmeite productio ad processig optios has also occurred durig 212 ad dowstream beeficiatio assessmet of these products is uderway. Based o iitial assessmets, it ca be expected that Iluka s productio respose optios may be: capital-efficiet (give the ability to utilise existig ifrastructure); provide both short ad medium to loger term productio opportuities; ad ivolve relatively low-to-moderate executio risk. The pursuit of ay of the iteral optios will occur i the cotext of key fiacial metrics, as well as market coditios. Iluka has three potetial tie-i satellite deposits withi close proximity to the Jacith-Ambrosia operatio. Page 2

30 Iluka Review 212 Product ad Techical Developmet Iluka s Product ad Techical Developmet fuctio, alog with the compay s marketig ad exploratio activities, represet a ivestmet i the future of the mieral sads sector ad Iluka s role withi it. Pricipal areas of focus durig 212 icluded: the cotiued developmet of ew sythetic rutile products usig ilmeites from a rage of Iluka s mies, both i Australia ad the Uited States. Most of the emphasis cotiued o the commercialisatio of Acid Soluble Sythetic Rutile (ASSR), which is a high grade sythetic rutile targeted to the sulphate pigmet market. After plat trials o ASSR i 211, it was decided i 212 to use a pilot plat to fialise the techical study of ASSR productio. Work progressed i 212 to recofigure a existig third party pilot plat kil for Iluka s requiremets. Testig o this pilot plat is expected to occur i 213; trial work o the use of Iluka s Virgiia ilmeite to make a superior sythetic rutile product for the high-ed titaium dioxide pigmet ad titaium metal markets. Successful full scale plat trials were coducted to produce a sythetic rutile with plus 94 per cet titaium dioxide cotet with low impurity levels from a 1 per cet bled of Virgiia ilmeite; ad zirco product developmet, the key focus area of which was the ogoig assessmet of moderisatio, thriftig ad substitutio (MTS) associated with the cosumptio of zirco i ceramics. Give the large size of the Chiese ceramics idustry, most the emphasis was placed o treds withi this market. Iluka worked with customers, tile maufacturers, equipmet suppliers ad idustry specialists to better uderstad the impact of MTS treds o global zirco demad. I additio, Iluka worked with a variety of idustries to explore ew ad growig applicatios for zirco or zirco based derivatives. A umber of opportuities were idetified, which will be progressed i 213. Iluka was istrumetal i the establishmet of the Zirco Idustry Associatio (ZIA) a idustry group made up of both zirco sad suppliers ad dowstream idustry users. The purpose of the ZIA is to represet ad promote the iterests of the zirco idustry. Iluka plas to coduct further ew product test work at its sythetic rutile kils i 213. Page 21

31 Mieral Sads Market Coditios Relative to 21 ad 211, periods of higher cyclical demad, 212 displayed the characteristics of a period of cyclical weakess across both the mai product suites. Mieral sads market coditios were iflueced by a combiatio of factors relatig to weak global ecoomic coditios, the ifluece of policy settigs i specific coutries (especially those related to the property sector i Chia), ad ivetory stockig ad destockig treds (at the fiished ceramic ed of the chai i Chia ad for chloride pigmet for high grade titaium dioxide products). All geographical markets ad all ed-market applicatios, although to varyig degrees, displayed weaker demad tha i 211 ad i relatio to a more typical demad year. For example, the export markets of Europea ceramic maufacturers were adversely affected by the aborted Arab Sprig as well as restrictios o ecoomic trasactios with Ira, a major tile cosumig atio. No-ceramic applicatios of zirco, such as zircoium chemicals, displayed more robust demad tha the ceramic sector, but eve here demad was more subdued based o global ecoomic coditios. Zirco demad i Chia was adversely iflueced by the adoptio of moder porcelai tile maufacturig techiques - techiques which have bee i existece for a exteded period i other tile maufacturig cetres, such as Spai ad Italy. This techological adaptio led to a structural chage i zirco usage i Chia, the volume impact of which was most proouced i 211 with a lesser assessed impact i 212. I Iluka s assessmet, this techological chage i tile makig i Chia has ow bee largely worked through, as have other thriftig ad substitutio practices. I titaium dioxide markets, the eed for chloride pigmet producers to work dow pigmet ivetories i the secod half meat that rutile ad sythetic rutile demad was materially weaker tha was aticipated at the begiig of 212. Pigmet plats ruig at lower tha ormal capacity ultilisatio rates had a direct, adverse impact o the demad for higher grade feedstocks, such as rutile ad sythetic rutile i the secod half of 212. The preferece for lower grade titaium dioxide feedstocks, such as chloride slag, ad its associated availability uder legacy cotractual ad lower pricig arragemets, compouded the weak demad coditios for Iluka s products. The iche markets for titaium dioxide usage, such as titaium metal ad the weldig sector, were ot immue from global ecoomic factors, with demad ad pricig outcomes i these sectors also weakeig. Iluka s mieral sads pricig outcomes for 212 are show i the table below. Lead idicators The Chiese ad Uited States costructio ad housig sectors are sigificat sources of demad for zirco ad titaium dioxide. Growth of these sectors slowed i 212, as was the case i 28 ad 29. However, positive sigs of a recovery were evidet i late 212 as demostrated i the followig lead idicator charts. Iluka s Mieral Sads Pricig 6 mth to Ju-12 Dec-12 Quarter 6 mth to Dec mth to Dec mth to Dec-11 Weighted average pricig US$/t FOB Zirco 2,49 1,449 1,856 2,8 1,886 Rutile 2,55 2,94 2,35 2,464 1,174 Sythetic rutile 1,95 1,463 1,465 1, Average Z/R/SR price received US$/t FOB 2,296 1,478 1,772 2,56 1,453 Iluka s average zirco startig price i 213 was ~ 15 per cet below December quarter 212 levels. Iluka s average rutile startig price i 213 was ~ 3 per cet below December quarter 212 levels. Page 22

32 Iluka Review 212 % YoY chage Ja-7 Jul-7 US NEW HOMES STARTED SEASONALLY ADJUSTED Ja-8 Jul-8 Ja-9 Jul-9 Ja-1 Jul-1 Ja-11 Jul-11 Ja-12 Jul-12 Feb-13 % YoY Chage US NEW HOUSE PRICES Ja-7 Jul-7 Ja-8 Jul-8 Ja-9 Jul-9 Ja-1 Jul-1 Ja-11 Jul-11 Ja-12 Jul-12 Ja-13 % YoY Chage CHINA FLOOR SPACE Ja-7 Jul-7 Ja-8 Jul-8 Ja-9 Jul-9 Ja-1 Jul-1 Ja-11 Jul-11 Ja-12 Jul-12 Feb-13 % YoY Chage CHINA REAL ESTATE INVESTMENT Ja-7 Jul-7 Ja-8 Jul-8 Ja-9 Jul-9 Ja-1 Jul-1 Ja-11 Jul-11 Ja-12 Jul-12 Feb-13 RMB b FLOOR SPACE SOLD FLOOR SPACE STARTED Source: CEIC Major ed uses of zirco iclude ceramics, such as floor ad wall tiles, ad saitary ware. Page 23

33 Sustaiable Developmet Iluka believes beig a sustaiable ad resposible compay cotributes to the delivery of the compay s primary objective: to create ad deliver value for shareholders. I practice, this meas cosideratio of all evirometal, social ad ecoomic implicatios prior to ad throughout the life of operatios. The compay believes this is a cetral compoet of its licece to operate ad will uderpi the future growth of the compay. Iluka s safety, health, evirometal, people ad stakeholder performace is oversee by the Board ad is supported by policies ad procedures which defie how the compay will deliver its busiess objectives ad the framework withi which maagers, employees ad subcotractors are expected to work. Iluka s seior maagemet team is accoutable for deliverig sustaiability objectives. The followig activities ad reportig measures are cosidered the key areas of focus for the compay, ad those deemed most relevat to stakeholders. While a rage of other activities form part of Iluka s approach to sustaiable developmet, these are ot reported i this documet. Jacith-Ambrosia seed storage ad germiatio, South Australia. Page 24

34 Iluka Review 212 People Iluka seeks to build ad maitai a diverse ad sustaiable workforce of taleted people reflectig the commuities i which the compay operates. The compay ecourages employee achievemet through the priciples of accoutability, commerciality ad egagemet, ad strives to maitai a work culture that reflects its values of commitmet, itegrity ad resposibility. This icludes a high stadard of health ad safety behaviour ad the developmet of idividuals, leaders ad teams to achieve extraordiary performace. I respose to both chagig market coditios ad log term growth opportuities durig 212, the compay focused o five key people areas: workforce capability plaig; skill ad leadership developmet; diversity; people maagemet techology; ad employee egagemet. Exploratio activity, Eucla Basi. Iluka uses helicopter fly-i-fly-out operatios give remote locatios ad to miimise evirometal damage from vehicular movemets. Workforce profile Durig 212, Iluka directly employed approximately 1,1 people (of which 2 per cet were female), plus approximately 1,5 cotractors. Approximately 8 per cet of Iluka s direct workforce was employed i Australia locatios across Wester Australia, South Australia ad Victoria, while aroud 2 per cet were located iteratioally, i locatios icludig Virgiia, Uited States, Shaghai, Chia ad South America. Employee umber YEAR EMPLOYEE NUMBERS 1,1 1, Employee egagemet A employee egagemet survey was coducted i 212, achievig a respose rate of 8 per cet. Held every two years, the survey measures employee perceptios relatig to busiess aligmet, sustaiability, employee achievemet (icludig diversity), leadership ad job ad employer egagemet. The overall employee egagemet level i 212 of 63 per cet was above idustry average rates, with job egagemet at 7 per cet ad employer egagemet at 75 per cet. These results are idustry leadig whe bechmarked agaist similar sized Australia orgaisatios withi the miig ad quarryig sectors. Iluka also performed above the overall average bechmark i all survey categories VOLUNTARY TURNOVER RATIO % Page 25

35 People Iluka s diversity activities focused o: developmet of programs to attract, develop ad retai employees across various age rages; creatio of sustaiable employmet opportuities for people with disabilities; a icrease i idigeous employmet ad traiig through parterships with local ad atioal idigeous groups; ad participatio ad advacemet of wome i various roles ad levels i the workplace. Key achievemets Hopetou rail loadig facility, Victoria. Diversity The compay respects ad ecourages workplace diversity ad strives to provide a workplace that is free of harassmet ad discrimiatio. To help achieve this outcome, a Diversity Committee operates to promote awareess of diversity, itegrate workplace diversity priciples ito compay activities, ad implemet a flexible workplace culture which assists employees to balace their resposibilities. Etry-level techical capability icreased sigificatly, with the appoitmet of seve appretices, three traiees, four vacatio studets ad four graduates. Employmet of people with a disability icreased from oe i 211, to five i 212. I some cases, jobs were redesiged to provide tailored employmet optios e.g. use of sig laguage with fellow colleagues. A total of 16 additioal idigeous people were employed i 212, five of which were through Iluka s collaboratios with local ative title claimat groups ad The Clotarf Foudatio. A further three idigeous people udertook work experiece i the South West of Wester Australia. Three females were appoited to seior maager positios, ad oe female was promoted to a executive maagemet positio reportig to the Maagig Director (i late 212). A Stadards of Behaviour Program was also implemeted at the Nargulu mieral separatio plat i Wester Australia to ecourage the attractio of female operators. A total of ie females were hired ad provided with accelerated developmet traiig to esure appropriate skill levels. Workplace Geder Equality Agecy profile Wome Me % Average salary $ (TFR) Positio FT PT FT PT Wome Me Wome Me Board , 125, Seior executives ,167 Seior maagers , ,924 FT= full time, PT= part time. Chairma ad Maagig Director salaries are excluded. Iformatio extracted from Iluka Resources EOWA Report. Page 26

36 Iluka Review 212 A review of the Australia Govermet s Employer of Choice for Wome accreditatio criteria was udertake durig the year ad a prelimiary pla for future accreditatio was developed. Further refiemet of the pla will be completed i 213 followig the results of a iteral qualitative geder diversity survey. A geder equity pay audit was completed for the secod year to review idividual employee comparisos. A small percetage (less tha 1 per cet) of employees were idetified i roles requirig actio to be take to address remueratio aomalies. Iluka provides eight weeks paid paretal leave to female employees, ad two weeks paid paretal leave to male employees. A volutary Stay i Touch program provides regular commuicatio ad developmet opportuities for employees o paretal leave. CASE STUDY Nargulu, Perth Basi, Wester Australia. Employee voluteerig I 212, Iluka itroduced two days paid voluteer leave per aum for all full time employees (or pro rata equivalet), where employees are etitled to work with a commuity group or charity of their choice. Sice the itroductio of the iitiative, approximately 175 employees, across most locatios, completed 22 voluteer days. Activities icluded idividual ad team voluteerig with aged care facilities, youth ad idigeous groups, aimal shelters, homeless orgaisatios ad coservatio groups. Geder diversity iitiative at Nargulu, Wester Australia The Nargulu mieral separatio plat i Wester Australia historically recruited operatioal persoel based o relevat work skills ad applicable experiece, a approach that directly resulted i a small cadidate pool ad appoitmet of successful applicats aliged with a traditioal demographic profile for operator roles (males with five years plus experiece). The recruitig approach at Nargulu was adjusted to focus o both loger term ad short term busiess eeds, ad icrease diversity across the operatio. Iluka believes a diverse workforce cotributes to differet styles of leadership, varied skill sets, ad a broadeig of behaviours, each cotributig to a high performig work culture. It was established that i additio to work skills ad experiece, the recruitmet strategy should be cetred o idividuals values ad stadards of behaviour. Advertisig ad selectio processes, icludig iterviews, were therefore modified to target values that were aliged with Iluka s core values of commitmet, itegrity ad resposibility, facilitatig the potetial recruitmet of a more diverse yet capable cohort of ew employees. The traiig program i place at Nargulu also provided a stable platform from which to fast-track the developmet of ew, less techically skilled employees. The chage i recruitig focus improved geder ad age diversity at the operatio. Female employees ow represet approximately 1 per cet of the operatioal team, a icrease of 1 per cet over the past three years. A icrease i the umber of employees uder the age of 3 years across the operatio has also bee achieved. Page 27

37 Safety ad Health Iluka is committed to high levels of evirometal, health ad safety performace. Safe Productio Leadership program The Safe Productio Leadership program was implemeted i Iluka s Australia operatios i April 211. This program was desiged to achieve a fudametal improvemet i Iluka s safety performace ad has ivolved developmet of safe productio plas at each of Iluka s sites. The program cotiued i 212, focusig o fuctioal support areas, such as exploratio ad corporate fuctios. The performace metrics of lost time ijury frequecy rate ad total recordable ijury frequecy rate sice the implemetatio of the SPL program highlight the advaces made as a result of the program. Cotractor maagemet Cotractors are a itegral part of Iluka s busiess, ad i 212 accouted for 56 per cet of the recorded hours worked. A project aimed at improvig the way Iluka maages its cotractors was lauched durig the year, ad icluded stadardisig cotractor pre-qualificatio processes, validatio of the eviromet, health ad safety performace of approved vedors, auditig the compliace of vedors with Iluka s sustaiability requiremets ad a review of the approved vedor list. The project commeced i Victoria ad will cotiue i other locatios throughout TOTAL RECORDABLE INJURY FREQUENCY RATE TOTAL RECORDABLE INJURY FREQUENCY RATE 1.5 LOST TIME INJURY FREQUENCY RATE LOST TIME INJURY FREQUENCY RATE Page 28

38 Iluka Review 212 Performace Iluka maages its activities via its Eviromet, Health ad Safety Maagemet System, costructed aroud 12 stadards ad 5 major risk procedures. The compay uses a umber of primary idicators to moitor safety performace: lost time ijury frequecy rate (LTIFR), severity rate, medical treatmet ijury frequecy rate (MTIFR) ad the total recordable ijury frequecy rate (TRIFR). I 212, Iluka improved its safety performace across a rage of metrics. However, despite a year-o-year improvemet, the severity rate result of 46.7 fell short of the compay s iteral target of Iluka s TRIFR reduced from 15.1 at the ed of 211 to 1.5 i 212, a 3 per cet reductio. This was a improvemet o the 212 target of 1.6. Similarly, the LTIFR for Iluka reduced from 3.1 at the ed of 211 to 1.9 i 212, a 39 per cet reductio. The umber of lost time ijuries, medically treated ijuries, recordable ijuries ad mior ijuries also reduced across the compay. The icrease i the umber of first aid ijuries recorded, measured agaist the declie i the umber of more serious icidets, reflects a icreased focus o reportig rather tha a chage i the risk profile. For further statistical iformatio, refer to page 48. Occupatioal health Durig 212, Iluka s occupatioal health ad hygiee maagemet framework was audited by exteral cosultats. The review reiforced Iluka s risk based approach for hygiee exposure ad health moitorig, esurig cosistecy withi operatios ad busiess uits uder a overarchig corporate maagemet pla. The cosultats were egaged to coduct a review of potetial exposure risks withi all aspects of Iluka operatios, with the fidigs prioritised for assessmet, moitorig ad cotrol i 213. Moitorig activities durig 212 focussed o the followig key risks: cotiuous ad peak oise; ihalable ad respirable dust; ioisig radiatio; ad Legioella bacteria. SAFETY INDICATORS SAFETY VISITS (PER EMPLOYEE) WORKPLACE INSPECTIONS HAZARD CARDS* * A hazard idetified i the workplace ad recorded i the EHS Maagemet System. Page 29

39 Evirometal Maagemet Iluka udertakes miig ad processig activities o lad that rages from remote regioal reserves to operatios i close proximity to populated areas. Iluka s approach to evirometal maagemet is based o the idetificatio, assessmet ad treatmet of risks ad protectio of the atural eviromet. A umber of iteral stadards gover how potetial evirometal impacts are maaged throughout all phases of the operatio, from exploratio through to closure. The idividual requiremets of each site are also cosidered ad site specific procedures ad work istructios are developed i compliace with these stadards. Operatioal sites are audited for compliace with Iluka s stadards o a regular basis. Performace I order to improve the resolutio of evirometal icidets, the defiitios for these icidets were reviewed durig 212 ad a ew, more uiform ad cosistet system implemeted. The ew defiitios have bee applied to the 211 data i order to allow more valid year-o-year comparisos. Durig 212, a total of 1,42 evirometal icidets were recorded, of which 76 per cet were classified as level 1 icidets - the lowest impact category - ad a further 18 per cet as level 2 icidets. The umber of icidets cosidered sigificat (level 3 ad above) decreased from 85 icidets i 211, to 59 i 212. The compay did ot record ay evirometal breaches durig the year which may have bee subject to a fiacial pealty. Overall, approximately 4 per cet more evirometal icidets were reported i 212 tha 211. This, i large part, reflects iteral efforts to esure more striget moitorig ad reportig, eve though such icidets were mior. The shift was towards less sigificat icidets tha the previous year. Evirometal icidets Idicator level Level (81.8%) 481 (64.5%) 796 (76.5%) Level (17.5%) 18 (24.1%) 187 (18.%) Level 3 5 (.6%) 82 (11.%) 43 (4.1%) Level 4 1 (.1%) 3 (.4%) 16 (1.5%) Level 5 (%) (%) (%) Total * 1,42 Target (level 3 & above) N/A N/A 85 * 51 of the 211 icidets could ot be reclassified due to lack of iformatio. All data icludes cotractor activities. Page 3

40 Iluka Review 212 Eergy Most of the eergy Iluka cosumes results from the operatio of the compay s sythetic rutile kils, two of which were i operatio throughout most of 212. To mitigate this impact ad miimise carbo dioxide emissios ad costs across Australia operatios, the compay idetifies ad reports o all eergy efficiecy improvemet opportuities i place as part of its obligatios uder the Australia Govermet s Eergy Efficiecy Opportuities Act 26 (EEO). This effort also etails a focus o carbo dioxide equivalet emissios (CO2-e). I 212, which marked the begiig of a ew five year Australia Govermet reportig cycle, the focus was o developig further processes for idetifyig ad implemetig ew efficiecy projects. Overall eergy savigs (withi Iluka s Australia operatios), icludig the idetified projects i 212, amouted to 7 per cet reductio i total eergy cosumptio at the ed of the full five year cycle. Eergy efficiecy projects i 212 icluded the use of a site-based gas-fired power statio ad improvemet i water pumpig efficiecy at the south secodary cocetrator at Eeabba i Wester Australia, ad ogoig work to improve the efficiecy of the power statio at Jacith-Ambrosia i South Australia. Durig 212, preparatios were made for the commecemet of the Australia Govermet s carbo pricig mechaism, which is admiistered by the Clea Eergy Regulator. The sythetic rutile productio idustry, of which Iluka is a part, is classified as a Emissios Itesive, Trade Exposed Idustry for purposes of the legislatio. Iluka will acquit permits for scope 1 coal emissios from sythetic rutile maufacture, ad some emissios from atural gas use. This will be followed by allocatio of fial permit umbers after the submissio of 213 Natioal Greehouse ad Eergy Reportig (NGER) report. As part of the scheme, Iluka qualifies for assistace permits as allowed uder the Jobs ad Competitiveess Program. Iluka will acquit the first roud of iterim permits by Jue 213 for scope local emissios from sythetic rutile maufacture ad some emissios from atural gas. This will be followed by allocatio of fial permit umbers after the submissio of the 213 Natioal Greehouse ad Eergy Reportig (NGER) report. Performace Iluka s emissios were 765 kilotoes of CO2-e, a reductio of 11 per cet from 211. This reductio was largely a result of the closure of Kulwi ad Douglas mies i the Murray Basi, Victoria, ad the major maiteace outages at the two operatig sythetic rutile kils. These decreases have bee partially offset by icreased emissios associated with the re-opeig of the Eeabba mie i Wester Australia, the commissioig of the Woorack, Rowack ad Pirro mie i Victoria, ad the Tutuup South mie i Wester Australia reachig full productio. For further statistical iformatio, refer to pages Water maagemet ad use Water is essetial to Iluka s miig, processig ad separatio processes. The compay uses either fresh water or aturally occurrig hypersalie water i these processes, the latter defied as water cotaiig dissolved solids i excess of sea water. Iluka recycles water where possible. Fresh water discharges ormally oly occur where there are seasoal imbalaces i water supply ad demad. I these cases, the discharges are licesed ad strict coditios imposed. Excess salie water is disposed of back ito the origial source locatio. Groudwater resources are further protected by meas of moitorig programs, while regular iterpretatio of moitorig data is performed by meas of aquifer reviews. Performace Higher water usage i 212, although at a level similar to the years 29-21, reflects the recommecemet of miig operatios at Eeabba i the Mid West of Wester Australia, ad the productio ramp up of the Tutuup South mie i the South West of Wester Australia. The decrease of 22 per cet of water discharged from sites, compared to 211, is attributed to the Douglas ad Kulwi mie ceasig productio ad the operatio of oly oe mie i the Murray Basi, Victoria. Similarly, the resumptio of miig at Eeabba saw icreased water use i the Perth Basi. For further statistical iformatio, refer to page ,287 5 WATER USE (MEGALITRES) 25 24,28 24,236 24,162 1,978 2,135 17,421 1, WATER DISCHARGED (ML) WATER USE (ML) Page 31

41 Evirometal Maagemet Rehabilitatio ad lad maagemet Iluka s five year lad rehabilitatio objective is to esure that completio of rehabilitatio o disturbed lad exceeds ew disturbace. Iluka made progress towards this objective i 212, with 619 hectares of rehabilitatio completed versus 223 hectares i 211. Overall, the total area of lad ope at December 212 amouts to 1,51 hectares a icrease from 211 at 1,32 hectares. New disturbace is attributed to the commecemet of Woorack, Rowack ad Pirro, further works at Eeabba ad exploratio tracks. A key aspect of maagig Iluka s rehabilitatio obligatio is to esure that rehabilitatio outcomes are successful i the log term. Rehabilitatio success requires plaig supported by relevat scietific studies. The scope of these studies icludes groudwater modellig, waste characterisatio, soil profile ivestigatio ad the physiology ad ecology of ative vegetatio. A sigificat developmet for 213 will be the commecemet of a partership betwee Iluka ad the Uiversity of Wester Australia (UWA) for the Iluka Chair i Vegetatio Sciece ad Biogeography for a period of five years. The Iluka Chair will focus o restoratio of biodiversity i species-rich shrub lads of the world, with due cogizace of the biogeographic characteristics of those areas. Sposorship of the UWA Chair will eable scietifically based iformatio ad studies to be coducted idepedetly, esurig credibility ad trasparecy i a area of research fudametal to Iluka s busiess ad log term sustaiability. Rehabilitated miig area at former Echo mie site, Murray Basi, Victoria. Page 32

42 Iluka Review 212 Performace CASE STUDY I 212, rehabilitatio of the Warooa site the South West of Wester Australia was completed, with 92 hectares seeded to pasture. The site has ow etered a phase of moitorig ad maiteace. Earthworks activity has moved to backfillig of the Yogaup West mie which is located earby ad o which miig ceased i 27. The 136 hectare area is plaed to be topsoiled ad seeded to pasture rehabilitatio i the first half of 213. I the Mid West of Wester Australia, approximately 192 hectares was rehabilitated to pasture or crop, ad 25 hectares rehabilitated to ative vegetatio at the Eeabba ad Gigi mies. Pasture rehabilitatio icluded a fial void at Eeabba, desiged with getle batters to esure a log term sustaiable lad use. Approximately 247 hectares of pasture rehabilitatio ad ative revegetatio is scheduled to be completed at Eeabba ad Gigi durig 213. Near Geraldto, Wester Australia, waste dam cappig works were completed o oe dam at the Nargulu sythetic rutile plat, a measure to prevet the risk of iro oxide residue leachig ito groudwater. The cappig activity also provides validatio of the overall closure cocept for the site. Pasture rehabilitatio, Warooa, Wester Australia. Site origially mied betwee 27 ad 29. Malleefowl, Victoria. Malleefowl at Woorack, Rowack ad Pirro The Woorack, Rowack ad Pirro mie site is located i orth wester Victoria. This regio is withi the curret kow rage of Malleefowl (Leipoa ocellata), a species listed as vulerable uder the Eviromet Protectio ad Biodiversity Coservatio (EPBC) Act 1999, as threateed uder the Flora ad Faua Guaratee (FFG) Act 1988, ad as edagered o the Advisory List of Threateed Faua i Victoria (DSE 23). As part of the 28 approvals process, Iluka was required to establish a Malleefowl Maagemet Fud ad goverig committee, ad provide fudig for projects which met the objectives of the Natioal Malleefowl Recovery Pla. The Malleefowl Maagemet Committee was formed i 21 ad has sice oversee the disbursemet of fuds towards approved projects, icludig improvemets to the atioal moitorig database, cotet aalysis of fox scats, adaptive maagemet research, developmet of public websites ad atioal ewsletters, istallatio of sigage, ad support for the Natioal Malleefowl Forum. Other approval commitmets, coditios ad maagemet actios relatig to habitat preservatio ad ehacemet, predator cotrol, moitorig ad educatio are also beig implemeted at site. A trial camera used to moitor mouds at site has captured valuable images of Malleefowl ad other o-target species, ad four more cameras have recetly bee purchased. Durig 212, Malleefowl activity was detected i a 8 hectare block of remat ative vegetatio i the souther ed of the miig area. Page 33

43 Evirometal Maagemet I the Murray Basi, Victoria, rehabilitatio of the Douglas, Echo ad Kulwi mies cotiued, with 225 hectares rehabilitated to pasture durig 212. A further 384 hectares of pasture rehabilitatio is plaed durig 213, which will complete the Kulwi mie area orth of the Mallee Highway ad the etire Echo site. The Kulwi earthworks will iclude backfill of ifiltratio basis that were required to maage groudwater durig operatios. Echo rehabilitatio will iclude reshapig the fial void. At the Jacith-Ambrosia mie i South Australia, a revegetatio trial was established i a backfilled part of the mie pit. This trial tests the ability of ative vegetatio to utilise hypersalie tailigs capped with differet depths of overburde soil. The rehabilitatio earthworks pla will be reviewed further durig 213 to esure mie ad rehabilitatio program commitmets for soil profile replacemet ca be achieved. I the Uited States, 46 hectares of rehabilitatio to fial ladform was completed at the Old Hickory site, ad a additioal 3 hectares at the Cocord mie. Both of these sites are located i Virgiia, with the predomiat fial ladform beig pasture grass for potetial future use as row-crop farmlad, pie platatio, or wildlife habitat. At the Brik mie, also i Virgiia, rehabilitatio begu i 212, with fial ladforms scheduled to be achieved i 213. The closure of the former Gree Cove Sprigs mie i Florida was progressed with the fial rehabilitatio of 7 hectares to pie tree platatio ad the advacemet of studies o stable ladforms ad cover requiremets for the fial reclamatio of process water ad tailigs impoudmets. For further statistical iformatio, refer to page 51. Trial bulk harvestig ad trasplatig of sedges at Eeabba, Wester Australia. Backfill of ifiltratio basi at the Kulwi mie, Victoria. Page 34

44 Iluka Review 212 Radiatio maagemet CASE STUDY Deposits of mieral sads, as with some other mierals such as sad, clay, soils, rocks ad may ores, cotai low levels of aturally-occurrig radioactive material (NORM). While the cocetratio of NORM i most atural substaces is low, ay operatio i which radioactive material is extracted from the earth ad processed (exploratio, miig, mieral separatio activities) ca potetially chage the form of or cocetrate NORM i product, by-product or waste (residue) streams. For this reaso, striget ad iteratioally accepted radiatio maagemet stadards are adopted to miimise potetial risk to huma health or the eviromet from such cocetratios occurrig. Iluka maages the way i which workers ad the eviromet are exposed to radiatio ad esures doses remai below regulatory limits. Post closure moitorig at Iluka miig ad processig sites is performed to assess the effectiveess of clea-up ad to provide regulators, lad owers ad the commuity with sufficiet iformatio that there are o legacy issues requirig remedial actio. I 212, moitorig results ad dose assessmets for the workforce did ot record ay employee exposure above the 2 millisievert (msv) aual limit. Iluka s exposure limit is well below the five-year 1mSv ad aual 5mSv limit typically foud i iteratioal protocols. The cotributio from ay of Iluka s operatios remais very low i compariso with both public dose limits ad the atural backgroud radiatio. Rehabilitatio activities, Jacith-Ambrosia, South Australia. Evirometal research at Jacith-Ambrosia The Wester Myall tree (Acacia papyrocarpa) is a deep rooted species ad is the sigature tree surroudig Jacith-Ambrosia. To esure sustaiable Wester Myall populatios i the rehabilitated mie pit, the recreated soil profile must be able to sustai the populatio log eough to allow them to experiece at least two series of above average raifall years. Wester Myall trees eed a series of above average raifall years to produce viable seed, germiate ad grow, ad this type of sequece rarely happes i the semi-arid eviromet. The rehabilitatio team at the Jacith- Ambrosia mie bega ivestigatig the rootig depths of the ative vegetatio i 21. They measured some species with root systems growig to 25 metres below surface, through the soil profile ad through the floor of the pit. I cotrast, the depth of soil to be replaced o top of the salie mie pit tailigs is much shallower, varyig betwee 1.5 metres ad eight metres depedig o the targeted vegetatio associatio. To further ivestigate these issues, Iluka expaded a existig relatioship with the Uiversity of Adelaide, with the partership submittig a three year research proposal for a Australia Research Coucil Likage Project (ARCLP). Field work bega i October 212. The ARCLP has fuded a post-doctorate positio ad a represetative from the Uiversity of Adelaide is coductig the research largely based from the mie site, mappig root architecture, moitorig vegetatio water use patters ad determiig saliity toleraces for key deep rooted species. At the ed of the three year project, recommedatios will be provided to improve rehabilitatio outcomes at Jacith-Ambrosia. Page 35

45 Commuity ad Stakeholder Egagemet persoal use oly Iluka recogises that egagemet ad cosultatio with stakeholders is itegral to the establishmet, operatio, rehabilitatio ad reliquishmet of its operatioal facilities. The compay is proud to work i partership with its host commuities, addig value to these regios by providig opportuities for local people, ladowers, idigeous groups ad commuity orgaisatios. Social Impact Assessmets I 212, Iluka coducted comprehesive social impact assessmets across its Australia operatios, icludig both operatig ad rehabilitatio sites. Over 1,2 stakeholders, icludig local govermet authorities, idigeous groups, evirometal groups, service providers, special iterest groups, ladowers ad commuity members were cosulted i a series of radom ad targeted oe-o-oe iterviews ad telephoe surveys. The outcomes provided Iluka with a detailed baselie of the impacts, attitudes ad perceptios of the commuities where it operates, measurable key performace idicators ad a umber of recommedatios o how the compay ca develop ad ehace relatioships with stakeholders. These outcomes will form a key compoet of Iluka s commuity egagemet practices i 213. Cosultatio ad egagemet activities will be tailored to each regio ad operatio ad will directly relate to addressig the outcomes of the assessmets. Iluka maitais a formal commuity commets ad complaits procedure for its exploratio, project developmet ad operatioal activities i lie with regulatory requiremets. Each site has a tailored pla i place which is suitable to the commuity where it is deployed. All commets ad complaits are reported ad maaged through Iluka s icidet reportig maagemet system. I 212, the compay received 28 public commets ad complaits, dow from 52 i 211. Commuity Relatios Commuity Relatios persoel provide support to each operatio ad key projects durig the feasibility, plaig, operatio ad closure ad rehabilitatio phases. Formal egagemet plas are established for both proposed ad existig operatios to guide the compay s cosultatio activities ad cotribute to the developmet of mutually beeficial stakeholder relatioships before ad throughout operatios. Durig 212, Iluka s exploratio teams were active i may parts of Australia, icludig South Australia, Wester Australia, New South Wales ad Victoria. The exploratio teams egage regularly with stakeholders, icludig traditioal owers, lad owers, local commuity ad State govermet represetatives o activities icludig cultural heritage surveys, lad access ad rehabilitatio. Expaded exploratio focus areas durig the year also saw Iluka egage with stakeholders i emergig provices iteratioally as i ew areas withi Australia. All commuity relatios activities are coducted i accordace with Iluka s Commuity Relatios Policy. Commuity participatio I 212, Iluka cotiued its regular egagemet schedule, hostig a umber of ope days ad tours at may of its operatig mie sites. The official opeig of the Woorack, Rowack ad Pirro mie site i Victoria also provided a opportuity for govermet, commuity, media ad ladholder stakeholders to lear about Iluka s latest mie developmet. The compay also cotiued the successful Talks i Schools Program i South Australia. Commuity forums were also coducted for Iluka s proposed operatios at Cataby, Wester Australia, ad Balraald, New South Wales, as well as for the existig Hopetou rail loadig facility ad Jacith-Ambrosia operatios, esurig commuity ad stakeholder awareess o the compay s curret ad proposed operatios. The compay also participated i a umber of commuity evets withi the local regios. I 212, Iluka received a high commedatio at the South Australia Premier s Commuity Excellece Awards i Miig ad Eergy i both the Excellece i Social Iclusio ad Supportig Commuity Participatio categories. Page 36For

46 Iluka Review 212 The Clotarf Foudatio. Partership Program Iluka aims to cotribute to positive social outcomes i the commuities ad regios where it operates, leavig a positive legacy beyod the life of the operatios. Iluka parters with atioal, regioal ad local orgaisatios that alig with the compay commitmet areas relatig to evirometal ad social improvemet. I 212, Iluka cotributed approximately $42, to 9 differet orgaisatios i the commuities i which the compay operates. Iluka s major parters iclude: OCHRE Cotemporary Dace Compay; Coservatio Voluteers; ad The Clotarf Foudatio. OCHRE Cotemporary Dace Compay I 27, the West Australia Aborigial Dace Compay was fouded to pursue the visio of creatig a Aborigial cotemporary dace compay based i Wester Australia. The Compay was reamed OCHRE Cotemporary Dace Compay i May 212. Iluka became a corporate parter i 211 i support of its commitmet to activities which cotribute to diversity ad iclusio amog idigeous ad o-idigeous Australias. OCHRE provides a eviromet for idigeous ad oidigeous art professioals to work together i harmoy, celebratig idigeous culture, stories, dace ad music. Iluka was pleased to exted this partership i July 212 ad is ow Pricipal Sposor of OCHRE. This commitmet is eablig cotiued developmet ad growth of OCHRE, with Iluka providig support for its iaugural public performace of Diaphaous i November 212 i Perth, Wester Australia. Coservatio Voluteers Coservatio Voluteers is a leadig evirometal coservatio group i Australia, maagig hudreds of thousads of voluteers from aroud Australia ad iteratioally to participate i importat evirometal protectio ad wildlife coservatio projects. I 212, Iluka cotiued its three year partership with Coservatio Voluteers Australia (established i 211) to assist i the protectio of threateed ative Australia wildlife. The partership eables Iluka employees to participate i wildlife coservatio activities withi Iluka s Australia areas of operatio. Durig the year, Iluka employees participated i a umber of voluteerig iitiatives, icludig: the Souther Grampias Easter Barred Badicoot Moitorig Program i Hamilto; the Caraby s Cockatoo Habitat Restoratio Program i Perth; ad Coservatio Voluteers revegetatio iitiative i Adelaide. Iluka s ogoig partership with Coservatio Voluteers supports the compay s commitmet to biodiversity ad sustaiable evirometal maagemet. The Clotarf Foudatio The Clotarf Foudatio was established i 2 to improve the educatio, disciplie, self-esteem, life skills ad employmet prospects of youg Aborigial me i Australia. The Foudatio uses football as a drawcard for studets to its program. Studets are required to apply themselves to their studies ad behave i lie with the ethos of the Foudatio. The programs educate ad assist i fidig post-schoolig employmet for approximately 2,8 boys i 54 schools across Wester Australia, Norther Territory, Victoria ad New South Wales. Iluka became a parter of the Foudatio i 211 to support its commitmet to activities which cotribute to cultural diversity ad sustaiable geeratioal chage at a commuity level. I 212, Iluka directly supported the educatio of 36 youg Aborigial me, as well as the participatio of oe Clotarf studet i the Compay Directors Course for Idigeous Busiess Leaders. Iluka employees also participated through attedace at studet evets, metorig, site tours ad provisio of work experiece opportuities. Page 37

47 Director Profiles George Joh Pizzey BE(Chem), FellDip (Maagemet), FTSE, FAICD, FAIM Chairma Mr Pizzey was appoited to the Board i November 25. He has extesive experiece i miig ad mieral processig. Mr Pizzey was Chairma of Alcoa of Australia ad held a umber of seior executive positios with Alcoa Ic (USA). He is Chairma of Alumia Limited ad a director of Amcor Limited. He was formerly a director of St Vicet s Medical Research Istitute (retired November 211) ad of the Lodo Metal Exchage UK from 1997 to 23. Jeifer Ae Seabrook BCom, ACA, FAICD Chairma of the Audit ad Risk Committee Ms Seabrook was appoited to the Board i May 29. She is also a o-executive director of IRESS Ltd ad Export Fiace ad Isurace Corporatio. Ms Seabrook is a member of ASIC s Exteral Advisory Group ad a Special Advisor to Gresham Parters Limited. She was formerly a member of the Takeovers Pael (2 to 212), ad previous directorships iclude beig a o-executive director of Amcor Limited, Bak of Wester Australia Limited, West Australia Newspapers Holdigs Limited, Australia Postal Corporatio, AlitaGas ad Wester Power. Ms Seabrook is Chairma of the Audit ad Risk Committee ad a member of the Remueratio ad Nomiatio Committee. I her executive career Jey worked at seior levels i chartered accoutig, capital markets ad ivestmet bakig busiesses. Gavi Rezos BA, LLB, B.Juris, MAICD Stephe Joh Turer BCom, ACA Mr Rezos was appoited to the Board i Jue 26. He has extesive Australia ad iteratioal ivestmet bakig experiece ad is a former Ivestmet Bakig Director of the HSBC Group with regioal roles durig his HSBC career based i Lodo, Sydey ad Dubai. Mr Rezos has held chief executive positios ad executive directorships of compaies i the techology, eergy ad resources areas i the UK, US ad Sigapore ad was formerly a director of Amity Oil NL (Atares). He is Chairma of Alexium Iteratioal Group Limited, a pricipal of Viaticus Capital Pty Ltd ad a director of Rowig Australia. Mr Rezos is a member of the Audit ad Risk Committee ad the Remueratio ad Nomiatio Committee. Mr Turer was appoited to the Board i March 21. He is a fouder of the Lodo Stock Exchage listed compay, Iteratioal Ferro Metals Limited. He was the Chief Executive Officer of Iteratioal Ferro Metals Limited from 22 to 29 ad cotiues as a director of that compay. He is also a director of South America Ferro Metals Limited ad Chairma of Vatage Goldfields Limited. Mr Turer has had resposibility for resource projects i Australia, Africa ad the Pacific Islads. He was a foudig director of the Australia subsidiary of PSG Ivestmet Group, a South Africa ivestmet bak. He is a Australia Chartered Accoutat. Mr Turer is a member of the Audit ad Risk Committee. Page 38