I attach a copy of Iluka's June Quarter Production Report.
I would remind recipients that Iluka made a call a while back not to disclose sales volumes in its quarterlies - essentially so as not to provide competitors and customers with information on inventory positions. This remains the practice.
We have reported Iluka data only (though with a separate split of Consolidated Rutile Holdings (CRT) volumes* and revenues) following the divestment of Iluka's 51% interest effective 27 May, given CRT will be reported in the financials as a discontinuing business.
Main components of the report:
� Lower production a result of changes announced in April to the company's production base designed to manage supply in the context of weaker 2009 demand associated with the GEC and high feedstock inventories in major markets to be worked down.
� WA production capacity has been reduced by approximately 50% - beginning to be reflected in production figures.
� Total sales volumes increased by over 60% in the June quarter relative to the March quarter, although a significant proportion of these volumes were lower value ilmenite sales.
� YTD total sales volumes substantially below sales in the pcp and, given the relative weakness, period-on-period, of sales of the higher value products of zircon and rutile, revenues were lower despite higher product prices received.
� Combined sales of high value TiO2 (rutile and synthetic rutile) in line with expectations; ilmenite sales have exceeded expectations associated with a recovery in sulphate pigment production in China.
� Zircon sales volumes relative to prior year monthly averages have been weak, despite sales volumes more than doubling in the June quarter from a very weak March quarter.
� Iluka’s mineral sands sales revenue before hedging for the first six months was $195.2 million (48.6 per cent lower than the previous corresponding period). Revenue after hedging for the six months was $149.3 million (61.6 per cent lower than the previous corresponding period). These figures exclude CRT. Proceeds from sale of Iluka holding in CRT - $84 million (received, along with $110 million from earlier institutional placement).
� In relation to zircon, evidence is emerging that recovery in demand for raw materials is occurring in China, the largest global zircon market. Encouragingly, Iluka estimates that first half 2009 total zircon consumption in China, at approximately 170 thousand to 180 thousand tonnes, was 85 to 90 per cent of first half 2008 consumption levels, albeit with inventory draw down being a major component of supply - as opposed to imports.
� In Europe and North and South America, as with China, stocks of both raw material and customers’ finished products have been at higher than typical levels and have depressed demand for resupply. Zircon demand has been particularly weak in these more mature economies to date.
� Murray Basin Stage 2 project, Victoria, is nearing practical completion, with commissioning occurring progressively during the September quarter.
� Jacinth-Ambrosia project, South Australia, remains ahead of initial schedule. First production of heavy mineral concentrate expected in early 2010.
� Capital expenditure for the June quarter was $161.2 million and $279.8 million for the six months to the end of June. Over 90% related to new growth projects: Murray Basin Stage 2, Jacinth-Ambrosia and the Brink development in Virginia.
Please let me know if I can provide any clarification. Iluka reports its half year results on 19 August at which time a fulsome review of the business will be provided.
*Iluka will not receive the CRT volumes - in 2008 CRT zircon volumes were 52kt and rutile 74kt (CRT indicated it expected 09 levels to be about 12% lower). This will provide a guide to the lower sales contribution from CRT to Iluka.
Regards
Rob
Robert Porter | General Manager Investor Relations and Corporate Affairs
Iluka Resources Limited | Level 23, 140 St Georges Terrace | Perth WA 6000
Phone +61 8 9360 4751 | Mobile 0407 391 829 | Fax + 61 8 9360 4336
robert.porter@iluka.com