Iluka Resources today issued its June Quarterly Production Report. Key features include:

Sales Revenue

�        Mineral sands sales revenue (before hedging) for the 1st six months was $378.4 million, a 93.8% increase compared with the 1st 6 months of 2009. 

�        Mineral sands sales revenue at $229.0 million (before hedging) for the June quarter was 53.3% higher than the March 2010 quarter.

Market Conditions

Year-to-date, Iluka has experienced favourable market conditions, indicated by: 

�        strong demand across its product suite and an associated drawdown of raw material inventories;

�        in the case of zircon, an inability to meet customer requirements fully;

�        industry wide price increases for zircon since the beginning of the year, and

�        the sale of some small uncontracted volumes of synthetic rutile (in the second half) at prices materially higher than levels achieved under prevailing contracts at the beginning of the year.

Production

�        June quarter zircon production of 104.7kt - 79% increase on the March 2010 quarter.

�        June quarter high-grade titanium dioxide production increased - rutile production of 56.9kt, a 25.6% increase relative to the March 2010 quarter; synthetic rutile (SR) production of 88.3kt up 3.2% increase.                             

�        Zircon production for 6 months to 30 June of 163.2kt was 1.0% lower than in the 1st 6 months of 2009 (164.9kt)
Rutile production of 102.2kt - up 60.9% on the 1st 6 months of 2009 (63.5kt).

�        Lower SR production of 173.9kt for the 1st 6 months of 2010, relative to 2009, reflects the decision by Iluka to idle two SR kilns during 2009. Improved throughput in the first half of 2010 at the South West (Western Australia) SR kiln has, however, enabled higher than forecast production to be achieved.

�        Jacinth-Ambrosia operation has been ramped up to targeted production rates - shipping commercial quantities of zircon and customer acceptance of the product has been favourable.

�        Associated with the ramp up of Jacinth-Ambrosia, the remaining mining operations at Eneabba (Western Australia) have been idled, as planned.
 - Iluka planned to idle the Mid West SR3 kiln shortly after the cessation of mining activities, revised commercial arrangements with customers have supported an extension of SR production to end 2010.

�        Murray Basin Stage 2 achieved targeted production rates.
- June 2010 quarter zircon production figure of 37.9kt, an increase of 58.6% to the March 2010 quarter.
- YTD rutile production was 67.4kt - a 111.3% increase relative to the 1st 6 months of 2009.
- Zircon production for the 1st six months of 2010 was 61.8kt, a 34.8% increase relative to the 1st 6 months of 2009.

�        Virginia processing was ramped back up to full production in mid February in response to higher demand.  The return of mining operations to full production has been brought forward to July from October.

 Sales Volumes

�        Demand recovery for zircon reflecting a rebound in demand in China to pre global economic crisis levels, a recovery in Europe and robust North American demand. Demand for high grade titanium dioxide products (rutile and synthetic rutile) has also recovered.

�        Zircon sales increased nearly four-fold in the 1st half of 2010, relative to the 1st half of 2009. Zircon sales YTD of 205.4kt exceeded production of 163.2kt, and have led to a drawdown of inventory. Murray Basin Stage 2 and Jacinth-Ambrosia production, which occurred towards the end of the June quarter, did not make a material contribution to sales volumes in the 1st half.

�        Rutile sales volumes of 101.6kt for the 1st 6 months of 2010 represent a more than three-fold increase from 2009, and are closely matched with production (102.2kt).

�        SR sales volumes of 161.3kt similar to 2009 levels (163.8kt), and while lower than production this reflects, in large part, the timing of shipments along with some additional production.

�        Lower ilmenite sales volumes (the lowest value product) of 187.4kt for the 1st 6 months of 2010, relative to 2009 (214.8kt), reflect idling of WA mining operations in 2009 and a lower proportion of ilmenite produced from the Murray Basin operations suitable for sale. 

Cash Costs of Production

Cash costs of production for the 1st six months of 2010 were $265 million (full year guidance of $530 million). 

If you have any questions, please contact me.

Regards

Rob

Robert Porter | General Manager Investor Relations
Iluka Resources Limited | Level 50, 120 Collins Street | Melbourne VIC 3000
Phone +61 3 9225 5481 | Mobile 0407 391 829 | Perth Corporate + 61 8 9360 4700

robert.porter@iluka.com