Iluka Resources has issued its March Quarterly Production Report.

Key features:

• as the company had flagged previously, lower first quarter production of zircon (March quarter 115.7kt, down 18.4% vs pcp), rutile (50.7kt, down 19.5%) and synthetic rutile (50.6kt, down 35.5%), reflecting factors referenced previously by the company (refer below* to David Robb's comments at the time of the full year results on 23 February 2012):
  • a decision to reduce zircon production during an expected soft quarter or two of zircon demand, mainly achieved to date through lower processing of Jacinth-Ambrosia heavy mineral concentrate;
  • lower output of rutile associated with the completion of mining at the Douglas and Kulwin Murray Basin deposits and the commencement of the mine move from the Kulwin deposit to the Woornack, Rownack, Pirro project location, whereas 2011 had mining from Douglas, Kulwin and Echo deposits; and
  • lower synthetic rutile production, reflecting the commencement of a scheduled major maintenance outage for Iluka’s largest synthetic rutile kiln during most of the March quarter (SR kiln 2 in the South West of Western Australia).
• revenues of $196.3 million (March 2011 $226.3 million), reflecting:
  • expected slow start to zircon sales in 2012;
  • phasing of the shipment schedule for high grade titanium dioxide products, including 26kt � of high grade titanium dioxide products originally scheduled for shipment in March, but delayed until early April; and
  • higher average AUS/USD exchange rate - 105.6 vs 100.5 cents.
• Iluka does not disclose sales volumes with its March and September quarterlies; this data will be available with the June quarterly report
• continued strong demand for high grade titanium dioxide products
• Iluka's 2012 production and sales guidance is contained within ASX Release, 23 February 2012, Iluka Key Physical and Financial Parameters, 2012, with an expectation of a marked second half weighting to sales volumes

Key Physical and Financial Parameters 2012

• Iluka's practice is not to refer to pricing in quarterlies (as opposed to half and full year financial reports when pricing updates are provided), unless there has been a material change in pricing in line with the company’s continuous disclosure requirements, with 23 February disclosures being:
  • 1st quarter weighted average zircon price of ~US$2,500/t compared with 2011 weighted average price of US$1,340/t
  • 1st half weighted average rutile price of ~US$2,400/t compared with 2011 weighted average price of US$1,340/t
  • 1st half weighted average synthetic rutile price of ~US$2,050/t compared with 2011 weighted average price of US$1,075/tonne
  • these increases, assuming retained throughout 2012, indicate a market increase in revenue per tonne of Z/R/SR
• The Woornack, Rownack, Pirro development in the Murray Basin on track for HMC production from late May with relocation of mining and concentrating equipment from Kulwin well advanced in what is scheduled as a 103 day mining outage, although the Hamilton mineral separation plant will continue to be fed by stockpiled HMC (albeit lower assemblage material than during 2011);
• Eneabba mining and processing in Western Australia commenced on schedule (within 6 months of re-start announcement) and within budget
• PFS studies continue on Cataby (Western Australia) and Balranald (NSW), indicatively scheduled for 2014 and 2015 respectively, subject to study outcomes
• Two new studies commenced (Aurelian Springs, North Carolina and Hickory, Virginia), each of which have the potential to extend Virginia operations by at least 10 years from previously expected mine closure of ~2014.
• These projects form part of Iluka’s enhanced production project which has identified 11 new internal potential sources of production (including 3 in the Eucla Basin) capable of either increasing rutile and zircon production, or extending the economic life of deposits.
• Planned recommencement of third synthetic rutile kiln (SR1) in the fourth quarter 2012.

� *David Robb comments – 23 February 2012

� As stated previously, it is likely to take some time for a clear profile of likely 2012 product demand to emerge, particularly for zircon. In this context, and given evidence of a softening in the near term zircon demand outlook, Iluka has the ability to moderate zircon production accordingly, while still retaining the ability to respond quickly to demand recovery and while preserving high grade titanium dioxide production.
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This product flexibility is important, given that zircon price rises have moderated but high grade titanium dioxide sales volumes in the first half of 2012 will be delivered at prices appreciably higher (up 80 to 90 per cent) than in the second half of 2011. Furthermore, Iluka is now more evenly balanced from a revenue perspective across zircon and high grade titanium dioxide products than it has been for some years and is generating strong returns on capital employed in all areas of the business.
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� Iluka intends to manage its investment, production and sales decision making in the context of both global macro economic factors (for example, economic growth, consumer spending, business confidence and credit availability) and the favourable medium to longer term supply/demand characteristics of both zircon and high grade titanium dioxide. The company will therefore continue to focus on organic production growth opportunities; on reactivation of idled synthetic rutile capacity; and on product and technical development and new exploration areas.

If you have any queries, please contact me.

Regards

Rob

Robert Porter | General Manager Investor Relations
Iluka Resources Limited | Suite 1-2, Level 9, 118 Queen Street | Melbourne VIC 3000
Phone +61 3 96000807 | Mobile +61 (0) 407 391 829
Perth Corporate + 61 8 9360 4700

robert.porter@iluka.com