We have prepared the following information that you may find of use in association with the company’s half year results released to the market this morning.

Relative Share Price Performance to 25 August 2010

Company and Market Factors Year-to-Date

A number of factors have had an influence on Iluka’s business environment, and possibly market assessment of the company over the last six months:

·        Iluka’s two new projects (Jacinth-Ambrosia and Murray Basin Stage 2) have been delivered and are in production; as such the major capital expenditure phase for the company is behind it as well as attendant project execution and balance sheet risk.

·         After curtailing supply in 2009 and putting what Iluka considered a floor under zircon prices in the year of the worst demand reduction; zircon prices have increased in 2010 with Iluka delivering two price increases year-to-date.

·         In 2010 year-to-date, Iluka is rationing zircon customers, with the only new source of material incremental supply on the horizon that from Iluka.

·         Broker zircon forecasts have increased, and are in line with the TZMI (industry consultants) base case price.

This may prove to be a less than heroic assumption given market dynamics.

·         TZMI at a Conference in China in May that an increase in zircon prices may be sustainable for five years.

Further TZMI comment - it is a matter of when not whether zircon prices increase above US$1,000/t.

·         A pricing dynamic for high grade feedstocks (see Mineral Sands Pricing briefing paper referred to below) which the industry has not seen for over a decade, where prices for products such as rutile and synthetic rutile will not be constrained by cap and collar contracts.

Iluka has indicated it has sold small volumes of synthetic rutile at levels materially higher than contract prices.

·         MAC royalty valuation has increased to an average of ~$700m as higher iron ore prices have been factored into the valuation of this asset.

·         With the new production base Iluka would expect debt to reduce and free cash flow to be enhanced; this can be expected to open up the opportunity for capital management initiatives.

Recent Mineral Sands Information prepared by the company (available on Iluka’s website www.iluka.com)

Mineral Sands Pricing (August 2010)

Ilukas Exploration Focus (July 2010)

Mining Area C Iron Ore Royalty (July 2010)

Key Physical & Financial Trends in Iluka Business 2011-2013 vs 2006-2008 (June 2010)

Global Zircon Conference 2010, Shenzhen, China (May 2010)

        Overview 2009 Market Conditions; Zircon & Titanium Dioxide Supply; Mineral Sands Lead Indicators (March 2010)

Chinese Zircon Import Statistics - June 2010

Global Zircon Conference 2010, China - presentation by Robert Porter, GM Investor Relations

For images of Iluka’s operations please contact Ingrid Thompson on 08 9360 4785.  

Regards

Rob

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