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CONSOL Energy ABOUT ILUKA
RESOURCES
Iluka Resources Limited (Iluka) is an international critical minerals company with
expertise in exploration, project development, mining, processing, marketing and
rehabilitation.
The company’s objective is to deliver sustainable value.
With over 70 years’ industry experience, Iluka is a leading producer of zircon and
high-grade titanium feedstocks (rutile and synthetic rutile). Via the company’s
development of Australia’s first fully integrated rare earths refinery at Eneabba in
Western Australia, Iluka is set to become a globally material supplier of separated
rare earth oxides.
Iluka’s products are used in an array of applications including technology,
construction, medical, lifestyle, defence and industrial uses.
As the world moves towards a smarter, safer and sustainable future, Iluka’s high
quality, Australian critical minerals products are in increasing demand.
Alongside the company’s Australian production base and development pipeline,
Iluka has a globally integrated marketing network. Exploration activities are
conducted internationally; and Iluka is actively engaged in the rehabilitation of
previous activities in the United States and Australia.
Headquartered in Perth, Western Australia, Iluka is listed on the Australian
Securities Exchange (ASX). Iluka holds a 20% stake in Deterra Royalties, the largest
ASX-listed resources focused royalty company.
2
PRODUCTS
TITANI UM
DIOXIDE Ti O 2
Iluka is a leading producer of synthetic rutile,
which is an upgraded, value added form of
ilmenite. The company also produces natural
rutile. Collectively, these products are referred
to as high-grade titanium dioxide feedstocks,
owing to their high titanium content. Primary
uses include pigment (paints), titanium metal and
welding.
RARE
EARTHS
Iluka has established a significant position in
rare earths elements. Rare earths are among the
key building blocks of an electrified economy –
essential in a wide range of applications including
high performance permanent magnets in electric
vehicles, wind turbines and other renewable energy
technologies.
The strong outlook for these applications is
expected to drive growing market demand for
Iluka’s rare earth oxides, particularly neodymium,
praseodymium, dysprosium and terbium.
Other rare earths minerals produced from
Iluka’s refinery, such as lanthanum and cerium,
are necessary in the manufacture of catalytic
converters for vehicle emission control of hybrid
and petrol-fuelled cars, in modern rechargeable
batteries, and as an alloying agent to create high-
strength metals in aircraft engines.
ZI RC ON
Iluka is the largest global producer of zircon. From
premium grade zircon to zircon-in-concentrate,
Iluka can efficiently deliver quality products to
a wide range of customers around the world
utilising our well-developed logistics and
distribution capabilities. Applications for Iluka’s
zircon include ceramics, refractory and foundry
applications and zirconium chemicals.
OT HER
Iluka recovers and markets products produced as
part of processing activities, including activated
carbon, gypsum and iron concentrate.
Forward looking statement
This document contains certain statements which constitute “forward-looking statements”. While these forward-looking statements
reflect Iluka’s expectations at the date of this report, they are not guarantees or predictions of future performance or statements of fact
and readers are cautioned against relying on them.
Further information regarding forward-looking statements in this Annual Report is provided on page 178.
This document contains non-IFRS financial measures including cash production costs, non-production costs, mineral sands EBITDA,
Underlying Group EBITDA, EBIT, free cash flow, and net debt amongst others. These non-IFRS measures are not subject to audit or
review, however, a reconciliation of the measures to Iluka’s statutory accounts is provided on page 36.
3
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 OUR LOCATIONS
Operations, resource development, marketing and
rehabilitation activities
United States
»
»
Marketing and distribution
Rehabilitation
4
Europe
»
Marketing and distribution
A U S T R A L I A
Western
Australia
Narngulu processing
Cataby mining and
concentrating
»
»
»
»
»
»
»
Asia
»
Marketing and distribution
New South
Wales
»
»
Balranald project
Euston project
Eneabba rare earths refinery
development
Victoria
Capel synthetic rutile
processing
South West deposits project
Corporate support centre
Rehabilitation
»
»
»
Wimmera project
Rehabilitation
Hamilton processing (idle)
South Australia
»
»
»
Jacinth-Ambrosia mining
and concentrating
Atacama project
Rehabilitation
5
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
OUR PROCESS
EXPLORATION
& PROJECT
DEVELOPMENT
RESEARCH &
ANALYSIS
MINING
Exploration
Iluka’s exploration teams seek to
identify the highest quality mineral
deposits and are a key component of
Iluka’s growth platform. Consistent with
Iluka’s strategy to continue to grow and
develop the company’s diverse project
pipeline, teams use innovative practices
to explore greenfield and brownfield
opportunities globally.
Throughout all stages of project
work Iluka ensures cultural, heritage,
community and environmental impacts
are respectfully considered.
Project
Development
Iluka progresses developments
through its project pipeline to deliver
sustainable value now and into the
future. The company takes a gated
approach to project evaluation,
completing scoping, preliminary
and detailed feasibility studies to
determine the operational feasibility
and commercial returns of prospective
investments. Consideration is given to
a wide range of factors in proceeding
with developments, including industry
dynamics, portfolio optimisation and a
range of financial metrics.
6
Industry
Development
Iluka identifies, researches and
develops solutions that address
operational, customer and industry
challenges. This is achieved through
continued investment into innovative
processing, mining and technological
opportunities. A prime example is
Iluka’s unmanned, remotely operated
underground mining (UGM) technology,
which will be deployed at the
company’s Balranald development (see
page 40).
Iluka has a dedicated Metallurgical Test
Facility (MTF), analytical laboratories,
and an open innovation approach
collaborating with industry bodies and
universities.
Education
Iluka’s partnerships with researchers
across a number of tertiary institutions
within Australia and the United States
deliver research-led outcomes
geared towards improving future
rehabilitation outcomes. Iluka also
supports scholarships for students
in industry-related fields; and offers
work experience, graduate programs
and apprenticeships through a
series of education partnerships and
programmes.
Mineral Sands
Mining
Mineral sands mining involves both dry
mining and wet (dredge) operations. All
of Iluka’s current operations use a dry
mining approach. Mining units and wet
concentrator plants separate ore from
waste material and concentrate the
heavy mineral sands.
The company pursues operational
excellence to optimise production
output sustainably. Operational
flexibility enables Iluka to preserve
margins across the company’s core
product suite throughout periods of
market instability, and to maximise
production throughput during periods
of high demand.
Economic
Contribution
Direct and indirect benefits to local
economies are provided by Iluka’s
operations and activities through
the payment of taxes and royalties;
employment and procurement
opportunities; and through community
investment initiatives. The company
reports on its economic contributions
through the Annual Report and Tax
Transparency Report.
PROCESSING
MARKETING &
LOGISTICS
REHABILITATION
& CLOSURE
Processing
A Global Network
An extensive marketing and logistical
network enables Iluka to supply critical
minerals to customers in over 40
countries. Iluka’s significant experience
working across a wide range of
supply chains enables marketing and
product development teams to deliver
sustainable pricing and volumes of
market-specific products to customers.
The recovery and sale of by-products
produced through Iluka’s processing
activities, including activated carbon
and iron concentrate, maximise the
value of products and reduces waste at
source.
Iluka is committed to the reliable
delivery of consistent and high quality
products.
Heavy mineral concentrate is
transported from Iluka’s mines to
its mineral separation plant(s) for
final product processing. The plant
separates the heavy minerals zircon,
rutile, ilmenite, monazite and xenotime
in multiple stages using magnetic,
electrostatic and gravity separation.
Synthetic Rutile Kiln
Iluka produces synthetic rutile from
ilmenite that is upgraded in kilns by high
temperature chemical processes. The
upgraded, high quality product has a
titanium dioxide content of 89-94 per
cent.
Rare Earths Refinery
On 4 April 2022, Iluka approved
the final investment decision for a
fully integrated rare earths refinery
at Eneabba in Western Australia.
The refinery is the first of its type in
Australia and one of few globally. It will
produce light and heavy separated rare
earth oxides and establish Western
Australia as a strategic hub for the
downstream processing of rare earth
resources.
Progressive
Rehabilitation
Rehabilitation commences during the
operational phase of the mine lifecycle.
This minimises Iluka’s mining footprint
and assists with understanding and
evaluating closure risks, including
through informing research and
development programmes, and refining
closure provision estimates. Ongoing
environmental monitoring is performed
at all rehabilitated mine sites.
Iluka has a demonstrated track record
and strong credentials in environmental
management of mining, processing,
product handling, waste management
and rehabilitation.
Iluka’s intent is to be a safe, responsible
and sustainable supplier of critical
minerals.
7
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 CONTENTS
Business review
2022 year in review
Chairman’s and Managing Director’s review
Board and Executive
Financial summary
Strategy and business model
Financial and operational review
Sustainability
Business risks and mitigations
Financial report
Results for announcement to the market
Directors’ report
Remuneration report
Auditor’s independence declaration
Financial statements
Directors’ declaration
Independent auditor’s report
Physical, financial and
corporate information
Five year physical and financial summary
Operating mines physical data
Ore Reserves and Mineral Resources statement
Shareholder and investor information
Corporate information
09
12
16
18
22
24
43
58
63
64
72
98
99
157
158
164
167
168
174
178
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About this report
This Annual Report is a summary of Iluka
Resources’ and its subsidiaries’ operations,
activities and financial position as at 31
December 2022. Currency is expressed in
Australian dollars (AUD) unless otherwise
stated.
This Report includes Iluka’s Sustainability
report. Current and previous reports are
available on the company’s website at
www.iluka.com.
Iluka is committed to reducing the
environmental footprint associated with the
production of the Annual Report, and printed
copies are only posted to shareholders who
have elected to receive a printed copy.
2022 YEAR IN REVIEW
Financials
$1,727m
mineral sands revenue
53%
mineral sands EBITDA margin
$946m
underlying group EBITDA
$489m
net cash
(as at 31 December 2022)
Markets and
Operations
Key synthetic
rutile contracts
renewed
710kt
Z/R/SR sold
679kt
Z/R/SR produced
People
18%
reduction in serious potential
incidents (18 in 2022, 22 in 2021*)
6.9
TRIFR (up from 5.1 in 2021)
24%
female representation across
total workforce
4.6%
Aboriginal and Torres Strait
Islander peoples in total Australian
workforce (including 21% at
Jacinth-Ambrosia operations)
*data excludes SRL
9
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
2022 YEAR IN REVIEW
TIMELINE
»
»
Completed feasibility study for
Eneabba Rare Earths Refinery
Rob Cole announced as the next
Chairman of Iluka
»
»
»
Final Investment Decision
announced for Eneabba Rare Earths
Refinery following agreement of
strategic partnership between Iluka
and the Australian Government
Iluka announced intention to
demerge Sierra Rutile
Fluor Australia awarded contract to
complete the Front End Engineering
Design (FEED) and provide
Engineering, Procurement and
Construction Management (EPCM)
services to the Eneabba project
J A N - F E B - M A R
A P R - M AY - J U N
Q1 Q2
10
»
»
»
»
410ha rehabilitated across Iluka
portfolio, up from 305ha at H1
2021
Sierra Rutile demerged
Mining operations move from
Jacinth North deposit to
Ambrosia deposit
All primary environmental
approvals achieved for Eneabba
Rare Earths Refinery
»
»
»
»
Iluka announces strategic
partnership with Northern
Minerals for rare earths
concentrate supply
Iluka’s innovative rehabilitation
equipment, Flora Restorer,
receives Golden Gecko Award for
Environmental Excellence by WA
Department of Mines, Industry
Regulation and Safety
SR1 kiln restarts at Capel
Record synthetic rutile production
achieved from SR2 kiln
J U L - A U G - S E P
O C T - N O V - D E C
Q3 Q4
11
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
CHAIRMAN’S
AND MANAGING
DIRECTOR’S REVIEW
Building a globally significant rare
earths business; catalysing an
Australian downstream industry
In April, Iluka concluded a $1.25 billion strategic risk sharing agreement
with the Australian Government to establish a domestic rare earths
industry. This marked the culmination of several years of discussions
with the Commonwealth to create what is a historic partnership. It
also marked the beginning of the development of a substantial new
business for the company; one that will be a significant global business
in its own right.
Key rare earths – neodymium, praseodymium, dysprosium and
terbium – are essential inputs for permanent magnets, which are in
turn essential for the electric motors used in electric vehicles and the
generators used in wind turbines. They are also essential for a range of
defence applications.
In this context, Eneabba is a once in a generation opportunity.
As one of few facilities in the world that will produce both light
(neodymium and praseodymium) and heavy (dysprosium and
terbium) separated rare earth oxides, it positions Iluka and Australia
at the forefront of two key structural shifts taking place globally: the
accelerating transition to a lower carbon economy via electrification;
and the growing priority assigned to sovereign capabilities and
diversified supply chains, particularly for the procurement of strategic
materials.
Iluka will become a material producer of refined rare earths. And with all
industry forecasters predicting significant price increases over coming
years, we expect Eneabba to commence operations at a time when
our products will be highly sought after, including for their provenance
and credentials. This has been confirmed through the company’s
engagement with a range of potential customers.
The refinery represents a long term critical infrastructure asset that
is catalysing the development of an Australian rare earths industry.
Previously, concentrates produced in Australia would have to be
exported overseas to be refined into rare earth oxides. Following
our final investment decision, this is no longer the case. We have
the opportunity not only to refine Iluka’s own feedstocks but to be
a customer for the feedstocks produced by others. To illustrate, in
October, we concluded an agreement with Northern Minerals – an
emerging rare earths company – for the future supply of concentrate
from its planned mine at Browns Range in the Eastern Kimberley.
Eneabba marks an order of magnitude step change for domestic value
addition to the country’s rare earth resources; and a foundation for
potential further steps along the rare earths value chain in future, such
as rare earth metallisation. Iluka continues to evaluate the production
of rare earth metals, which would increase our reach and value to
consumers in key and emerging markets.
Dear Shareholders,
Iluka has a proud, 70-year history
of mining, processing and
marketing critical minerals.
In 2022, we built on this legacy
to deliver a number of significant
opportunities that are calibrated
to global trends and central to our
bright future.
It has been an extraordinary year
for our company – most notable for
our diversification into rare earths,
which will occur in the first instance
through the development of
Australia’s first fully integrated rare
earths refinery at Eneabba. The
refinery will be fed initially by Iluka’s
unique stockpile of rare earths,
which we have built progressively
over the past 30 years on the basis
that these critical minerals would
one day be valuable.
12
Rob Cole
Chairman
Tom O’Leary
Managing Director & CEO
Wimmera is a potential multi-decade source of rare earths and
zircon. Alongside the approval of a DFS, Iluka has declared an
Ore Reserve for Wimmera based on the value of its refined rare
earths. This has been made possible as a result of the Eneabba
refinery, which enables Iluka to capture additional value from the
rare earth minerals in the Wimmera region that is not available to
others. Again, this demonstrates the mutually reinforcing nature
of our mineral sands and rare earths businesses.
One characteristic shared by deposits in the Wimmera region is
higher levels of impurities in their zircon. Absent a processing
solution to remove these impurities, the zircon is ineligible for
sale into key markets, including the ceramics market, which
accounts for approximately 60% of total zircon demand. Iluka
has proven the technical viability of a zircon purification process
at lab scale. We continue to conduct pilot scale testing, with the
goal of then demonstrating the commercial viability of zircon
purification via a demonstration plant, which will be progressed
alongside the DFS.
Additional progress on major projects included the Atacama,
Euston and Tutunup developments, with the preliminary
feasibility study for Atacama scheduled for completion in early
2023.
Given our strategic and capital allocation priorities in Australia,
in 2022 Iluka determined to demerge its business in Sierra
Leone. This was executed in August, with Sierra Rutile listing
independently on the ASX.
Our purpose: deliver sustainable
value
Iluka’s evolution – diversifying into rare earths, investing in new
technologies and consolidating and unlocking production in
Australia – has taken place amid ongoing macroeconomic and
geopolitical uncertainty. The global economy continues to be
impacted, directly and indirectly, by the after-effects of the
COVID 19 pandemic, including inflation and the return to more
balanced monetary policy settings by central banks after years
of stimulatory low interest rates. This has been coupled with
further instability resulting from Russia’s invasion of Ukraine and
the ensuing energy crisis occurring in Europe in particular.
In addition, Iluka’s downstream position in Australia – a stable
jurisdiction and one respected for its high standards on safety,
environmental management and sustainability – positions the
company well for advancing value addition opportunities beyond
metallisation. These future opportunities lie in the magnetisation
of rare earth metals and alloys, as well as in the recycling of rare
earth materials.
While we will consider these possibilities in time, for the
present we are focused firmly on delivering the Eneabba
refinery – the first step in what we regard as a company-defining
transformation.
Rare earths are also highly complementary to Iluka’s
longstanding mineral sands business. Across our operational
and major project suite, rare earth minerals occur naturally
alongside the company’s traditional zircon and titanium dioxide
products. These minerals will now be refined by Iluka in Australia,
with the value captured for our shareholders and stakeholders
more broadly.
Unlocking Australian critical
minerals
2022 saw further considerable advancement throughout Iluka’s
minerals sands growth pipeline. These advancements facilitated
our final investment decision for the Balranald development
and the approval of a definitive feasibility study (DFS) for the
Wimmera development, both occurring in February 2023.
For several years, Iluka has been investing substantially in
new technologies targeted at unlocking Australian resources
previously regarded as uneconomic. Balranald is a primary
example of this investment focus. The remotely operated,
underground mining (UGM) technology we have developed
and will utilise at Balranald is akin to keyhole surgery for the
mining of critical minerals. It enables commercial access to a
rich deposit which, at 60 metres below surface, would not be
viable through traditional extraction techniques. Furthermore,
UGM’s sustainability benefits include a substantially reduced
disturbance footprint and carbon intensity.
Balranald will deliver approximately 250 jobs during construction
and approximately 270 jobs during operation including
contractors, with capital investment of approximately $480
million. As an important source of rutile, zircon, ilmenite (for
upgrading to synthetic rutile) and rare earths, this development
enhances Iluka’s portfolio offering of high grade, high quality
critical minerals products produced in Australia.
13
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 Confronted with this instability and uncertainty, Iluka’s financial
results once again exhibited the resilience and cash generation
capability of our company. Your Board is pleased at the extent
to which the successful implementation of Iluka’s approach to
operations, markets and project development has contributed to
building this resilience.
We delivered record revenue of $1.73 billion, $589 million in
NPAT, $444 million in free cash flow and total dividends of 45
cents per share. Our balance sheet strength is highlighted by
a net cash position of $489 million, our 20% equity interest in
Deterra, undrawn commercial bank facilities of $570m and a
$1.25 billion loan facility from the Commonwealth Government.
Iluka’s commitment and performance in relation to environmental
management was recognised by the Government of Western
Australia in October, with the company receiving the Golden
Gecko award for environmental excellence. This recognised the
commissioning of our internally developed bespoke seeding
machine, ‘Flora Restorer’, which has more than doubled the
annual area rehabilitated to native vegetation at Eneabba and
improved plant growth and diversity in the Kwongan ecosystem.
In closing, the past year has been perhaps the most momentous
in our company’s proud history. As we look to a bright future
and the opportunities within our reach, Iluka remains, as ever,
committed to delivering for our shareholders.
These results were underpinned by a strong sales and
operational performance. Iluka effectively sold out of all our
products in 2022, with zircon sales of 334 thousand tonnes
and high grade titanium (rutile and synthetic rutile) sales of
386 thousand tonnes. The company’s zircon inventory is at a
historically low level and Iluka remains focused on sustainable
pricing for its high grade products. At the industry level, zircon
and high grade titanium supply chains remained tight throughout
2022, reflecting supply disruptions from other major producers
and as a result of the war in Ukraine.
With scarcity, security and reliability of supply increasingly
prominent considerations for many downstream customers,
Iluka’s portfolio offering of high grade, high quality critical
minerals products produced in Australia sees the company well
placed. In January, we concluded key offtake agreements for
our synthetic rutile. New and existing customer commitments
increased to approximately 200 thousand tonnes per year for the
next four years, contracted under the ‘take or pay’ arrangements
we first put in place to underpin the Cataby development in 2017.
All Iluka operations were at full capacity over the year. Mining
at Cataby produced 501 thousand tonnes of heavy mineral
concentrate (HMC), including 419 thousand tonnes of ilmenite
for use as synthetic rutile kiln feed. Our Jacinth-Ambrosia
mining operation moved from the depleted Jacinth North
deposit to Ambrosia in August and produced a total of 351
thousand tonnes of HMC. The Narngulu mineral separation plant
processed both Cataby and Jacinth Ambrosia feed, producing a
total of 299 thousand tonnes of zircon and 55 thousand tonnes
of rutile. Synthetic rutile kiln 2 (SR2) at Capel had a record
year of production, delivering 231 thousand tonnes. And our
adjacent kiln, SR1, was successfully restarted in December 2022,
providing an additional source of high grade titanium feedstocks.
Production volumes from SR1 will be available for sale on a spot
basis as planned.
Sustainability is central to everything we do at Iluka. Given the
globally significant work we have embarked upon and the trust
invested in us to deliver it, this has never been more important.
Our first and foremost responsibility is the safety of our people.
In 2022, we achieved a 18% decrease in our Serious Potential
Injury Frequency Rate, which has been an area of specific
attention for some time. Our Total Recordable Injury Frequency
Rate was 6.9 – a focus for improvement.
14
Thank you for your support.
Rob Cole
Chairman
Tom O’Leary
Managing Director and CEO
15
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 BOARD OF DIRECTORS
AND COMMITTEES
Rob Cole
LLB (Hons), BSc
Chairman
Independent Non-Executive Director
Joined Iluka 2018
Perenti, GLX Group, Synergy, Southern
Ports, Woodside Petroleum, King &
Wood Mallesons, Landgate, Curtin
University
Tom O’Leary
LLB, BJuris
Managing Director and Chief
Executive Officer
Joined Iluka 2016
Wesfarmers Chemicals, Energy &
Fertilisers, Wesfarmers, Nikko, Nomura,
Allen & Overy, Clayton Utz, Clontarf
Foundation, Edith Cowan University
Lynne Saint
BCom, GradDip Ed Studies, FCPA,
FAICD, Cert Business Administration
Independent Non-Executive Director
Joined Iluka 2019
Bechtel Group, Fluor Daniel, Placer
Dome, NuFarm, Ventia Services
Susie Corlett
BSc (Geo, Hons), FAusIMM, GAICD
Independent Non-Executive Director
Joined Iluka 2019
Aurelia Metals, The Foundation for
National Parks & Wildlife, Standard Bank,
Macquarie Bank, Pacific Road Capital
Management, Mineral Resources
Marcelo Bastos
BEng Mechanical (Hons, UFMG), MBA
(FDC-MG), MAICD
Independent Non-Executive Director
Joined Iluka 2014
Vale, BHP, MMG, Aurizon Holdings, Golder
Associates, Golding Contractors, Anglo
American, Oz Minerals
Andrea Sutton
BEng Chemical (Hons), GradDipEcon,
GAICD,
Independent Non-Executive Director
Joined Iluka 2021
Rio Tinto, Energy Resources Australia,
Infrastructure W.A, ANSTO, Red 5
Limited, DDH1
Committees
The Board of Directors comprises five non-executive Directors and one executive Director (the Managing Director).
»
»
»
»
Audit and Risk Committee Chair – Lynne Saint
Sustainability Committee Chair – Marcelo Bastos
People and Performance Committee Chair – Andrea Sutton
Nominations and Governance Committee Chair – Rob Cole
16
Executive
Tom O’Leary
LLB, BJuris
Managing Director and Chief
Executive Officer
Joined Iluka 2016
Wesfarmers Chemicals, Energy &
Fertilisers, Wesfarmers, Nikko, Nomura,
Allen & Overy, Clayton Utz
Adele Stratton
BA (Hons), FCA, GAICD
Chief Financial Officer and Head of
Development
Joined Iluka 2011
KPMG, Rio Tinto Iron Ore
Matthew Blackwell
BEng (Mech), Grad Dip (Tech Mgt), MBA,
MAICD, MIEAust
Head of Major Projects and Marketing
Joined Iluka 2004
Asia Pacific Resources, WMC
Resources, Normandy Poseidon
Sarah Hodgson
LLB, GAICD
General Manager People and
Sustainability
Joined Iluka 2013
KPMG, Westpac, Mercer
Colin Nexhip
PhD Chemical Engineering, BSc (Hons),
BEd
Chief Technology Officer
Joined Iluka 2023
Newmont Corporation, MP Materials,
Rio Tinto, CSIRO
Daniel McGrath
BSc (Math)
Chief Technology Officer and Head of
Rare Earths
Joined Iluka 1993
Shane Tilka
BCom
General Manager, Australian
Operations
Joined Iluka 2004
Kerrie Matthews
BAppSc, GradCertRiskMgmt, GAICD
Project Director, Eneabba Project
Joined Iluka 2022
BHP, Maca Ltd, Rio Tinto
T
he Executive responsibilities
include achieving defined
business and financial
outcomes; capital deployment;
business planning; identification
and pursuit of appropriate growth
opportunities; sustainability
performance; promotion of diversity
objectives; strategic workforce
planning and capability; leadership
of required culture and behaviours;
and succession planning.
17
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
FINANCIAL SUMMARY
MINERAL SANDS
REVENUE
Mineral Sands
$1,727m
Revenue
$m
1,727
1,486
UNDERLYING MINERAL
Underlying
SANDS EBITDA
Mineral Sands
$917m
EBITDA
917
$m
UNDERLYING
NPAT
Net Profit After Tax
$597m
597
$m
1,193 1,244
634
947
531
545
315
301
279
342
151
2022 2021 2020 2019 2018
2022 2021 2020 2019 2018
2022 2021 2020 2019 2018
Mineral Sands Revenue
Iluka achieved record mineral sands revenue in 2022 of $1,727 million. The company was effectively sold out of Z/R/SR, with inventory
levels at historic lows.
Zircon sales of 334 thousand tonnes (including 100 thousand tonnes of zircon in concentrate) exceeded production and zircon inventory
is now at record lows. The zircon market was affected by a number of global economic headwinds in 2022 including softness in the
Chinese construction sector and energy price increases in Europe. Nevertheless, the zircon industry continued to be characterised
by supply tightness with a number of major producers experiencing disruptions and logistical challenges. Iluka is focused on being a
disciplined and reliable supplier of zircon.
Rutile sales of 140 thousand tonnes were in line with production in the year. Sales volumes reduced from 2021 following the demerger of
Sierra Rutile Limited in August 2022, which was Iluka’s dominant producer of natural rutile. Synthetic rutile sales exceeded production at
246 thousand tonnes.
Demand remained strong during the year for Iluka’s high grade feedstock despite slowing pigment demand especially in Europe and
China.
In Europe, pigment demand is estimated to have declined 20-25% compared to the same period to Q4 2021. Pigment producers
responded by idling or severely restricting production at all European sulphate pigment plants; and cutting back rates at chloride
facilities, thereby reducing production to match demand.
While titanium dioxide demand in North America has begun to be affected by higher interest rates and reduced housing demand,
domestic pigment production remains in line with seasonal norms. Chlorine prices remain at elevated levels, incentivising chloride
pigment plants to run higher head grades, utilising high grade ores such as synthetic rutile and natural rutile.
Underlying Mineral Sands EBITDA
Underlying mineral sands EBITDA was $917 million. This reflects the strong sales result as prices increased across the product suite
while supply constraints continued to impact the market.
The mineral sands business delivered excellent margins at 53% (2021: 42%)
Net Profit After Tax
Iluka reported a strong Underlying NPAT of $597 million, up from $315 million in 2021. Underlying NPAT included an earnings contribution
of $30 million from Iluka’s 20% interest in Deterra Royalties.
18
FREE CASH
FLOW
$444m
Free Cash Flow
$m
444
300
304
140
36
NET CASH
(DEBT)
$489m
Net Cash (Debt)
$m
489
295
ROE & ROC
ROE 33%
ROC 89%
ROE & ROC
%
311%
284%
50
43
2
89%
33%
69%
26%
54%
32%
7%
2022 2021 2020 2019 2018
2022 2021 2020 2019 2018
2022 2021 2020 2019 2018
-25%
ROE
ROC
Free Cash Flow
Free cash flow was $444 million, up from $300 million in 2021.
Operations continued to generate very strong cashflows, with operating cash flow of $711 million in 2022, an increase over the $514
million generated in 2021.
Iluka’s 20% stake in Deterra Royalties generated $36 million of cash flow, which was subsequently fully distributed to Iluka’s shareholders
in accordance with Iluka’s Dividend Framework.
Capital expenditure was $153 million. This included: $42 million spent on the Eneabba Rare Earths development; ~$33 million on
feasibility studies including Balranald, Euston, South West and Atacama deposits; $33 million on the SR1 restart, which commenced
production in December; and the remainder on sustaining capital expenditure. The capital expenditure for 2022 also included $11
million spent on Sembehun while Sierra Rutile remained part of the Group. During 2022, $12 million was spent on advancing critical
growth studies and research, including Wimmera and other rare earths and mineral sands opportunities that do not yet qualify as capital
expenditure and are captured within operating cashflows.
Total tax payments of $104 million include $31 million for 2021 final tax payments paid in the first half of 2022. Iluka expects to make tax
payments of $135 million in 2023 which relate to the 2022 financial results.
Net Cash (Debt)
As at 31 December 2022, Iluka reported a net cash position of $489 million, up from $295 million net cash as at 31 December 2021. Iluka
continues to prioritise maintaining a strong balance sheet in the face of continued uncertainty due to global inflation and recessionary
pressures driven by continued impacts of the global pandemic and the Russian invasion of Ukraine.
Iluka made the first drawdown of $41 million from the $1.25 billion loan from Export Finance Australia, underpinning the risk-sharing
strategic partnership with the Australian Government to establish the first fully integrated rare earths refinery in the Western world.
ROE and ROC
Iluka reported return on equity of 33% and return on capital of 89%, reflecting another strong operational performance in the year.
19
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 Balance Sheet
NET DEBT,
DEBT FACILITIES
Net debt, gearing and
(EXCLUDES EFA)
debt facilities
$m
1,200
488.7
1,000
294.8
640.0
512.0
50.2
43.3
1.8
618.0
500.0 519.0
800
600
400
200
0
DEBT FACILITIES
Debt facilities maturity
MATURITY PROFILE
(EXCLUDES EFA)
profile
570
70
0
0
0
2022
2021
2020
2019
2018
2023
2024
2025
2026
2027
Debt Facilities $m Net Cash (Debt)
As at 31 December 2022, Iluka had total debt facilities of $1,890 million. This comprised:
»
»
$1,250 million non-recourse loan facility from the Government of Australia (administered by Export Finance Australia) to construct
the Eneabba Rare Earths Refinery, with a term of up to 16 years expiring in 2038; and
$640 million Multi Option Facility Agreement (MOFA) of a series of committed five-year unsecured bilateral revolving credit
facilities with several domestic and foreign institutions. The MOFA, which was reduced to $570 million in January 2023, is
denominated in AUD and matures in 2027. No funds were drawn from the MOFA as at 31 December 2022 (2021: $ nil). The Group
also had $130 million of bank guarantee facilities utilised at 31 December 2022.
The Group had $489 million net cash at 31 December 2022.
Note 21 of Iluka’s Financial Report provides details of the maturity profile and interest rate exposure.
Dividend Framework
Iluka’s dividend framework is to pay 100% of dividends received from Deterra Royalties and pay a minimum of 40% of free cash flow
from the mineral sands business not required for investing or balance sheet activity. The company also seeks to distribute the maximum
franking credits available.
During the year, Iluka paid a fully franked interim dividend of 25 cents per share and has declared a final dividend of 20 cents per share,
fully franked, for 2022.
20
Hedging
Iluka manages a portion of its foreign exchange risk via a foreign exchange hedging program.
The Group entered into the following hedging contracts in 2022:
»
»
US$47.1 million in forward exchange contracts in 2022 with an average rate of 73.1 cents, which matured
during the year; and
US$319.6 million in foreign exchange collars consisting of US$319.6 million of bought AUD call options
with weighted average strike prices of 77.1 cents and US$319.6 million of sold AUD put options with
weighted average strike prices of 65.4 cents.
In addition, the following hedging contract matured during the year:
»
US$270.3 million in foreign exchange collar contracts consisting of US$270.3 million of bought AUD call
options with weighted average strike prices of 79.1 cents and US$270.3 million of sold AUD put options
with weighted average strike prices of 64.8 cents.
Iluka has US$151.6 million in foreign exchange collar contracts in relation to expected USD revenue from
contracted sales to 31 December 2023 which remain open as at 31 December 2022, which are detailed in Note
21 of Iluka’s Financial Report.
21
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
STRATEGY AND
BUSINESS MODEL
Our Values
● INTEGRITY
● RESPECT
● COURAGE
● ACCOUNTABILITY
● COLLABORATION
Our Purpose
Iluka’s purpose is to deliver sustainable value. The company aims to
achieve this by:
»
»
»
»
»
»
»
ensuring the safety, health and wellbeing of our employees;
optimising shareholder returns through prudent capital
management and allocation;
developing a robust business that can maintain and grow returns
over time;
providing a competitive offering to our customers;
managing our impact on the environment;
supporting the communities in which we operate; and
building and maintaining an engaged, diverse and capable
workforce.
22
Deliver to Grow Our Future
In a macroeconomic environment characterised by inflation, uncertainty and global supply chain challenges, Iluka delivered strong
outcomes in 2022, both in the context of financial performance and progress against its strategic priorities.
Iluka’s purpose is to deliver sustainable value. In 2022, net profit after tax was $589 million, free cash flow was $444 million. The company
maintained its strong balance sheet position, ending 2022 with net cash of $489 million.
Iluka’s operational portfolio remained configured at maximum settings throughout the year. Customers sought high quality zircon and
very high grade titanium feedstocks produced by Iluka in Australia, with sales constrained by production.
The company’s SR1 kiln restart was commissioned in December. This development represents a capital efficient, incremental increase in
synthetic rutile production. With production from the SR2 kiln effectively contracted, and given the favourable outlook for synthetic rutile
as a feedstock, SR1 volumes will be available for sale on a spot basis as planned.
Iluka further progressed a number of developments in its project pipeline during 2022 that provide options to sustain, grow and
potentially transform the business.
Most notably, following the agreement of a strategic partnership with the Australian Government, Iluka has undertaken a substantial
diversification into rare earths. In April, the company approved the final investment decision to develop Australia’s first fully integrated
rare earths refinery at Eneabba in Western Australia. Earthworks commenced in November.
Iluka’s risk sharing partnership with the Australian Government includes a $1.25 billion non-recourse loan under the Critical Minerals
Facility administered by Export Finance Australia.
Importantly, the refinery has been designed with the size and capability to process a broad range of rare earth feedstocks. This includes
Iluka’s own feedstocks at Eneabba, Wimmera and elsewhere. It also extends to a wide range of potential third-party feedstocks located
in various parts of Australia and overseas.
In October, Iluka concluded an agreement with Northern Minerals for the supply of rare earths concentrate from Northern’s Browns
Range development. Whereas previously intermediate rare earth products such as these would require export overseas prior to refining,
this agreement ensures that value addition will now occur in Australia.
Northern’s deposit is significant globally for its high assemblage of heavy rare earths dysprosium and terbium, used in a number of
defence applications. Just as the company’s leading position in zircon has underpinned its competitive advantage in mineral sands over
the past decade, the production of high value heavy rare earths in Australia will be an important differentiator for its rare earths business
in the decades to come.
The Eneabba refinery is critical infrastructure which builds sovereign industry capability, onshores value addition, facilitates third party
mining developments and supports both national security and renewable energy technology manufacturing.
The gating of the Balranald and Wimmera projects respectively marks further important progress throughout Iluka’s development
pipeline.
These projects reflect the company’s emphasis on research and development to unlock Australian resources previously regarded
as uneconomic. Each of their associated technologies are potentially applicable beyond those deposits on which they are currently
focussed, holding the prospect of significant mining and processing evolutions for the critical minerals industry.
At the corporate level, Iluka successfully completed its demerger of its Sierra Leone business in August. The demerger reflects Iluka’s
evolution since it acquired Sierra Rutile in 2016; and enables the company’s strategic and capital allocation priorities to be focussed on
key Australian critical minerals operations and development projects.
23
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 FINANCIAL AND
OPERATIONAL
REVIEW
In this section:
»
Financial Results
»
»
»
»
»
»
»
24
Sales and markets
Production and operations
Projects
Exploration
Sustainability report
Project Pipeline
Business Risk and Mitigation
Financial Results
Income Statement Analysis
$ million
Z/R/SR revenue
Ilmenite and other revenue
Mineral sands revenue
Cash costs of production
Inventory movement - cash
Idle capacity, restructure, and other non-production
Government royalties
Marketing and selling costs
Asset sales and other income
Major projects, exploration and innovation
Corporate and other costs
Foreign exchange
Underlying mineral sands EBITDA
Share of profit in associate - Deterra
Underlying Group EBITDA
Depreciation and amortisation
Inventory movement - non-cash
Rehabilitation costs for closed sites
Loss on remeasurement of put option
Loss on Demerger
Impairment
Group EBIT
Net interest and bank charges
Rehabilitation unwind and other finance costs
Profit before tax
Tax expense
Profit for the period (NPAT)
Average AUD/USD rate for the period (cents)
2022
2021
% change
1,594.5
1,381.9
103.9
1,485.8
15.4%
27.9%
16.3%
132.9
1,727.4
(650.1)
27.0
(14.9)
(48.2)
(31.5)
0.9
(37.0)
(71.2)
14.4
916.8
29.6
946.4
(145.4)
9.3
(11.2)
-
(23.6)
26.3
801.8
(6.7)
6.2
801.3
(212.8)
588.5
69.5
(579.2)
(12.3%)
(67.0)
(33.4)
(38.0)
(34.4)
n/a
55.4%
(26.8%)
8.4%
2.0
(55.0%)
(45.2)
(64.3)
7.6
633.9
18.4
652.3
(171.2)
(12.6)
60.8
(3.4)
-
(6.3)
519.6
(5.7)
(8.9)
18.1%
(10.7%)
89.5%
44.6%
60.9%
45.1%
15.2%
n/a
n/a
n/a
n/a
n/a
54.3%
(17.5%)
n/a
505.0
58.9%
(139.1)
(52.9%)
365.9
75.2
61.2%
25
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Movement In Underlying NPAT
$ million
NPAT
Non-recurring adjustments:
Rehabilitation for closed sites - Total (post tax)
Loss on revaluation of put option
Impairments
SRL demerger loss (net of transaction costs)
Underlying NPAT
2022
588.5
(11.2)
-
26.3
(23.6)
597.0
2021
% change
365.9
60.9%
60.8
(3.4)
(6.3)
-
n/a
n/a
n/a
n/a
314.8
89.7%
403
28
111
27
( 91 )
( 170 )
31
8
11
16
( 10 )
( 8 )
( 75 )
597
e
c
i
r
P
e
m
u
o
V
l
i
x
M
X
F
S
G
O
C
t
i
n
U
r
e
h
t
o
&
e
d
l
I
r
e
h
t
o
&
e
t
i
z
a
n
o
m
,
m
l
I
j
s
t
c
e
o
r
P
r
o
a
M
j
s
e
i
t
l
a
y
o
r
t
n
e
m
n
r
e
v
o
G
a
r
r
e
t
e
D
r
e
h
t
O
&
e
t
a
r
o
p
r
o
C
x
a
T
r
e
h
t
o
&
d
n
w
n
U
i
2
2
0
2
r
e
b
m
e
c
e
D
1
3
2022
880.0
711.2
706.5
2022
66.4
90.6
94.8
2021
631.4
502.5
488.9
2021
20.9
17.1
16.1
$m
800
700
600
500
400
300
200
100
0
315
1
2
0
2
r
e
b
m
e
c
e
D
1
3
Continuing Operations
Underlying Group EBITDA
EBIT
Profit before tax
Discontinued Operations
Underlying Group EBITDA
EBIT
Profit before tax
26
Sales commentary is contained on page 28. Exchange rate variances relate to AUD:USD translation of sales, which are predominantly
sold in USD currency. The Australian dollar depreciated deeply for the first three quarters of 2022 before recovering slightly in Q4, with
Iluka ending the year with an average exchange rate of 69.5 cents compared to 75.2 cents in 2021. The Group hedges a portion of its
US dollar sales to assist in managing exchange rate exposure, which is detailed on page 21 of this report. Foreign exchange impacts on
operating costs—mainly related to Sierra Rutile operations for the portion of the year that it was in the Group—are included in the overall
movement in unit cost of goods sold.
Cash costs of production increased by $71 million as persistent global inflation impacted labour, consumables, fuel, and transport
costs at all operations, as well as higher mining and concentrating costs on increased Jacinth-Ambrosia HMC production and higher
synthetic rutile production as the SR2 kiln operated for all of 2022 and SR1 commenced operation in December.
Unit cost of goods sold increased to $1,031 per tonne compared to $916 per tonne in 2021. This reflected inflationary pressure on
production costs in Australia, conclusion of lower grade mining in the Jacinth North deposit, as well as shifts in product mix to maximise
zircon production to satisfy demand. Australian operations unit cost of goods sold increased 26% to $978 per tonne.
Idle, restructure, and other non-production costs decreased as the SR2 kiln operated for all of 2022 and a change in accounting
treatment for Sembehun study costs which were capitalised in 2022 compared to being expensed in 2021. Costs for ongoing
maintenance and land management of idle plant and operations at Tutunup South, Murray Basin, and the United States were in line with
2021 costs.
Corporate cost reflects expenses to operate, govern and grow the business. Increased costs reflect activity associated with growth
projects, including rare earths development and transaction costs for finalising the non-recourse loan facility with the Government of
Australia, as well as increased labour costs, including payment of incentives.
Major projects, exploration, and innovation costs included $11 million for exploration and $4 million on research and studies including
for Wimmera. Overall costs decreased as Iluka completed early phase studies in rare earths and commenced capitalisation of the
Eneabba Rare Earths Refinery project.
Government royalties increased on higher revenue.
Tax expense represented an effective tax rate of 28% in 2022. The equity-accounted profit for the Group’s investment in Deterra
Royalties is not assessable and the dividends received were fully franked, resulting in an effective tax rate lower than the corporate tax
rate. The tax rate applicable in Australia remained at 30%.
27
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 SALES AND
MARKETS
Iluka has observed a shift to a ‘value over volume’ approach in a number of the downstream market segments for zircon and titanium
feedstocks. This is evidenced by many opacifier producers resisting efforts from end consumers to discount year-end inventory; and
the unprecedented downward adjustment of pigment production in response to slowing demand, which, as at the end of 2022, appears
to have prevented any unseasonal build of inventory.
These disciplined responses are an encouraging evolution for the mineral sands and downstream opacifier and pigment industries and
should reduce volatility, with positive implications for many through the supply chain. Furthermore, security and reliability of supply are
increasingly prominent considerations for many downstream consumers in light of continuing production interruptions at some facilities.
Zircon
Iluka’s total zircon sales of 334 thousand tonnes in 2022 exceeded production for the year. Sales included 100 thousand tonnes of
zircon-in-concentrate. This result was achieved despite a number of global economic headwinds affecting key markets and highlights
the ongoing supply tightness, especially in the premium zircon market. Iluka ended 2022 with historically low levels of zircon sand
inventory through the company’s supply chain and over the course of the year drew down significantly on previously stockpiled volumes
of zircon-in-concentrate. Supply disruptions to competitors’ supply and logistical challenges have also been characteristics of 2022;
Iluka views supply tightness as a major factor in near-term market dynamics.
In China, demand for zircon started solidly but softened over the course of the year with the cumulative impact of ongoing COVID
restrictions and real estate market softness affecting ceramics markets. Fused zirconia and zirconium chemicals markets were more
robust but also showed some easing in the latter half of 2022.
European ceramic markets were impacted by high energy costs resulting from the war in Ukraine. Some smaller ceramic manufacturers
have ceased production. Production of lower value tiles, with lower zircon loading, declined. Production of large ceramic slabs,
containing higher zircon loadings, continued to outperform other sectors of the industry over the year.
Zircon demand in other key markets including India, Brazil and Mexico was solid over the year with some tile production shifting to these
regions characterised by relatively lower energy costs.
Given the macroeconomic uncertainty over 2022, Iluka prioritised sustainable, stable pricing to customers while also delivering value for
shareholders. The weighted average zircon sand price was US$1,943 per tonne, reflecting steady price growth over recent years, with
sand prices ending the year at US$2,054 per tonne (Q4 2022).
High Grade Titanium Feedstocks
2022 sales of high grade titanium feedstock products rutile and synthetic rutile totalled 386 thousand tonnes. The titanium market
experienced mixed conditions over the year, impacted by a number of global events including the war in Ukraine and monetary policy
tightening in Western economies. Iluka continued to offer a stable source of supply and experienced strong demand for its products.
Year-end stocks of high-grade feedstocks were also at historic lows.
Titanium pigment accounts for approximately 90% of titanium feedstock demand. The pigment market started the year strongly
with a backlog in construction and renovation projects following several years of COVID effected demand. High chlorine input costs,
particularly in the US, further contributed to strong demand for higher grade titanium feedstocks which require less consumption of
process chemicals. Pigment inventories which have been cyclical in the past remained low.
The war in Ukraine had a significant impact on European titanium markets. Ukraine is a major source of ilmenite and rutile as used in
pigment and welding. Iluka saw increased demand for its products as a secure, alternative source of feedstock supply. The related
increase in energy costs in Europe resulted in a number of pigment plants, particularly more energy intensive sulphate process plants,
being idled or output severely reduced.
In the latter part of the year, pigment demand softened in the US and Europe as the cumulative impact of interest rate rises reduced
economic activity, especially in the construction industry. In Europe, the impact of monetary policy tightening has been exacerbated by
the energy price shock with a sharper decline in construction activity evident. The pigment industry broadly responded with a focus on
inventory management and maintaining margins.
Interest in Iluka’s premium synthetic rutile offering continues to be strong. This reflects the relative economic value of synthetic rutile
compared with other high grade feedstocks; and Iluka’s reputation as a consistent supplier of quality products from a reliable jurisdiction.
Offtake commitments increased to an average of ~200ktpa of synthetic rutile contracted under ‘take or pay’ arrangements for the next
four years. With production from the SR2 kiln effectively contracted, and given the favourable outlook for synthetic rutile as a feedstock,
SR1 spot volumes are available on a spot basis as planned.
Iluka’s average rutile price over the year was US$1,550 per tonne, the highest in a decade and indicative of the strength in high grade
feedstock markets.
28
PRODUCTION &
OPERATIONS
Australia
Iluka’s mining and processing operations are located in South Australia and Western Australia. The company is focussed on operating in
a safe and sustainable manner and strives to optimise production volumes in line with market demand while also delivering operational
efficiency improvements.
Iluka’s Australian based operations operated at full capacity over 2022 delivering 299 thousand tonnes of zircon, 55 thousand tonnes of
rutile and 238 thousand tonnes of synthetic rutile.
The Cataby mine in Western Australia produced 501 thousand tonnes of heavy mineral concentrate. Two new mining units to assist with
debottlenecking the operation by increasing the ore processing rates and exploiting available current wet concentrator capacity, will be
commissioned in 2023.
Mining and concentrating at Jacinth-Ambrosia in South Australia continued throughout the year. The planned mine move from the fully
depleted Jacinth North deposit to Ambrosia was completed in September. Ore grades mined at Ambrosia are initially higher and, in
2022, the operation produced a total of 351 thousand tonnes of heavy mineral concentrate. Iluka has had a strong focus on indigenous
employment at Jacinth-Ambrosia and in 2022 the company and its mining contractor, Piacentini & Son, achieved 20% employment of
Far West Coast Peoples.
The Narngulu mineral separation plant in Western Australia processed 1,024 thousand tonnes for heavy mineral concentrate from
Cataby and Jacinth-Ambrosia over the year.
The synthetic rutile kiln (SR2) in Capel operated at full capacity over the year and achieved record annual production of 231 thousand
tonnes. The previously idled SR1 kiln was restarted as planned in December and produced 7 thousand tonnes of product in the last
month of the year. Capacity of SR1 is 110 thousand tonnes per annum.
Sierra Leone
Iluka demerged Sierra Rutile on 4 August 2022.
Prior to the demerger, Sierra Rutile produced 197 thousand tonnes of heavy mineral concentrate for 84 thousand tonnes of rutile final
product from the Area 1 mining operations.
29
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
ZIRCON
RUTILE
Zircon
Production volumes (kt)
Rutile
Production volumes (kt)
324
322
303
349
185
197
184
173
163
139
SYNTHETIC
RUTILE
Synthetic Rutile
Production volumes (kt)
238
227
220
199
196
ILMENITE
Ilmenite
Production volumes (kt)
591
564
456
395
319
2022 2021 2020 2019 2018
2022 2021 2020 2019 2018
2022 2021 2020 2019 2018
2022 2021 2020 2019 2018
CASH COSTS
Cash costs of production
Unit cash production cost per tonne Z/R/SR produced
Unit cost of goods sold per tonne Z/R/SR sold
$m
$/t
$/t
Jacinth-Ambrosia / Mid-West
Cataby / South West
Australia Total
Sierra Rutile
Total
MINERAL SANDS OPERATIONS RESULTS
2022
650.1
938
915
1,041
978
1,444
1,031
2021
579.2
777
631
909
774
1,678
916
% change
12.3%
20.8%
(45.0%)
(14.5%)
(26.4%)
13.9%
(12.5%)
Jacinth-Ambrosia / Mid-West
Cataby / South West
Rare Earths
SRL
Idle Ops
Support and corporate
Elimination - interco sales
Total
$ million
Revenue
EBITDA
EBIT
2022
778.9
753.4
-
203.6
0.4
-
(8.9)
2021
599.6
639.1
-
232.7
14.4
-
-
2022
512.4
452.9
-
66.4
(7.7)
2021
383.1
339.7
-
20.9
3.2
2022
465.9
366.7
-
90.6
(17.8)
2021
335.0
241.1
-
17.1
33.7
(98.3)
(113.0)
(94.7)
(107.3)
(8.9)
-
(8.9)
-
1,727.4
1,485.8
916.8
633.9
801.8
519.6
30
Jacinth-Ambrosia/Mid West
Production volumes
Zircon
Rutile
Total Z/R production
Ilmenite
Monazite concentrate
Total saleable production
HMC Produced
HMC Processed
Unit cash cost of production - zircon/rutile/SR
Mineral Sands revenue
Cash costs of production
Inventory movement - cash
Restructure, idle capacity and other non-production costs
Government royalties
Marketing and selling costs
Asset sales and other income/(expenses)
EBITDA
Depreciation and amortisation
Inventory movement - non-cash
Rehabilitation costs for closed sites
EBIT
2022
243.7
20.7
264.4
137.1
-
2021
change %
271.2
(10.1%)
30.3
(31.7%)
301.5
(12.3%)
127.7
57.7
7.4%
n/a
401.5
486.9
(17.5%)
351
458
727
264
453
563
33.1%
1.1%
29.1%
778.9
599.6
29.9%
(192.3)
(169.6)
(13.4%)
(32.6)
(2.1)
(29.0)
(10.5)
(7.1)
(359.2%)
(2.9)
27.6%
(21.6)
(34.3%)
(15.2)
30.9%
-
(0.1)
n/a
512.4
(49.3)
(0.3)
3.0
383.1
33.8%
(43.8)
(12.6%)
5.4
(9.7)
n/a
n/a
465.8
335.0
39.0%
kt
kt
kt
kt
kt
kt
kt
S/t
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
While the Narngulu MSP continued to run near capacity through 2022, zircon and rutile production was lower than the previous
comparative period as lower zircon assemblage in the Jacinth North deposit affected final product separation, though more ilmenite was
recovered.
Mineral sands revenue increased 30% to $779 million (2021: $600 million) as prices increased throughout the year in response to tight
global supply, especially in the zircon market.
Cash costs of production were 13% higher as increased fuel, consumables, and labour costs impacted mining and concentration costs.
The inventory movement reflects continued drawdown of HMC stocks. Total inventory balances (WIP and finished goods) decreased by
$26 million to $236 million at 31 December 2022, reflecting lower inventory levels offset by higher unit costs.
Depreciation and amortisation charges increased 13% from the previous corresponding period due to increased amortisation of
rehabilitation assets.
Marketing and selling costs were 31% lower as global shipping costs normalised through 2022 following the disruptions caused by the
global pandemic and recoveries for shipping costs from customers were adjusted.
Government royalties rose to $29 million as HMC haulage volumes increased, continuing to draw down inventory at Jacinth-Ambrosia,
with the royalty being charged when HMC leaves the mine gate, regardless of timing of sale.
31
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Cataby/South West
Production volumes
Zircon
Rutile
Synthetic rutile
Total Z/R/SR production
Ilmenite - saleable and upgradeable
Total saleable production
HMC Produced
HMC Processed
Unit cash cost of production - zircon/rutile/SR
Mineral Sands revenue
Cash costs of production
Inventory movement - cash
Restructure, idle capacity and other non-production costs
Government royalties
Marketing and selling costs
Asset sales and other income
EBITDA
Depreciation and amortisation
Inventory movement - non-cash
Rehabilitation costs for closed sites
EBIT
2022
2021
change %
55.0
34.4
237.6
327.0
419.0
746.0
501
566
985
48.9
37.0
198.7
284.6
383.9
668.5
541
470
747
12.5%
(7.0%)
19.6%
14.9%
9.1%
11.6%
(7.4%)
20.3%
24.6%
753.4
639.1
17.9%
(322.1)
(212.5)
(51.6%)
47.5
(3.1)
(59.5)
n/a
(7.7)
59.7%
(16.5)
(11.2)
(47.3%)
(6.7)
0.4
452.9
(91.4)
10.1
(4.9)
(8.9)
0.4
24.7%
-
339.7
33.3%
(81.0)
(12.8%)
(16.6)
n/a
(1.0)
(390.0%)
366.7
241.1
52.1%
kt
kt
kt
kt
kt
kt
kt
S/t
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
The SR2 kiln operated throughout the year, achieving record annual production, and the SR1 kiln commenced operation in December,
resulting in a total of 238 kt synthetic rutile production. Cataby mine produced 469 kt HMC.
Mineral sands revenue increased 18% from higher prices across all products, largely driven by increased demand for high grade
titanium feedstocks for the pigment market.
Cash costs of production increased to $322 million reflecting both the higher synthetic rutile production in the year and also higher
costs for labour, consumables, transportation, and fuel.
A return of ilmenite feed and work-in-progress stockpiles to more sustainable levels for future production impacted inventory movement
following major drawdowns in 2021.
Higher government royalties were driven from higher sales revenue.
Marketing and selling costs dropped commensurate with the lower average sea freight costs through 2022.
The return of the SR2 kiln to full production following the 2021 maintenance shutdown resulted in a drop in idle costs and an increase in
depreciation, which was also higher with the commissioning and commencement of operation of the SR1 kiln.
32
Sierra Rutile
Production volumes
Zircon
Rutile
Total Z/R/SR production
Ilmenite
Total production
HMC Produced
HMC Processed
Unit cash cost of production
Mineral Sands revenue
Cash costs of production
Inventory movement - cash
Restructure, idle capacity and other non-production costs
Government royalties
Marketing and selling costs
Asset sales and other income/(expenses)
EBITDA
Depreciation and amortisation
Inventory movement - non-cash
Rehabilitation and holding costs for closed sites
Impairment
EBIT
2022
2021
change %
4.0
84.0
88.0
34.8
4.1
(2.4%)
129.3
(35.0%)
133.4
(34.0%)
52.1
(33.2%)
122.8
185.5
(33.8%)
197
200
1,467
203.6
301
312
(34.5%)
(35.7%)
1,402
4.7%
232.7
(12.5%)
(129.1)
(187.0)
31.0%
(2.2)
(2.4)
(1.0)
(2.5)
-
66.4
(0.9)
(0.5)
-
25.6
90.6
(4.0)
45.0%
(15.1)
84.1%
(4.7)
78.7%
(1.0)
(150.0%)
-
n/a
20.9
217.7%
(43.2)
97.9%
(1.0)
50.0%
40.4
-
n/a
n/a
17.1
429.8%
kt
kt
kt
kt
kt
kt
$/t
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
Sierra Rutile was demerged on 4 August 2022 and its shares were distributed to Iluka shareholders. The results above reflect operations
for 7 months of 2022.
33
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Idle Operations
Mineral Sands revenue
Cash costs of production
Inventory movement - cash
Restructure, idle capacity and other non-production costs
Government royalties
Marketing and selling costs
Asset sales and other income
EBITDA
Depreciation & amortisation
Inventory movement - non-cash
Rehabilitation and holding costs for closed sites
EBIT
2022
0.4
(6.6)
7.2
(7.3)
(1.7)
(0.2)
0.5
(7.7)
(0.8)
-
(9.3)
(17.8)
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
2021
14.4
(10.0)
3.6
(7.7)
(0.5)
1.5
1.9
3.2
(0.2)
(0.4)
31.1
33.7
Discontinued and idle operations reflect rehabilitation obligations in the United States (Florida and Virginia) and certain idle assets in
Australia (Murray Basin). Revenue in 2022 represented sale of remnant HyTi and ilmenite in the United States as warehouses are cleaned
out.
Cash costs of production were largely driven by activities associated with product transportation and processing costs for Murray Basin
inventory transfers to the synthetic rutile kiln.
In 2021, rehabilitation costs reflected a significant decrease in the United States rehabilitation provision, with changes for closed
sites taken directly to profit and loss. The reduction came as Virginia operation discussions with the regulator reached a successful
conclusion and agreements were reached with landholders.
34
Movement in Net Cash
Movement in net debt ($million)
H1 2022
H2 2022
H1 2021
H2 2021
Opening net cash (debt)
Operating cash flow
Exploration
Interest (net)
Tax
Capital expenditure
Dividends received - Deterra
Government grants
Settlement of IFC put option
Investment in Northern Minerals
Principal element of lease payments AASB 16
Asset sales
Share purchases
Free cash flow
Dividends
Net cash flow
SRL cash demerged
Exchange revaluation of USD net debt
Amortisation of deferred borrowing costs
Increase in net cash/(debt)
Closing net cash/(debt)
294.8
481.0
(4.4)
(0.1)
(52.4)
(71.4)
12.3
-
(11.5)
600.3
230.2
(5.9)
4.8
(51.7)
(81.2)
23.3
-
-
-
(20.0)
(3.9)
(4.9)
-
-
-
-
50.2
306.6
(3.8)
(0.8)
(84.7)
(16.7)
2.6
(13.9)
-
-
(3.8)
0.1
(6.3)
220.1
221.1
(4.2)
(0.3)
(65.2)
(36.9)
12.2
-
-
-
(2.8)
1.9
(5.6)
349.6
94.5
179.3
120.2
(47.7)
(99.1)
(7.9)
(47.4)
301.9
(4.6)
171.4
72.8
-
3.8
(0.4)
(105.6)
(1.5)
-
305.3
(111.8)
600.1
488.6
-
(1.2)
(0.3)
169.9
220.1
-
2.3
(0.3)
74.8
297.9
35
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 Expl &
Oth
Mineral
Sands
(8.9)
1,727.4
-
87.5
(41.5)
(841.3)
Corp
Group
-
-
-
1,727.4
87.5
(841.3)
-
-
-
-
-
-
29.6
29.6
14.4
14.4
(71.2)
(71.2)
(50.4)
973.6
(27.2)
946.4
(0.2)
(142.5)
(2.9)
(145.4)
-
-
-
9.3
(11.2)
-
-
9.3
(11.2)
-
(23.6)
(23.6)
0.1
25.7
0.6
26.3
(50.5)
854.9
(53.1)
801.8
-
-
(1.6)
1.0
(0.6)
0.1
-
0.1
(50.5)
853.4
(52.1)
801.3
n/a
903.9
n/a
903.9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-IFRS Financial Information
JA/MW
C/SW US/MB
SRL
RE
Mineral sands revenue
778.9
753.4
0.4
203.6
AASB 15 freight revenue
58.6
28.9
-
-
Expenses
(325.1)
(329.4)
(8.1)
(137.2)
Share of profit in associate
FX
Corporate costs
-
-
-
-
-
-
-
-
-
-
-
-
EBITDA
512.4
452.9
(7.7)
66.4
Depn & Amort
(49.2)
(91.4)
(0.8)
(0.9)
Inventory movement - non-cash
(0.3)
10.1
-
(0.5)
Rehabilitation for closed sites
3.0
(4.9)
(9.3)
Demerger gain
Impairment
EBIT
-
-
-
-
-
-
-
-
25.6
465.9
366.7
(17.8)
90.6
Net interest costs
(0.6)
(0.7)
(0.1)
(0.2)
Rehab unwind and other finance
costs
(2.7)
(3.2)
0.9
5.1
Profit Before tax
462.6
362.8
(17.0)
95.5
Segment result
462.6
362.8
(17.0)
95.5
36
Exploration
Exploration is managed through a structured, stage-gated process considering a risk weighted analysis of technical and economic
factors. Near mine exploration seeks to add value in areas adjacent to Iluka’s existing assets, where synergies can deliver additional value
through mine life extension or progressive development. New mine exploration focusses on identifying new high quality mineralisation
that can deliver a new operation and longer term growth.
Please refer to the Ore Reserves and Mineral Resources Statement section on page 168-173.
Generation and External Opportunities
Iluka is focused on identifying opportunities within Australian and North American jurisdictions to augment the existing project pipeline.
The past year has seen Iluka continuing to focus on traditional mineral sands prospects while expanding into rare earth exploration
search spaces.
Australia
During 2022 activity primarily centred around increasing geological definition of Resources associated with operations and feasibility
programmes in South Australia, Victoria, New South Wales and Western Australia.
At Atacama in South Australia, a total of 49,884 metres were drilled in 1,145 holes focused on the geological and metallurgical
assessment programs aligned to the project’s preliminary feasibility study. Drilling and sampling activities were carried out in support of
the preliminary feasibility study at Wimmera in Victoria and Tutunup in Western Australia, and the definitive feasibility study at Balranald
in New South Wales. Additionally, various other programmes were focused on the evaluation of historic magnetic and non-magnetic by-
products for potential monazite and ilmenite feedstocks from the Murray Basin, the Mid West and South West of the Perth Basin.
At the Cataby operations in Western Australia, drilling was undertaken as part of normal life of mine and future-pit definition activities. A
total of 247 holes were completed for a total of 9,678 metres.
Regional exploration drilling was completed at the Hughenden (Queensland) and Sherwood (New South Wales) greenfield exploration
projects. Both programs were designed to advance the geological understanding of the regions to assess regional prospectivity and
suitability to host economic critical minerals deposits. The next steps for Hughenden will be determined when all assays are returned.
Drilling will recommence at Sherwood in 2023 pending additional land access and drill rig availability.
Iluka successfully progressed a number of access agreements with Traditional Owner groups across Western Australia and South
Australia. The signing of these agreements has allowed progression of these tenements to grant, providing access to two new, large
conceptual target testing. Field activities are planned to commence H2 2023 when all necessary approvals and clearances have been
received.
United States
On ground exploration activity within the United States has centred primarily on identifying and testing new search spaces on the
eastern seaboard. Following a review of geological settings a number of new search spaces were identified that were either poorly
tested or previously overlooked due to limited geological understanding. Drilling has focused on building the understanding of the
regional geological settings and their capacity to host significant critical mineral deposits. A total of 137 holes were drilled for a total of
4,241 metres during the second half of 2022. It is expected that additional drilling will be undertaken in 2023.
Rare Earth Exploration
As part of the diversification into rare earths, Iluka has commenced a review of potential exploration targets within both Australia and the
United States. The review has included both internal and external opportunities hosted within all types of geological settings. Iluka will
continue to assess as and when they arise. Four new tenement applications were submitted in Australia with a view to securing rights to
explore for rare earth elements (REEs).
37
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 GRANTED TENEMENT POSITION
AS AT 31 DECEMBER 2022
TENEMENT APPLICATIONS
AS AT 31 DECEMBER 2022
Region
Approx. square
kilometres
Region
Approx. square
kilometres
Eucla Basin (SA & WA)
15,782.60
Eucla Basin (SA & WA)
Murray Basin (NSW & VIC)
3,525.60
Murray Basin (NSW & VIC)
Perth Basin (WA)
740.00
Perth Basin (WA)
Other - Australia (QLD)
1,790.70
Gippsland (VIC)
Other - International
0.00
Other - Australia (QLD)
Total
21,838.90
Other - International
Total
725.78
2,095.78
501.64
357.30
0.00
0.00
3,680.50
EXPLORATION AND GEOLOGY 2022 YTD AND DEC 2022 EXPENDITURE
Canada and US,
$2.8M, 26%
Operations and
Project Support,
$3.6M, 33%
Administration & Others,
$0.3M, 3%
Australian
Exploration,
$3.5M, 32%
Opportunity ID,
$0.5M, 5%
International
Exploration,
$0.1M, 1%
38
PROJECTS
Iluka develops and gates projects in a disciplined manner towards execution subject to acceptable progress
in the following areas: (i) confidence in satisfactory project risk-return attributes, (ii) high level of strategic
alignment, and (iii) sequenced to take advantage of the economic and market outlook.
ENEABBA
WESTERN AUSTRALIA
Iluka routinely produces the rare earth bearing minerals monazite and xenotime as by-products of mineral sands processing activities.
Since the early 1990s the company has stockpiled these minerals at a former mining void at Eneabba, Western Australia. Since 2020
Iluka has taken an incremental phased approach to both developing Eneabba and the company’s rare earth diversification opportunity.
Phase 1 of the development commenced operating in 2020 and produces a mixed monazite-zircon concentrate. Phase 2 further
processes this product to produce a 90% monazite concentrate – a direct feed to a rare earths refinery; and a separate zircon-ilmenite
concentrate. Phase 2 was completed in June 2022.
Phase 3, a fully integrated rare earths refinery for the production of separated rare earths, received final investment approval from the
Iluka Board in April 2022. The decision was made following the completion of the feasibility study for the refinery and agreement of a
strategic partnership with the Australian Government, including a $1.25 billion non-recourse loan under the Critical Minerals Facility
administered by Export Finance Australia (EFA).
The refinery will have a total rare earth oxide capacity of 17.5-23 thousand tonnes per year and be fed initially by Iluka’s Eneabba
stockpile. Importantly, it will be capable of processing rare earth feedstocks sourced from both Iluka’s portfolio and from a range
of potential third party concentrate suppliers. Separated rare earth oxide production will include the high value rare earth oxides
neodymium, praseodymium, dysprosium and terbium.
In June 2022 Iluka awarded Fluor Australia (Fluor) the contract to complete the Front End Engineering Design (FEED) and undertake
Engineering, Procurement and Construction Management (EPCM) services for the Eneabba rare earths refinery.
All primary environmental approvals have been secured and bulk earthworks commenced at site in November. Commissioning is
scheduled for 2025.
39
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
BALRANALD
NEW SOUTH WALES
The Balranald development is located in the Riverina district of south western New South Wales. It is focussed on the rutile and zircon
rich West Balranald deposit. Owing to its relative depth (approximately 60 metres below surface), Iluka has over several years assessed
the potential to develop West Balranald via a novel, unmanned, remotely operated underground mining (UGM) technology.
This technology enables access to ore bodies previously thought uneconomic, with marked reductions in both environmental
disturbance and carbon intensity relative to traditional extraction techniques.
The definitive feasibility study for Balranald was completed in late 2022. This has confirmed the technical and commercial viability of
Iluka’s UGM technology; and the company’s Board approved the final investment decision for Balranald in February 2023.
Representing a capital investment of $480 million, Balranald will deliver approximately 250 jobs during construction and approximately
270 jobs during operation including contractors.
This development enhances Iluka’s portfolio offering of high grade, high quality critical minerals products produced in Australia. This
includes rutile, zircon, synthetic rutile and rare earths.
Furthermore, the technology has the potential to unlock other development opportunities that, owing to the depth, would be otherwise
unavailable via conventional mining techniques. These opportunities include Iluka’s existing critical minerals products (mineral sands
and rare earths) and other commodities. Further evaluation of these opportunities will be undertaken post implementation of UGM
technology at Balranald.
WIMMERA
VICTORIA
Located in Western Victoria, Wimmera is a potential multi decade source of both zircon and rare earths, including heavy rare earths.
The project’s rare earth minerals are not technically challenging, with concentrate produced at Wimmera an attractive, long-term source
of supplementary feed to Iluka’s Eneabba refinery.
Since 2014, Iluka has invested substantially in resolving a range of technical challenges associated with Wimmera’s zircon. This has
included the challenge of physical separation (given the fineness of the Wimmera deposits), which the company resolved in 2018.
More recently, Iluka’s focus has centred on a purification process to address higher levels of uranium and thorium. Unaddressed, these
impurities would render Wimmera’s zircon ineligible for most key markets.
Absent a technical solution for the zircon purification, projects of this nature are generally economically challenged. Iluka benefits from
the ability to generate returns from not only the rare earth concentrate but also the further processing to produce a rare earth oxide
through the company’s Eneabba refinery. As a result, Iluka has been able to declare a Mineral Reserve for Wimmera’s rare earths as part
of the commencement of the definitive feasibility study.
Iluka has proven the technical viability of a zircon purification process at lab scale and more recently at larger pilot scale. The next step
is to demonstrate the viability of purification at a still larger scale. Iluka will continue to conduct pilot scale testing, with the goal of then
demonstrating the commercial viability of zircon purification via a demonstration plant. This will be progressed alongside the DFS. The
company considers this a prudent and appropriate step given the nature of the purification technology.
Wimmera’s DFS is scheduled for completion by the end of 2025, at a cost of $30 million.
40
SYNTHETIC RUTILE
KILN 1 (SR1) RESTART
WESTERN AUSTRALIA
SR1 is located at Capel, Western Australia, on the same site as SR2. SR1 was placed on care and maintenance in 2009. The restart of
SR1 represents a low capital expenditure, low risk opportunity to produce an additional 110ktpa of synthetic rutile, in light of industry
supply constraints. Iluka announced the execution of SR1’s restart in August 2021.
Site and kiln refurbishment work was completed over 2022 and the kiln was restarted successfully in December.
ATACAMA
SOUTH AUSTRALIA
Atacama is a satellite deposit located approximately five kilometres from Iluka’s existing operation at Jacinth-Ambrosia. The project is a
logical extension for the operation and a potential source of zircon and synthetic rutile kiln feeds.
The project is currently the subject of a pre-feasibility study. Work in 2022 continued to focus on validating a processing solution to
remove ilmenite contaminants. The study is scheduled for completion in early 2023; it is expected that a DFS would include a test pit to
confirm trafficability of material.
EUSTON
NEW SOUTH WALES
The Euston deposit is a traditional mineral sands deposit. Located in western New South Wales, the deposit has significant zircon and
rutile assemblages, with ilmenite feedstock as a possible supplement for Iluka’s synthetic rutile kilns.
The development would be a traditional open cut, dry mine and provides Iluka optionality in its future developments. Preliminary
feasibility study work was progressed in 2022.
41
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 2022 PROJECT
PIPELINE
Select
Preliminary Feasibility
Study
Determine what it
should be
Develop
Definitive Feasibility
Study
Determine what it
will be
Execute
Project execution
Deliver the project
Producing
Operate and maximise
Grow and improve
EUCLA BASIN
MURRAY BASIN
PERTH BASIN
ACATAMA
EUSTON
SOUTH WEST
DEPOSITS
WIMMERA
BALRANALD
ENEABBA
REFINERY
JACINTH
AMBROSIA
SR1 KILN
SR2 KILN
CATABY
RESOURCE
RESERVE
OTHER
42
SUSTAINABILITY REPORT
Message from the Sustainability Committee Chair
At the end of 2021, Iluka’s Board determined to form a Sustainability Committee. This reflected the company’s evolution and the priority
we place on the integration of sustainable development throughout the business. I am most pleased to lead this committee, particularly
in the context of the globally significant opportunities that are within Iluka’s reach.
Trusted by our people and communities
The lifting of COVID-19 restrictions during 2022 enabled the Board to visit the company’s operations in the South West – our first site
visit since November 2019. We spent time engaging with employees on the criticality of safety and gained first-hand experience of our
Critical Control Management programme. This programme has facilitated a reduction in Iluka’s Serious Potential Incident frequency
rate over the past year. In parallel, our TRIFR has increased, mainly due to soft tissue injuries and minor lacerations. We value the safety
of our employees and contractors, first and foremost. The Board is focussed on supporting senior management to enhance our field
leadership and implement strategies to improve our performance.
Of equal importance to physical safety is the creation of a psychosocially safe environment for our workforce. We have placed a priority
on transparent and open conversations with our employees on these issues, the importance of speaking up and the avenues available
to seek help and support. Implementation of training programmes relating to cultural awareness, mental health and expected behaviours
are a key component in building workforce capability to achieve a safe, diverse and inclusive workplace.
Responsible for the environment
We are proud of our rehabilitation legacy and Iluka’s rehabilitation team; in 2022 the team was recognised for its performance and
innovation, achieving the prestigious Golden Gecko award for environmental excellence. We continued to demonstrate strong outcomes
in this area, including the rehabilitation of 574 hectares in 2022 and the relinquishment of environmental obligations at our Wagerup
mineral sands mine in Western Australia.
Operate in and provide products for a lower carbon world
As the Chairman and Managing Director have noted, rare earths are among the essential building blocks of the transition to an
electrified, lower carbon economy. We cannot decarbonise without them. Iluka’s diversification into rare earths – to occur via the
development of Australia’s first fully integrated rare earths refinery at Eneabba – provides a unique opportunity to support this transition
through the company’s critical minerals product suite.
Iluka is also focussed on carbon reduction in its operations. In 2022 we focused on identifying potential decarbonisation pathways in
the period to 2030 and over the longer term to 2050. The solutions we require to decarbonise our business are technically complex and
require significant development before they become commercially viable. To support this process, the Board is pleased to welcome
Colin Nexhip, who joined Iluka as Chief Technical Officer in January 2023. Colin will lead Iluka’s climate change programme, including the
investigation and development of potential decarbonisation opportunities.
I look forward to keeping you updated as Iluka continues to improve its sustainability performance.
Thank you for your interest.
Marcelo Bastos
Independent Non-Executive
Director
43
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Sustainability at Iluka
Iluka’s sustainability priorities are defined in its three-year sustainability strategy.
Iluka’s goal is to be a safe, responsible and sustainable supplier of critical minerals. To achieve this, the strategy is structured around
three pillars:
»
»
»
Trusted by our people and communities: To engage and build the capability of Iluka’s workforce, prioritising health, safety and
wellbeing, and embed a consistent and open approach to relationships with the communities where Iluka operates.
Responsible for our environment: To be cognisant of the impact of Iluka’s operations on the environment and maximise the
efficiency in how the company operates.
Operate in and provide products for a lower carbon world: To recognise that the manner in which Iluka operates and evolves
its business can reduce the company’s carbon footprint and provide opportunities to support the transition to a lower carbon
economy.
Iluka’s approach to sustainability is aligned with recognised principles and frameworks; and contributes to the advancement of the
United Nations Sustainable Development Goals. Iluka is committed to integrating sustainability into everyday business practices and to
the continuous improvement of the company’s sustainability performance.
Underpinning the company’s approach is Iluka’s commitment to transparency, behaving ethically and conducting business in
accordance with high standards of corporate governance through comprehensive systems and processes.
The Iluka Board Sustainability Committee assists the Board in reviewing progress made against the sustainability strategy.
Responsibilities include oversight of performance and compliance with legislation, and management of health, safety, environmental,
social and governance risks and impacts. The Committee also monitors the effectiveness of company strategies, policies and standards
as they relate to sustainability.
This Report summarises Iluka’s approach and performance for priority topics determined by the 2022 sustainability materiality
assessment. Case studies and a separate Sustainability Data Book outlining key performance information for 2022 and historical
reporting periods, are available at www.iluka.com.
Iluka reported in accordance with the GRI Standards for the period 1 January 2022 to 31 December 2022. GRI 1: Foundation 2021
has been applied, in addition to the G4 Sector Disclosures for Mining and Metals 2013. Refer to the GRI content index in the 2022
Sustainability Data Book.
44
Trusted by Our People and Communities
18%
6.9
24%
4.6%
1st
decrease in SPIs from 2021 (18 in 2022, 22 in 2021*)
*data excludes SRL
TRIFR up from 5.1 TRIFR in 2021
total women representation across workforce
Aboriginal and Torres Strait Islander peoples in total Australian workforce, including 21% at Jacinth-Ambrosia
Iluka Supplier Code of Conduct launched
Health, Safety and Wellbeing
Protecting the safety, health and wellbeing of Iluka’s people is its highest priority.
APPROACH
Iluka’s focus on health, safety and wellbeing is centred on creating a culture where all employees are leaders in promoting a safe working
environment. This includes work to identify, assess and control risks, reduce the potential for occurrences of occupational illness and
injury, and promote healthy lifestyles.
This approach is supported by Iluka’s Health, Safety, Environment and Community Management System, comprising Group Standards
that define minimum performance requirements across 14 key areas: risk and hazard management; contractor management; leadership
and training; emergency and crisis preparedness; and audit and assurance.
Group Standards require Iluka’s workforce to be proficient in the requirements for a safe and healthy workplace for employees and
contract partners. Employees are empowered to actively identify and control hazards in the workplace by task based risk assessments
and critical control checks. Frontline leaders utilise risk management tools to verify that hazards are effectively controlled. Contract
partners are selected, engaged and managed to ensure they meet Iluka’s performance requirements through prequalification and
ongoing support during their contract period.
Iluka’s health, safety and wellbeing programmes include the:
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Safe Production Leadership programme, a back-to-basics initiative which equips frontline leaders with the skills and knowledge
of Iluka systems and requirements through classroom based education and competency assessments.
Safety Visit Programme, a positive leadership tool focused on behaviours and risk for specific tasks. It aims to increase visibility
of frontline leaders through thematic discussions between the Iluka Leadership Team and those undertaking the task, generating
opportunities to engage with all levels of the workforce to identify safety improvements.
Critical Control Management (CCM) programme engages employees in the identification, elimination, control and mitigation of
fatality risk. CCM provides confidence that health and safety material risks are being effectively managed, through a combination
of programme assurance, good governance and improved frontline knowledge of critical risks and controls.
Occupational Hygiene Programme monitors potential workplace exposures which may impact health. In line with Iluka standards
and guidelines, monitoring programmes are based on qualitative and quantitative risk assessments. Through the operational
risk profile, programmes typically focus on monitoring exposure to airborne contaminants including respirable dust, respirable
crystalline silica, inhalable dust, noise and radiation.
Iluka prioritises the mental health and physical wellbeing of employees through a number of initiatives including a dedicated wellbeing
portal on the Iluka intranet for resources, tools and techniques to enhance wellbeing; the provision of mental health first aid training for
employees and supervisors; and participation in awareness and fund raising events. An Employee Assistance Programme is available as
a confidential support service that can help employees and their immediate families address a wide range of work and life challenges.
Iluka has introduced its Mental Health Awareness eLearning module, which was developed in partnership with The Mental Health Project
and designed to align to the Western Australia Department of Mines, Industry Regulation and Safety Mentally Healthy Workplaces
guidelines. LifeLine WA’s mental health first aid training is also in place for appointed employees throughout the business.
To ensure business continuity, Iluka maintains its emergency preparedness for managing the impacts of the COVID-19 coronavirus.
Across Iluka’s business, changes in government directives and outbreaks are monitored. Specific COVID-19 management controls are
maintained for each operation and corporate support offices as required.
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ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
PSYCHOSOCIAL SAFETY AND WELLBEING
Iluka’s internal cross-functional psychosocial safety and wellbeing working group was established in response to the Australian
Human Rights Commission Respect@Work Report 2020. Previously focused on sexual harassment, the working group’s objectives
have expanded to cover leadership and culture; risk assessment and transparency; safety and amenity of accommodation villages;
measurement; knowledge and training; employee support; and victim reporting and external developments.
Iluka is a member of the Western Australian Chamber of Commerce and Industry’s safe and respectful behaviours industry working
group, which helps the company to align its actions to the recommendations of the Western Australian Government Inquiry into Sexual
Harassment Against Women in the FIFO Mining Industry 2021.
2022 HIGHLIGHTS
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Developed a company-wide action plan to support safe and respectful behaviours at Iluka incorporating internal focus
groups, engagement surveys and risk assessments.
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Awarded the Virginia Mineral Mine Safety Award for Open Pit Operations in the category of 10,000 to 30,000 hours
worked, recognising the safety performance of Iluka’s U.S. operations in 2020.
Focused efforts to reduce the frequency and repetitive nature of soft tissue injuries and lacerations, including:
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Increased visible presence of senior leaders at operational sites.
Early physiotherapy intervention and treatment on-site to minimise musculoskeletal injuries and severity.
Iluka’s CCM programme was embedded across all Australian operating sites, with 338 employees and 145 contractors
completing CCM training during 2022. The decrease in serious potential incidents (SPIs) can partly be attributed to the
maturity of this programme.
65 Safe Production Leadership training sessions were conducted during the year, with 569 employees and 144
contractors participating.
Read more about safety, health and wellbeing at Iluka on www.iluka.com.
Our People
Iluka is focused on building and maintaining an engaged, diverse and capable workforce.
APPROACH
Over 950 people globally are employed by Iluka and its subsidiaries, including 914 personnel in Australia1. Iluka’s business is supported
by a contractor workforce of over 800 people.
The Executive and Board recognise the importance of driving positive outcomes through the company’s culture, as well as enabling a
workplace where employees want to make a difference. Iluka’s desired culture is one that aligns with the company’s values and reflects
openness, integrated working, collective accountability and operating with a sense of urgency.
Iluka recognises the need for a strong employee offering in order to attract a broad range of talent and build robust future pipelines.
To support this, several internal working groups have been established to actively drive initiatives covering workplace behaviours and
conduct, culture, diversity and inclusion across the business.
Iluka’s People Policy and Diversity and Inclusion Policy guide the company’s approach to recruiting, developing and retaining an
engaged, diverse and inclusive workforce. Senior leaders promote diversity and inclusion; and integrate these principles into company
activities such as recruitment, training talent and succession management.
Iluka respects and encourages workplace diversity and inclusion. Iluka aims to have a workplace that is representative of the wider
communities in which the company operates. In Australia, Aboriginal and Torres Strait Islander workforce participation is just under 5%,
which is reflective of good participation at Iluka’s Jacinth-Ambrosia and Narngulu operations.
1 This represents a substantial change in Iluka’s workforce following the demerger of Sierra Rutile Limited in 2022. At the time of the
demerger there were over 2,100 Sierra Rutile employees.
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CAPABILITY AND DEVELOPMENT
Employee development is a priority at Iluka. Through annual strategic workforce, talent management and succession planning
processes, Iluka identifies critical skills required and invests in building capabilities throughout the organisation. A key priority is the
progression of workforce planning for the Eneabba refinery.
The Australian resources industry continues to face challenges in workforce availability, particularly in critical skills disciplines. In
response, Iluka focuses on the development of its people and invests in building talent pipelines at early career stages.
Iluka’s formal development initiatives include a two-year graduate programme; vacation internships; student scholarships; bespoke
leadership programmes; and support for employees to pursue formal education through courses and degrees.
To facilitate employment pathway opportunities for Aboriginal and Torres Strait Islander employees, Iluka offers traineeship
opportunities for students through education partnerships including the Clontarf Foundation and SHINE Academy. In the Mid West
region Iluka currently has three alumni from the Clontarf Foundation and SHINE Academy permanently employed.
EMPLOYEE ENGAGEMENT
Iluka’s objective is to meaningfully engage with all its employees. Information obtained through continuous engagement enables
Executive and senior leaders to understand employee concerns, identify and manage risk and material issues, and seek opportunities
for improvement.
Employee engagement surveys are conducted regularly to gather feedback on employees’ experiences and identify areas for focus and
business improvement. The 2022 survey focused on the five key themes: safety and wellbeing; diversity and inclusion; Speaking Up and
harassment; culture; and employee engagement. A strong overall employee engagement score was achieved, with 77% of employees
participating. Employee engagement is measured by the benchmark question of ‘I would recommend Iluka as a great place to work’ with
a score of 72/100 achieved.
2022 HIGHLIGHTS
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Refreshed Iluka’s diversity and inclusion strategy to focus on building a diverse, high performing workforce that
is representative of the communities in which the company operates. A series of employee focus groups and
conversations were conducted to support the diversity and inclusion review.
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Launched Iluka’s Leadership Skills Series, formerly the company’s Emerging Leader programme, redesigned to
provide a flexible and modular way of reaching a wider group of frontline leaders in operational and corporate roles.
13 frontline leaders completed their Certificate IV in Leadership and Management.
82 apprentices and trainees are working across the Australian operations, representing a 70% increase from 2021.
Awarded three scholarships in Metallurgy and Chemical Engineering in partnership with the Western Australian Mining
Club and two Playford Trust scholarships in Mining Engineering in South Australia.
Radiation Management
Iluka seeks to be recognised and trusted as an industry leader on radiation management.
APPROACH
Mineral sands, as with other mineral ores, contain some level of naturally occurring radioactive material (NORM). This is associated with
low level, naturally occurring potassium, uranium and thorium contained within the grains of the minerals: monazite, xenotime, zircon and
some ilmenites. Any activity in which material containing radiation is extracted from the earth and processed, can potentially concentrate
NORM in the final products, co-products and residue materials.
Iluka identifies, assesses and controls risks associated with exposure to radiation from NORM and man-made sealed sources. Radiation
exposure sources can be found within Iluka’s processing plants and laboratories, instrumentation and through all phases of activities,
from exploration, project development, operations, rehabilitation and closure.
Radiation management practices are aligned with international best practice, including the International Commission on Radiological
Protection (ICRP), International Atomic Energy Agency (IAEA) and applicable jurisdiction legislation. These practices include the
responsible and safe management of waste, ensuring it is disposed of in accordance with relevant legislation as documented in site-
specific radioactive waste management plans. These practices are regularly reviewed to capture updates, changes and revisions to
international, national and state level requirements.
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ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
In line with Iluka’s Radiation Management Standard and site-specific radiation management plans, the company ensures exposure to
radiation meets prescribed statutory limits and is as low as is reasonably achievable (ALARA), taking economic and societal factors into
account. All Iluka radiation management plans are reviewed by the relevant national, state or territory government regulator against
defined requirements before any approval to operate is granted. Once approved, these become licence conditions and obligatory
standards which must be complied with to maintain a regulatory licence to operate.
Iluka recognises the importance of maintaining and enhancing the technical skills of its radiation specialists, and ensuring the basic
literacy in radiation management is broadly understood across the workforce. Iluka’s radiation specialists maintain their technical
competencies through regular training and development.
Iluka collaborates with leading associations, such as the Radiation Services division of the Australian Nuclear Science and Technology
Organisation (ANSTO). Specialists hold individual memberships to the Australasian Radiation Protection Society (ARPS), in addition to
several current positions on the Australasian Radiation Protection Accreditation Board (ARPAB).
2022 HIGHLIGHTS
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Developed a radiation safety development programme for radiation technicians and safety officers. In collaboration
with the Radiation Services division of ANSTO, the radiation safety training component was developed and delivered to
operational line managers, Executive team and the Iluka Board.
Communities and Indigenous Relations
Iluka seeks to establish and maintain open relationships with communities for mutual benefit; and share the value its business
creates.
APPROACH
Iluka values the relationships it has with the communities associated with its operations and activities, and works in accordance
with Iluka’s Social Performance Standard and related procedures, which provide a framework for mandatory social performance
requirements. Annual assessments and internal reviews are conducted to ensure compliance against this framework and to pursue
improvements in Iluka’s social performance practices.
Potential impacts on communities and social risks to the business are managed using an evidence-based approach to understand
community needs and expectations. As part of an integrated project engagement process Iluka completes and reviews social baseline
studies, socio-economic and environmental impact assessments and collects community sentiment data.
Iluka’s community and stakeholder engagement is consistent across the company’s operating regions, adapting to the specific
circumstances of each region. Engagement programmes are implemented to support project development and formal government
approvals processes. Iluka has an online information and feedback mechanisms for communities and stakeholders which can be found
at www.iluka.com/engage.
All Iluka sites have a locally-appropriate grievance mechanism, as described in Iluka’s Grievance Management Procedure, which aligns to
the United Nations Guiding Principles on Business and Human Rights.
Recognising and respecting people’s human rights and cultural heritage are embedded in the company’s values, policies and
standards. Iluka acknowledges the important connection that Indigenous people have with country and seeks to work together to build
constructive and respectful relationships.
Iluka’s Aboriginal Cultural Awareness programme aims to develop the capability of employees to build and maintain strong, effective
relationships with Aboriginal and Torres Strait Islander people in Australia. These relationships extend from Board level through to
day-to-day relationships at Iluka’s operational sites. In consultation with Traditional Owners, Cultural Heritage Management Plans are
developed and implemented where sites of cultural heritage significance are identified.
Iluka has two agreements in place with Traditional Owners. In South Australia, Iluka’s Native Title Mining Agreement with the Far West
Coast (FWC) Native Title holders has been in place since 2007 at Iluka’s Jacinth-Ambrosia operations. In Western Australia, Iluka has a
voluntary agreement with the Yued Noongar People for the company’s Cataby operations. A formal relationship between Iluka and the
Yamatji Nation of Western Australia’s Mid-West regions is being pursued with a focus on jobs and training in the region.
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CREATING VALUE
Direct and indirect economic benefits are created in the communities in which Iluka operates. This includes employment and local
procurement opportunities; investment in community infrastructure and services; taxes and payments to governments; payments to
landowners and community groups; and sponsorships and partnerships.
Contractors and suppliers form an integral part of Iluka’s value chain. Australian operations collectively engage over 1,800 suppliers, of
which approximately 95% are located within Australia.
Guided by the Iluka Procurement Policy and supporting processes, Iluka aims to engage with businesses local to operations where
possible, while ensuring the ethical and responsible sourcing of goods and services.
Iluka supports the transparent disclosure of taxes, royalties and fees to government, and publicly reports contributions annually in the
Iluka Tax Transparency Report available online at www.iluka.com/investors-media/financial-results.
2022 HIGHLIGHTS
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Contributed $1.0 million in community investments in agriculture development, education, sponsorships and
donations.
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Engagement with local communities and continued support community events such as Nati Frinj Festival at Wimmera,
Five Rivers Festival at Balranald, Oysterfest at Ceduna and the Eneabba Merry Markets.
Partnered with the Police and Community Youth Centre in Moora Western Australia to help young people obtain their
driver’s licence through the Drive to the Future programme.
Introduced mandatory Cultural Competency e-learning modules for all Australian employees, which was developed in
partnership with Arrilla, a Supply Nation-certified and majority Aboriginal owned and operated business. The Executive
also participated in a Cultural Competency workshop to develop a better understanding of histories and cultures
shared by Indigenous peoples.
Introduced a Cultural Leave Policy to support Aboriginal and Torres Strait Islander employees to uphold any
community or obligations they may have outside the workplace.
Launched Iluka’s Supplier Code of Conduct that specifies Iluka’s procurement and respect for human rights
expectations.
Launched Iluka’s new vendor portal to modernise and streamline the vendor onboarding management process for
suppliers, including pre-qualification, requalification, data management and communication.
Read more on Iluka’s work with Traditional Owners in the Sustainability Data Book and on www.iluka.com/sustainability/case-studies-
and-insights.
Read more on Iluka’s economic contributions in the Sustainability Data Book.
Human Rights
Iluka is committed to respecting human rights within its business and supply chain; and treating all people with dignity and
respect.
APPROACH
Iluka’s approach to respecting human rights is guided by the Code of Conduct and Human Rights Policy. Embedded in the People Policy
and Health, Safety, Environment and Community Policy, the approach aligns with the United Nations Guiding Principles on Business and
Human Rights.
Iluka seeks to identify potential human rights issues associated with the company’s activities including instances of modern slavery in
Iluka’s supply chain. Human rights due diligence is embedded in Iluka’s procurement processes, including new supplier selection and
screening procedures. The company continues to mature its approach to modern slavery risk management through its procurement
processes, with a framework for the ongoing management of modern slavery risk currently in development.
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ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Stakeholders are consulted on human rights issues to identify and manage risks and provide an easily accessible complaints
mechanism to resolve grievances in accordance with Iluka’s Grievance Management Procedure. Employees gain awareness of human
rights implications for the business by completing Iluka’s mandatory human rights and modern slavery training module. Personnel are
engaged by Iluka to provide security services in line with the Voluntary Principles on Security and Human Rights.
Iluka actively participates in the Australia-based Human Rights Resource and Energy Collaborative to develop industry-specific human
rights remediation protocols and audit programmes. This group provides a forum for the resources and energy sectors to network and
share knowledge on respect for human rights, including implementation of the Australian Modern Slavery Act 2018.
Progress on managing modern slavery risks is published in Iluka’s annual Modern Slavery Statement available online at www.iluka.com/
about-iluka/governance.
2022 HIGHLIGHTS
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Completed a third-party risk review of Iluka suppliers to assess the likelihood of modern slavery practices within these
businesses, based on key risk factors.
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Introduced the requirement for new suppliers to complete a modern slavery questionnaire ahead of working with Iluka.
Responsible for our Environment
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Level 3 or greater environmental incidents compared to 7 in 20212
574ha
Land rehabilitated
Winner Golden Gecko Awards for Environmental Excellence 2022
Biodiversity
Iluka seeks to protect biodiversity and ecosystem value, and prevent or limit adverse impacts through exploration, development,
operational and rehabilitation phases.
APPROACH
Iluka owns, leases, manages and accesses a number of operational, rehabilitation and future project sites that contain areas of high
biodiversity value in Australia. Iluka works to protect the biodiversity of sensitive environments and contribute to regional biodiversity
through ecological and conservation efforts.
Guided by the Iluka Environmental Management Standard, the company’s biodiversity management considers regional and local
biodiversity needs and regulatory requirements. Biodiversity is managed at all Iluka sites through the implementation of environmental,
rehabilitation and closure management plans.
The mitigation hierarchy of avoid, minimise, rehabilitate and offset is applied across all projects and operations. This incorporates a
hierarchy of controls to address specific potential impacts identified during pre-mining biodiversity assessments and baseline studies.
In particular, the Eneabba refinery is being developed on a brownfield site to avoid adverse impacts on the high biodiversity value of
the Eneabba area. The Eneabba sandplain is part of the world-renowned biodiversity hotspot, supporting native vegetation known as
Kwongan - an Aboriginal word for low, hard scrub and heathland. Kwongan vegetation of the Eneabba region is extremely diverse and
includes many species, a large percentage of which are endemic to the region.
2 In 2022 eleven Level 3 and above environmental incidents were recorded and relate to the release of turbid or saline water; minor spills
of mineral containing NORM; and a recurring incident at Level 2 and below classification.
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2022 HIGHLIGHTS
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Research continues on the movement ecology of Carnaby’s Cockatoos (Calyptorhynchus latirostris) in the Cataby
region as part of Iluka’s partnership with Murdoch University’s Harry Butler Institute. Significantly, the recording of a
female bird at Cataby was confirmed to have been born approximately 70 kilometres north of Cataby. This indicates
mixing and breeding between bird populations, and was the first recording since monitoring began 20 years ago.
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Contributing research to the global macroecology network DarkDivNet, the Iluka Chair in Vegetation Science and
Biogeography at the Harry Butler Institute commenced a project looking at dark diversity of plant communities in
undisturbed natural and rehabilitated areas at the Eneabba and Jacinth-Ambrosia mine sites.
Read more about biodiversity at Iluka on www.iluka.com/sustainability/case-studies-and-insights.
Water Stewardship
Water is a valuable and essential resource for Iluka’s mining and processing activities. The company’s practices balance
environmental and social requirements within Iluka’s operations catchments.
APPROACH
Water is used in all parts of Iluka’s business, including exploration drilling, mining, processing, dust suppression, rehabilitation and for
drinking and domestic use in accommodation camps.
All Iluka operations maintain a site-specific water management plan to guide responsible water use throughout the mine lifecycle and
in the context of the local catchments. The Jacinth-Ambrosia and Cataby operations also have site-wide water balances in place. The
company’s water-related activities are regulated by relevant legislation in each jurisdiction and are subject to set quality and quantity
thresholds.
Understanding the importance of the physical risks of climate change on water availability in the regions in which Iluka operates, the
company has put in place suitable management and mitigation measures to ensure sustainable use and project longevity.
Water used in Iluka’s operations can impact the surrounding water table and its quality. Water is predominately sourced from nearby
groundwater aquifers and, in some instances, long-term use can potentially result in groundwater drawdown. Additionally, due to the
reliance on groundwater for processing activities, water quality can also be altered. To minimise these impacts and reduce the amount of
groundwater consumed, Iluka works to maximise the volume of water recycled within mining and processing operations.
Iluka has established group-wide metrics for measuring water consumption at all of its current operations. This will enhance our
understanding of water consumed per tonne of product and identify opportunities to maximise water efficiency.
2022 HIGHLIGHTS
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Established an internal water accounting framework for all operational sites, allowing for automated real-time water
consumption reporting. This is to develop a better understanding of water use and availability, and identify water
resource efficiency initiatives.
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Improved surface water infrastructure at the Cataby operations to manage flows during high rainfall events. This was
based on revised surface water flow modelling to improve the site’s understanding of surface water.
Tailings Management
Iluka manages tailings storage facilities in a safe and responsible manner in line with best practice.
APPROACH
Iluka utilises engineered tailings storage facilities (TSFs) situated within mine voids or externally located to mine pits to manage process
waste. This process waste comprises of clay, silt and sand-sized tailings. With exception to one TSF, embankments for Iluka’s TSFs were
constructed using downstream methods to final height.
Iluka applies a risk-based approach to actively mitigate potential impacts from TSFs on employees, local communities and the
environment. Existing management systems are reviewed to facilitate alignment with the industry-recognised Australian National
Committee on Large Dams (ANCOLD, 2019) guidelines, and the company continues to look at how the Global Industry Standard on
Tailings Management may inform our future practices.
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ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Iluka uses external, independent geotechnical specialists to support the assessment of the company’s compliance with TSF guidelines
and inform improvements in their management.
Iluka places importance on ongoing consultation with landholders adjacent to the company’s mining operations and transparently
discloses TSF information via the Global Tailings Portal.
Read more on Iluka’s tailings management approach and register of TSFs in the 2022 Sustainability Data Book.
Rehabilitation and Closure
Iluka’s business, social and environmental objectives are to leave beneficial closure outcomes by planning and executing the
rehabilitation and closure of assets in a manner aligned with leading practice.
APPROACH
Iluka is proud of the company’s strong track record in mine rehabilitation and closure, spanning several decades. This performance is
driven by the requirements set out in Iluka’s Closure Standard and Social Performance Standard.
Successful mine closure requires an integrated approach, with planning commencing at the feasibility phase and continuing throughout
the life of the asset. Closure planning processes include determining post mining land use; assessing closure risks and determining
relevant closure objectives; undertaking research programmes necessary to address knowledge gaps; and developing rehabilitation
management and engineering prescriptions. Planning is appropriate to the project or operational phase and is continually updated to
reflect changes in operational activities and mining methods, and new information.
Given Iluka’s 70 year history, land contamination may exist by virtue of the standards of the day, as opposed to any regulatory non-
compliance. In addition to the ongoing environmental management of operating sites, any historical land contamination issues are
addressed through a rigorous programme of assessment and management.
2022 HIGHLIGHTS
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Total rehabilitation expenditure exceeding $61 million.
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257 hectares was rehabilitated across Iluka’s Australian sites and 317 hectares across Iluka’s sites in Virginia.
Achieved relinquishment of environmental obligations of the Wagerup mineral sands mine following the completion of
land rehabilitation that met Western Australian government requirements.
Iluka was recognised for technological innovation in rehabilitation, with the bespoke Flora Restorer tractor-drawn
machine named as a winner in the Western Australian Department of Mines, Industry Regulation and Safety’s Golden
Gecko Awards for Environmental Excellence 2022.
Read more about Iluka’s legacy projects on https://www.iluka.com/sustainability/case-studies-and-insights.
Operate In and Provide Products for a Lower Carbon World
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group training sessions conducted for Iluka’s continuous improvement
programme, CORE
Approved a 9MW solar installation for the Cataby operation
Growth and Innovation
Iluka’s ability to innovate and apply new technologies is vital in advancing the company’s strategy, overcoming technical
challenges and creating growth opportunities.
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APPROACH
As Iluka’s evolution continues, the company aims to generate growth options through exploration, innovation, project development and
external growth opportunities.
Supported by a comprehensive approach to risk management, growth opportunities are validated as part of a disciplined process of
project selection and evaluation to maximise the opportunity, achieve the desired outcomes and manage risk.
Iluka pursues innovation and applies new technologies to advance the company’s business strategy and overcome technical challenges.
Iluka maintains a strong technical capability in mineral sands development, mining and processing and has testing facilities that
continually improves processing efficiencies and advances product development. This has driven the development of non-traditional
mineral sands ore bodies and technology projects potentially transformative for Iluka and the industry. This includes projects at
Balranald, Wimmera, Atacama and Eneabba; more information on these projects is available on pages 39-41.
Iluka recognises that a mindset of continuous improvement enables the company to improve and generate new opportunities. CORE,
Iluka’s continuous improvement programme, provides a framework and support for employees to identify, evaluate and implement
improvements; and has been rolled out across all Australian operations.
Since its launch in 2021, CORE has reviewed over 400 improvement opportunities and implemented over 90 initiatives. Examples of
improvement initiatives include relocating local control stations to eliminate confined spaces; streamlining contractor inductions; and
installation of permanent tool boxes adjacent to frequently maintained equipment to reduce handling.
2022 HIGHLIGHTS
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Announced the final investment decision for the development of a fully integrated rare earths refinery at Eneabba. The
refinery is a first of its type in Australia and will produce separated rare earth oxides from the highly valuable mineral
sands co-product. More information about the Eneabba refinery and Iluka’s strategic partnership with the Australian
Government is on page 12.
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Integrated the ability to capture climate change-related business improvement opportunities in CORE to enable
employees to contribute to Iluka’s climate change effort. This included company-wide workshops to identify and
capture emissions reduction opportunities across 100% of Iluka’s business functions.
The Iluka Board approved the final investment decision for Balranald. Iluka has over several years assessed the
potential to develop Balranald via a novel, remotely operated, underground mining (UGM) technology.
Product Stewardship
Sustainable delivery of Iluka’s products and minerals requires responsible business practices throughout Iluka’s value chain.
APPROACH
Iluka’s commitment to sustainability extends beyond delivery with the company working collaboratively with customers and
stakeholders to identify, support and promote sustainable management and opportunities for responsible product use.
Product stewardship is integrated throughout the business and is guided by Iluka’s Code of Conduct, Health, Safety, Environment and
Community Policy, Procurement Policy and Human Rights Policy.
Innovative processing and technology under development by Iluka, aims to remove contaminants contained within zircon minerals at the
company’s Wimmera project. Removing the contaminants will ensure products continue to meet increasing regulatory requirements for
transportation and for use in end markets. This technology could be applicable to other mineral sands deposits with similar contaminant
issues.
Iluka’s research and development work extends to identifying market opportunities for co-products produced as a necessary part of
mineral sands mining and upgrading, as well as product reuse and recycling initiatives. Iluka has numerous co-products that generate
revenue and limit waste production, handling and storage. These products include activated carbon; zircon-in-concentrate (ZIC); iron ore
fines and iron man gypsum; and the aluminosilicate staurolite.
Rare earth bearing minerals produced as a co-product of Iluka’s mineral sands processing activities are stockpiled at Iluka’s Eneabba
operation. To further upgrade the stockpiled rare earths, Iluka has constructed a screening plant and a beneficiation plant that will
produce a suitable direct feed for the company’s rare earths refinery, currently under construction. The refinery has been designed with
a closed circuit system to enable the re-use and recycling of the water and reagents required for processing; and for the collection of
by-products that can be sold to market.
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ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Iluka’s rare earths include the highly valuable light and heavy rare earths, essential for the manufacture of a range of clean energy and
high-end technology solutions. Other rare earths minerals produced from Iluka’s refinery, such as lanthanum and cerium, are necessary
in the manufacture of catalytic converters for vehicle emission control of hybrid and petrol-fuelled cars, and in modern rechargeable
batteries.
Iluka actively supports students in industry-related fields, providing scholarships, work experience opportunities and apprenticeships
through a series of education partnerships and programmes. The company also actively supports research and participation in industry
stewardship initiatives, such as the Zircon Industry Association and the Rare Earths Industry Association.
2022 HIGHLIGHTS
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Commissioned Iluka’s Eneabba beneficiation plant that will further upgrade stockpiled rare earth bearing minerals.
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Completed a life cycle analysis of Iluka’s titanium dioxide products process to better understand the greenhouse gas
emissions profile of synthetic rutile and commenced planning for similar analyses on Iluka’s rare earths and zircon
products.
Joined the Rare Earths Industry Association to support Iluka’s collaboration with other rare earths companies and
downstream producers, and to contribute to the development of a diversified and critical supply chain.
Life Cycle Analysis of Titanium Dioxide
In 2022 Iluka commissioned an external Life Cycle Analysis (LCA) of the company’s synthetic rutile production process to better
understand the carbon footprint generated from synthetic rutile. The analysis included upstream mining and downstream pigment
production processes, as well as emissions associated with chloride pigment produced using others’ feedstocks and sulphate pigment
production. Data was sourced from Iluka’s own synthetic rutile production data for the 2021 calendar year and publicly available
information on mining, processing and pigment production. Eight chloride pigment plants and five sulphate pigment plants were
assessed for all the key feedstock types, including slags and natural ores, as proxies for all global pigment production. Iluka proposes to
update the analysis over time as further data becomes publicly available.
An aspect of the carbon footprint analysis of Iluka’s synthetic rutile production system was to compare it against other titanium
feedstocks used within both sulphate and chloride pigment production processes. Preliminary results suggest the emissions intensity of
Iluka’s synthetic rutile (considering pigment production) is placed in the lowest quartile when compared to other titanium feedstocks.
From cradle to grave, the carbon emissions within both the sulphate and chloride pigment processes are driven by the upstream mining,
beneficiation and potential processing undertaken by feedstock suppliers; and the intensity of processing requirements undertaken by
pigment producers.
One of the main drivers of greenhouse gas emissions in the pigment supply chain is associated with the feedstock used, representing
a large fraction of the emissions associated with the supply chain or influence the degree of processing required due to the average
grade of the feedstock used. There is a trade-off between using high grade feedstocks (of which Iluka’s synthetic rutile is one), which
require significant processing prior to reaching the pigment plant; and using lower grade as-mined feedstocks, which require significant
chemical input to produce finished pigment.
The analysis was conducted following the International Organization for Standardization, Environmental management life cycle
assessment principles and framework ISO 14040:2006 and Environmental management life cycle assessment requirements and
guidelines, ISO 14044:2006. The analysis is currently undergoing third party review in accordance with these standards.
54
Climate Change Response
Iluka recognises that the physical and transitional impacts of climate change may affect its assets, productivity, supply chains
and markets. Iluka is committed to pursuing the reduction of its carbon footprint and to helping facilitate the transition to a lower
carbon economy through the production of critical minerals.
APPROACH
Iluka accepts the Intergovernmental Panel on Climate Change (IPCC) assessment of climate change science and that climate change
impacts are widely recognised. In 2021 Iluka published its first Climate Change Position Statement, which confirmed the company’s aim
to make a positive contribution to global decarbonisation goals.
The company’s approach is disclosed in this Annual Report and Sustainability Data Book. Iluka’s disclosure using the Taskforce on
Climate-related Financial Disclosures (TCFD) framework is also presented in the Sustainability Data Book.
Iluka’s approach is centred on three priorities:
MANAGING OUR EMISSIONS FOOTPRINT
Iluka reports Scope 1 and Scope 2 greenhouse gas (GHG) emissions annually, with data presented in the Sustainability Data Book.
Guided by the Iluka Carbon and Energy Standard, all Iluka operations monitor their energy use and GHG emissions, and consider ways to
reduce emissions and improve efficiency.
Iluka’s own carbon emissions arise largely from the use of coal as a reductant in the production of synthetic rutile, a high-grade titanium
feedstock; and through diesel use in mining operations. These emissions are challenging to abate. There is currently no proven
commercially feasible alternative to the use of coal as a reductant in the synthetic rutile production process.
During 2022 potential decarbonisation opportunities to reduce Iluka’s carbon footprint were identified and assessed. Specialist
consultants supported Iluka in assessing short to medium term abatement options, as well undertaking a technology horizon scan to
identify longer-term global technologies required for the transition toward net zero by 2050.
All identified abatement opportunities were initially assessed on their abatement potential, then ranked and prioritised on a marginal
abatement cost curve. Abatement technologies were also considered against Iluka’s current and future operations to determine
potential decarbonisation pathways. Abatement opportunities for existing operations are at varying levels of maturity in relation to their
current development phase, ranging from initial identification and evaluation through to detailed design.
To achieve Iluka’s objectives and set emissions targets, further work is required to provide confidence in the feasibility of options
available, as well as progress development on the range of abatement projects identified.
Iluka joined the Electric Mine Consortium in 2022 to further the company’s efforts in finding longer term technology solutions, especially
around the deployment of more energy efficient and lower carbon mining fleets. Iluka is actively involved in Consortium initiatives such
as energy storage, mine design, light and auxiliary infrastructure, electrical infrastructure, and surface and long haulage.
CONTRIBUTING TO A LOWER CARBON ECONOMY THROUGH OUR PRODUCTS
Iluka’s primary contribution is underpinned by the company’s product suite producing critical minerals that are among the building
blocks of a lower carbon economy. In addition, the high grade and high-quality products produced by Iluka have lower emissions impacts
in use compared to alternatives and help to enhance the sustainability of various end-use applications as explained below.
Iluka’s rare earths business puts the company at the forefront of global decarbonisation efforts, through the supply of its products.
When complete, the Eneabba refinery has the potential to be a strategic hub for downstream processing of Australia’s rare earth
resources, producing separated rare earth oxides including high value neodymium, praseodymium, dysprosium and terbium. These rare
earths are the building blocks of electrification – essential for the permanent magnets used in wind turbines and electric cars.
Zircon’s opacity, thermal stability, resistance to corrosion and non-reactive properties are beneficial in a wide range of applications.
Zircon has approximately a 16% lower Global Warming Potential than calcined alumina, the main alternative product, when used as
ceramic whitener and opacifier in porcelain stoneware tile production. Using zircon generates lower overall environmental impacts in
production versus calcined alumina, over a range of environmental indicators.
55
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 Titanium dioxide’s resistance to heat, light and weathering assists in maintaining the quality of products for longer. Pigments containing
titanium dioxide are used in approximately 95% of paints and are the main end-use of Iluka’s rutile and synthetic rutile products. Titanium
pigment in paint protects against UV and is heat and weather resistant, reducing maintenance and prolonging the life of structures. High
grade titanium feedstocks, such as synthetic rutile, enable Iluka’s pigment customers to operate their plants more efficiently, generate
less waste and have lower impact on the environment.
BUILDING RESILIENCE TO CLIMATE-RELATED RISK
Iluka acknowledges the importance of increasing resilience to a variable and changing climate. The company takes steps to understand,
assess and manage the risks and opportunities to the business and stakeholders, incorporating these into business strategy and
investment decisions.
Iluka utilises scenario analysis to evaluate climate-related risks and opportunities. In 2022 Iluka conducted a review of transitional risks
across its business and commenced the assessment of physical risks for its future growth projects (operating assets were assessed in
2019). For physical risks, 2°C and 4°C scenarios were applied for both 2030 and 2050 time horizons. The International Energy Agency
(IEA) Sustainable Development Scenario (SDS) and Net Zero Emissions by 2050 (NZE2050) scenarios were applied for transition risks.
2022 HIGHLIGHTS
»
Investigated alternative technologies to improve the carbon footprint of the synthetic rutile production process,
identified potential shorter-term opportunities and scoped for a study of long-term options for reductant use including
hydrogen technology development. Analysis of Scope 3 emissions associated with the production of synthetic rutile
was also completed.
»
»
»
»
Approved the development of a solar installation at the Cataby operation and entered into a power purchase
agreement with a third party to install a 9 megawatt solar farm that is projected to abate approximately 10,700 tonnes
of carbon dioxide per annum once fully operational.
Introduced a hybrid solar diesel electricity facility at the Jacinth-Ambrosia operation, expected to reduce the site’s
Scope 1 emissions by up to 10% or 5,500 tonnes of carbon dioxide equivalent per annum. The solar farm is running at
approximately 85% capacity at present.
Implemented an internal shadow carbon price to be applied when evaluating the feasibility of future Iluka projects.
Completed assessments for carbon sequestration opportunities on Iluka-owned land.
Read more about Iluka’s Climate Change Position Statement online at www.iluka.com/sustainability/transparency-hub.
Iluka’s TCFD response is detailed further in the 2022 Sustainability Data Book.
Hybrid power solution at the Jacinth-Ambrosia operation online at www.iluka.com/sustainability/case-studies-and-insights.
56
Iluka’s climate change ambitions
Iluka’s objective
How it will be achieved
Decarbonisation activities
Over the short to
medium term(a)
identify and realise
GHG emission
abatement
opportunities.
Achieve net zero
Scope 1 and Scope
2 GHG emissions
by 2050 where
technology is
viable, available
and commercially
feasible.
Identify, assess and deliver abatement opportunities
to reduce Iluka’s Scope 1 and Scope 2 emissions
intensity where technically and commercially viable.
This could include:
»
»
»
»
»
»
Maximising the proportion of renewable
energy supply available to current and future
operations without reliance on storage
technologies.
Realising energy efficiency gains across
mining and processing operations.
Accessing the continued decarbonisation of
grid-based electricity systems across Iluka’s
operations in Australia.
Investigating avenues to reduce reliance
on coal as a thermal energy source in the
synthetic rutile production process.
Considering the introduction of more efficient
heavy vehicle mining fleets.
Developing carbon offset projects on Iluka-
owned land.
Potential pathways that have been identified
to decarbonise Iluka’s operations to net zero
require delivery of electrification and/or hydrogen
transformation projects that are not technically
or commercially feasible at present or in the short
term.
Iluka will continue to monitor and investigate the
emergence of transitional technologies in the
context of its longer-term emissions roadmap.
Potential opportunities will be pursued as they
become available and are commercially and
technically viable.
Outside of this, Iluka’s objective is to continue to
identify and realise Scope 1 and Scope 2 GHG
abatement opportunities, as set out above.
(a)
Iluka defines short term as the period up to 2030 and medium term as 2050.
During 2023 Iluka aims to undertake
the following activities aimed at
decarbonisation:
»
»
»
»
Install a 9 megawatt solar farm at
the Cataby operation.
Complete a detailed assessment
of short-term efficiency and
emissions intensity measures
within the synthetic rutile
production process.
Progress a concept study of
long-term alternatives to coal as
a reductant in the synthetic rutile
production process.
Complete the detailed design of
a pilot carbon farming project on
Iluka-owned land at North Capel,
which is projected to sequester
approximately 30,000 tonnes of
carbon dioxide equivalent over a
25-year period.
57
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
BUSINESS RISK AND
MITIGATIONS
The delivery of Iluka’s strategy and purpose of delivering sustainable value requires
comprehensive risk management practices. This enables Iluka’s Board and management to
make strategic choices on where to take risks to realise opportunities while enhancing and
preserving business value.
Iluka’s Risk Management Policy is operationalised through its Risk Management Framework
which is aligned to the International Standard for Risk Management, ISO 31000. The
Framework provides a whole of business approach to the management of risks; and sets
out the process for the identification, evaluation, monitoring, review and reporting of risk to
facilitate the achievement of the company’s plans and objectives.
Risks are managed within the context of the Board approved Risk Appetite Statement,
including risk tolerances and reporting guidance across a range of business and strategic
priority areas. Management reports to the Board those risks which could have a material
impact on the business and / or could result in a breach of approved risk tolerance
thresholds twice yearly. The Audit and Risk Committee assists the Board with oversight
of the company’s risk management practices and undertakes an annual review of its Risk
Management Framework considering business priorities and industry practices.
Iluka has a dedicated Business Risk function that supports the Audit and Risk Committee
and management in facilitating consistent risk management practices, and centralised
reporting of risks to management and the Board.
Support for Health and Safety and Sustainability risks is provided by the corporate
health and safety and sustainability teams, subject to oversight of Iluka’s Sustainability
Committee. Iluka has a cross functional Modern Slavery Working Group to develop and
embed good practices through collaborating with peer resources sector industries and
external specialist experts. Compliance with the Declaration of Human Rights is a high
priority for the company.
Set out below are the key risk areas that could have a material impact on Iluka. These
risks are not the only risks that the company faces and whilst reasonable effort is made to
identify and manage material risks, additional risks not currently known or detailed below
may adversely affect future business performance. Emerging risk is a standing Board
agenda item.
All these risks are considered against a backdrop of a myriad of changes and ongoing
uncertainties in the external environment in which Iluka operates including COVID-19,
evolving global climate change policy, supply chain disruptions, inflationary/recessionary
environment and geopolitical conflicts. These present both opportunities and challenges.
During 2022 Iluka continued to improve the integration of strategic risk management and
corporate planning and maturing the Risk Appetite framework and tolerance reporting.
These continue to support the company to navigate through this landscape to achieve its
purpose of delivering sustainable value.
58
Risk level: Low, Medium, High
Risk trend compared to 2021: Unchanged (stable), Increased, Decreased
59
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 Health and Safety Risks
Attracting and Retaining Talent
Iluka places significant emphasis on ensuring strong systems,
processes and culture to protect the health and safety of its
workforce.
Throughout 2022, Iluka has continued to manage both fatality
risk through critical control management as well as the risk
that COVID-19 posed to the health and safety of the workforce
across all jurisdictions.
Environmental Risks
Iluka is committed to leading practice in environmental
management as outlined in the Iluka Health, Safety,
Environment and Community Policy. Leading practice is based
upon current community expectations, applicable legislation
and regulatory standards, all of which change over time.
Community/Social Risk
Iluka operates in different jurisdictions with varying community,
heritage and social laws and cultural practices. Community
expectations are continually evolving and are managed
through the development of robust strategies, maintaining
strong relationships with communities and delivering on its
commitments.
Climate Change Risk
Iluka recognises that the physical and transitional impacts
of climate change may affect its assets, productivity, supply
chains and markets. This provides an opportunity for Iluka to
support the transition to a lower carbon economy through the
production of critical minerals and to pursue the reduction of
the company’s carbon footprint.
Attracting and retaining key personnel continues to be a
high priority and has been increasingly challenged in 2022
as a result of the changing external environment including
tight employment markets. Despite the challenging external
environment, Iluka has continued to successfully attract talent.
Cyber Risks
Iluka takes a risk-based approach to manage cyber security
with a focus on ensuring good practices across standard
processes and controls. Iluka leverages leading frameworks
such as NIST and guidance from Australian Government’s
Cyber Security Centre.
Cyber risk, if materialised within Iluka or if a key Iluka vendor
suffers a cyber event, may cause disruption to our business
processes, operations, and/or result in data breaches.
Iluka maintains a heightened focus on managing its cyber
risks noting the increasing threats and trends in the external
environment.
Financial Risks
Iluka recognises the importance of maintaining a strong
balance sheet that enables flexibility to pursue strategic
objectives. Iluka faces risks relating to the cost and access to
funds, movement in interest rates and foreign exchange rates
(refer Note 20 in financial statements).
Iluka maintains policies which define appropriate financial
controls and governance which seek to ensure financial risks
are recognised, managed and recorded in a manner consistent
with generally accepted industry practice and governance
standards.
Read Iluka’s response to climate change on page 55 and TCFD
response in the 2022 Sustainability Data Book.
Growth Risks
Sustaining Operations Risks
Maintaining a pipeline of Ore Reserves and projects is a
key focus for Iluka. Tailings dam management is an ongoing
Executive and Board focus at Iluka across all of its operations.
Iluka has a dedicated geotechnical resources team that draws
on external tailings and dam management experts. Extensive
annual reviews are conducted of the company’s resources
and reserves, asset integrity, short and long term planning,
geotechnical and hydrogeological modelling.
Iluka regularly assesses its ability to enhance its production
profile or extend the economic life of deposits through the
development of new projects within its portfolio. Iluka seeks
to generate growth options through exploration, innovation,
project development and appropriate external growth
opportunities.
Evaluating growth opportunities requires prudent risk taking
as part of a disciplined process of project selection and
evaluation to maximise the opportunity, achieve the desired
outcomes, and manage the associated risks to the company.
Risks to major development projects include the ability
to acquire and/or obtain appropriate access to property,
regulatory approvals, supply chain risks, inflationary
environment, construction and commissioning risks. Cost
escalation, especially labour intensive work in Western
Australia, is being experienced across the industry.
60
Regulatory and Compliance Risk
New or evolving regulations and standards are outside the
company’s control and are often complex and difficult to
predict. The potential development of opportunities can
be jeopardised by changes to fiscal or regulatory regimes,
adverse changes to tax or other laws, material differences in
sustainability standards and practices, or changes to existing
political, judicial or administrative policies and changing
community expectations.
Anti-Bribery and Corruption
Risk
Iluka has a clear policy and internal controls and procedures to
protect against risks relating to Anti-bribery and Corruption.
These include training and compliance programmes for
employees, agents and distributors. These cover a range of
risks and related scenarios including unauthorised payments or
offers of payments to or by employees, agents or distributors
that could be in violation of applicable anti-corruption laws.
Although this is a continual focus including regular reviews,
there is no assurance that such controls, policies, procedures
or programmes will protect Iluka from potentially improper or
criminal acts.
Business Interruption Risk
Circumstances may arise which preclude sites from operating
including natural disaster, material disruption to Iluka’s logistics
chain, critical plant failure, industrial action or future pandemic
related issues.
The company undertakes regular reviews for mitigation of
property and business continuity risks.
Iluka utilises the company’s Crisis and Emergency Management
Processes to manage these risks. A Crisis and Emergency
Management expert conducts training and exercises at Iluka’s
sites on an annual cycle.
Iluka maintains a global insurance programme that may offset a
portion of the financial impact of a major business interruption
event.
61
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 FINANCIAL
REPORT
In this section:
»
Results for announcement to
market
Directors’ report
»
Remuneration report
Auditor’s independence
declaration
Financial statements
Directors’ declaration
Independent auditor’s report
»
»
»
»
»
62
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Provided below are the results for announcement to the market in accordance with Australian Securities
Exchange (ASX) Listing Rule 4.2A and Appendix 4E for the consolidated entity Iluka Resources Limited and its
controlled entities for the year ended 31 December 2022 (the 'financial year') compared with the year ended 31
December 2021 (the 'comparative year').
All currencies shown in this report are Australian dollars unless otherwise indicated.
Revenue from ordinary activities - continuing operations
Net profit after tax for the period from ordinary activities - continuing operations
Net profit after tax for the period attributable to equity holders of the parent
Up 22.4% to $1611.3m
Up 46.0% to $517.3m
Up 60.2% to $584.5m
Dividends
2022 final: 20 cents per ordinary share (100% franked), to be paid in March 2023
2022 interim: 25 cents per ordinary share (100% franked), paid in September 2022
2022 SRL demerger distribution: $145.8 million, distributed in August 2022
2021 final: 12 cents per ordinary share (100% franked), paid in April 2022
2021 interim: 12 cents per ordinary share (100% franked), paid in October 2021
Key ratios
Basic profit per share (cents) - continuing operations
Diluted profit per share (cents) - continuing operations
Free cash flow per share (cents)¹
Return on Equity²
Net tangible assets per share ($)
2022
116.9
115.9
104.7
33.0
3.27
2021
86.7
86.0
71.0
25.9
2.60
¹Free cash flow is determined as cash flow before refinance costs, proceeds/repayment of borrowings and dividends paid in
the year.
²Calculated as net profit after tax (NPAT) for the year as a percentage of average monthly shareholder's equity over the year.
Commentary on the consolidated results and outlook are set out in the Operating and Financial Review section of
the Directors' Report.
Dividend Reinvestment Plan (DRP)
The current Dividend Reinvestment Plan (DRP) was approved by the Board of Directors, effective for all dividends
from the 2017 final dividend onwards. Under the plan, eligible shareholders can reinvest either all or part of their
dividend payments into additional fully paid Iluka shares. The DRP remains active for the 2022 final dividend.
The Directors have determined that no discount will apply for the DRP in respect of the 2022 final dividend.
Shares allocated to shareholders under the DRP for the 2022 final dividend will be allocated at an amount equal
to the average of the daily volume weighted average market price of ordinary shares of the Company traded on
the ASX over the period of 10 trading days commencing on 10 March 2023. The last date for receipt of election
notices for the DRP is 8 March 2023.
Independent auditor's report
The Consolidated Financial Statements upon which this Appendix 4E is based have been audited.
63
63
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 DIRECTORS’ REPORT
The directors present their report on the Group consisting of Iluka Resources Limited (the ‘Company’) and the entities it controlled at the
end of, or during, the year ended 31 December 2022.
The overview of Iluka’s operations, including key aspects of operating and financial performance are contained on pages 18 to 61 which
forms part of the Directors’ Report for the financial year ended 31 December 2022 and is to be read in conjunction with the following
information:
DIRECTORS
The following individuals were directors of Iluka Resources Limited during the whole of the financial year and up to the date of the report,
unless otherwise stated:
»
»
»
R Cole (Chairman)
T O’Leary (Managing Director and CEO)
M Bastos
»
»
»
L Saint
S Corlett
A Sutton
Directors’ Profiles
Name:
Rob Cole
Qualifications:
Age:
Appointed:
Role:
Independent:
LLB (Hons), BSc
60
1 March 2018
Non-executive Director, Chairman
Yes
COMMITTEE MEMBERSHIP:
»
Nominations & Governance Committee (Chair)
»
»
People & Performance Committee
Sustainability Committee
RELEVANT SKILLS AND EXPERIENCE:
Rob has over 35 years of commercial, business strategy and planning experience in the energy and resources sectors.
Rob was previously Managing Director of oil and gas production and exploration company, Beach Energy. Rob also spent over eight
years at Woodside Petroleum Limited across a number of senior positions in commercial, corporate and legal areas, including Executive
Director, Executive Vice President (Corporate and Commercial) and General Counsel. Prior to his time at Woodside, Rob was a Partner at
the law firm King & Wood Mallesons. Rob is currently a Non-executive Director of various public, government-owned and not-for-profit
companies and an external member of the Regulation & Market Operations subcommittee of the Power and Water Corporation of the
Northern Territory.
OTHER DIRECTORSHIPS AND OFFICES (CURRENT AND RECENT):
»
Southern Ports Authority - Non-executive Chair (retired February 2020)
GLX Group - Non-executive Chair (retired April 2020)
St Bartholomew’s House Inc. - Non-executive Director (retired October 2022)
Synergy - Non-executive Chair (appointed November 2017)
Perenti Global Limited - Non-executive Chair (appointed July 2018)
Power & Water Corporation (Northern Territory) – external member of the Regulation & Market Operations subcommittee
(appointed June 2020)
Landgate - Non-executive Chair (appointed August 2020)
Council of Curtin University – Member (appointed June 2022)
»
»
»
»
»
»
»
»
64
Name:
Tom O’Leary
Qualifications:
Age:
Appointed:
Role:
Independent:
LLB, BJuris
59
13 October 2016
Managing Director
No
RELEVANT SKILLS AND EXPERIENCE:
Tom has over 30 years of commercial, investment banking, business development and executive management experience in a range of
sectors including energy, chemicals and mining.
Tom was previously Managing Director of Wesfarmers Chemicals, Energy & Fertilisers having been appointed to the role in 2010. Tom
joined Wesfarmers in 2000 in a business development role and was then appointed Managing Director, Wesfarmers Energy, in 2009.
Prior to joining Wesfarmers, Tom worked in London for 10 years in finance law, investment banking and private equity. Tom holds a law
degree from The University of Western Australia and has completed the Advanced Management Program at Harvard Business School.
OTHER DIRECTORSHIPS AND OFFICES (CURRENT AND RECENT):
»
Clontarf Foundation - Non-executive Director (appointed June 2006)
Name:
Marcelo Bastos
Qualifications:
Age:
Appointed:
Role:
Independent:
BEng Mechanical (Hons, UFMG), MBA (FDC-MG), MAICD
59
20 February 2014
Non-executive Director
Yes
COMMITTEE MEMBERSHIP:
»
Audit & Risk Committee
»
»
Nominations & Governance Committee
Sustainability Committee (Chair)
RELEVANT SKILLS AND EXPERIENCE:
Marcelo has over 35 years of operational and project experience in the mining industry across numerous commodities and geographies,
particularly in Australia, Africa and South America.
Marcelo has extensive experience in major projects development and operation, and company management in the metals and mining
industry. Marcelo was formerly the Chief Operating Officer of the global resources company, MMG Limited, with responsibility for its
global operations.
Prior to MMG, Marcelo held senior executive positions with BHP and Vale, including CEO BHP Billiton Mitsubishi Alliance (BMA), President
of BHP’s Nickel West, President of Cerro Matoso and Nickel Americas, and Vale Director of Copper Operations. Marcelo is a former Non-
executive Director of Golder Associates and Oz Minerals Ltd, a former Member of the Western Australia Chamber of Mines and Energy
and served as Vice President of the Queensland Resources Council.
OTHER DIRECTORSHIPS AND OFFICES (CURRENT AND RECENT):
»
OZ Minerals Limited - Non-executive Director (retired April 2019)
»
»
»
Golder Associates - Non-executive Director (retired in April 2021)
Aurizon Holdings Limited - Non-executive Director (appointed November 2017)
Anglo American PLC - Non-executive Director (appointed April 2019)
65
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Name:
Lynne Saint
Qualifications:
Age:
Appointed:
Role:
Independent:
BCom, GradDip Ed Studies, FCPA, FAICD, Cert Business Administration
60
24 October 2019
Non-executive Director
Yes
COMMITTEE MEMBERSHIP:
»
Audit & Risk Committee (Chair)
»
»
Nominations & Governance Committee
People & Performance Committee
RELEVANT SKILLS AND EXPERIENCE:
Lynne has over 30 years of financial, auditing, corporate governance, enterprise risk, supply chain management, project management,
and commercial experience both within Australia and internationally.
Lynne’s career spans more than 19 years in executive leadership at Bechtel Group, having served as Chief Audit Executive and Chief
Financial Officer of Bechtel’s Mining and Metals Global Business Unit. In Lynne’s early career, she held consulting and auditing roles
with KMPG and PwC, financial and commercial roles in financial services and assurance, mining, and the engineering and construction
industry in Australia and Papua New Guinea. In 2003, Lynne was recognised as the Telstra Queensland Business Woman of the Year.
OTHER DIRECTORSHIPS AND OFFICES (CURRENT AND RECENT):
»
NuFarm Ltd – Non-executive Director (appointed December 2020)
»
Ventia Services Group Limited – Non-executive Director (appointed October 2021)
Name:
Susie Corlett
Qualifications:
Age:
Appointed:
Role:
Independent:
BSc (Geo, Hons), FAusIMM, GAICD
52
1 June 2019
Non-executive Director
Yes
COMMITTEE MEMBERSHIP:
»
Audit & Risk Committee
»
»
Nominations & Governance Committee
Sustainability Committee
RELEVANT SKILLS AND EXPERIENCE:
Susie has over 25 years’ experience in exploration, mining operations, mining finance and investment.
Susie is a professional non-executive director following an executive career spanning mine operations, investment banking and private
equity. A geologist, Susie’s background is in mining operations and exploration for RGC Ltd and Goldfields Ltd. Susie was most recently
an Investment Director for Pacific Road Capital Ltd (a global mining private equity fund), following a career in mining project finance and
credit risk management for Standard Bank Limited, Deutsche Bank and Macquarie Bank.
OTHER DIRECTORSHIPS AND OFFICES (CURRENT AND RECENT):
»
Australian Institute of Mining & Metallurgy (AusIMM) Education Endowment Fund - Trustee (appointed June 2018)
Foundation for National Parks and Wildlife - Non-executive Director (retired December 2022)
Aurelia Metals Ltd - Non-executive Director (appointed October 2018)
The David Burgess Foundation - Non-executive Director (retired June 2019)
Mineral Resources Limited - Non-executive Director (appointed January 2021)
»
»
»
»
66
Name:
Andrea Sutton
Qualifications:
Age:
Appointed:
Role:
Independent:
BEng Chemical (Hons), GradDipEcon, GAICD
51
11 March 2021
Non-executive Director
Yes
COMMITTEE MEMBERSHIP:
»
People & Performance Committee (Chair)
»
»
Nominations & Governance Committee
Sustainability Committee
RELEVANT SKILLS AND EXPERIENCE
Andrea has over 25 years’ experience across a range of operational and corporate functions, having held a number of executive roles in
health, safety, and environment; human resources; and infrastructure management, within the resources sector.
Andrea’s 25-year career with Rio Tinto included: a secondment as CEO and Managing Director of Energy Resources of Australia (ERA)
from 2013 to 2017; Head of Health, Safety, Environment and Security; Managing Director Support Strategy Review - Human Resources;
General Manager of Operations at the Bengalla Mine; and General Manager of Infrastructure, Iron Ore.
Andrea is a member of Engineers Australia, Australasian Institute of Mining and Metallurgy, Chief Executive Women, and the Australian
Institute of Company Directors.
OTHER DIRECTORSHIPS AND OFFICES (CURRENT AND RECENT):
»
Energy Resources Australia Limited - Non-executive Director of (retired May 2020)
»
»
»
»
»
Infrastructure WA - Board member (retired December 2022)
Australian Nuclear Science and Technology Organisation (ANSTO) - Board member (appointed April 2020)
National Association of Women in Operations (NAWO) - Board member (appointed August 2020)
Red 5 Limited - Non-executive Director (appointed November 2020)
DDH1 Limited - Non-executive Director (appointed February 2021)
67
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Meetings of Directors
In 2022 the Board formally met on 12 occasions, of which 8 meetings were scheduled. In addition to these meetings, the Board spent
a day primarily focused on strategic planning. The chairman chaired all the meetings. The non-executive directors periodically met
independent of management to discuss relevant issues. Directors’ attendance at Board and committee meetings during 2022 is
detailed below.
Director
Board
Audit and Risk
Committee
Nominations
and Governance
Committee
People and
Performance
Committee
Sustainability
Committee(3)
(1) (2)
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Total meetings
12
Executive
T O'Leary (3)
Non-executive
R Cole (4)
M Bastos (5)
S Corlett
G Martin (6)
L Saint (7)
A Sutton (8)
12
12
12
12
12
5
12
12
12
12
12
5
10
12
4
4
4
4
3
3
2
3
2
3
3
4
4
2
2
4
4
1
4
4
4
1
1
1
4
4
4
2
2
4
4
3
3
2
3
2
3
3
4
4
4
4
1
4
4
4
4
4
4
1
4
4
Chairman
Member
Prior Member
Prior Chairman
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
“Held” indicates the number of meetings held during the period of each director’s tenure. Where a director is not a member but attended meetings
during the period, only the number of meetings attended is shown.
“Attended” indicates the number of meetings attended by each director.
Tom O’Leary ceased being a member of the Sustainability Committee on 13 April 2022.
Rob Cole ceased being Chair of the People and Performance Committee on 13 April 2022 but remains a member of this Committee. He became
Chairman of the Board and Chair of the Nominations and Governance Committee on 14 April 2022.
Marcelo Bastos became Chair of the Sustainability Committee on 14 April 2022.
Greg Martin served as a Non-executive Director from 1 January 2013 until his retirement from the Board on 13 April 2022.
Lynne Saint ceased being a member of the Sustainability Committee on 13 April 2022.
Andrea Sutton ceased being a member of the Sustainability Committee on 13 April 2022.
Directors Shareholding
Directors’ shareholding is set out in the Remuneration Report, section 6.
68
Executive Team Profiles
Matthew Blackwell, BEng (Mech), Grad Dip (Tech Mgt), MBA, MAICD, MIEAust
Head of Projects and Sales & Marketing
Mr Blackwell joined Iluka in 2004 as President of US Operations. He had responsibilities for Land Management and as General Manager,
USA, before being appointed Head of Marketing, Mineral Sands in February 2014. In 2019, Mr Blackwell was made Head of Major
Projects, Engineering & Innovation. In late 2020, Mr Blackwell reassumed responsibility for Sales and Marketing. Prior to joining Iluka, he
was Executive Vice President of TSX listed Asia Pacific Resources, based in Thailand. Mr Blackwell’s background in the mining industry
includes varied roles spanning multiple commodities.
Sarah Hodgson, LLB, GAICD
General Manager, People and Sustainability
Ms Hodgson has 25 years professional experience spanning HR, tax and sustainability. Ms Hodgson joined the People team at Iluka
Resources in 2013 and was appointed to her current role in March 2018. Her career started at PricewaterhouseCoopers in London
providing advice on UK and US tax, employment and international mobility before relocating to Australia with KPMG in 2002. Prior to
joining Iluka Ms Hodgson held senior roles, both as a consultant and in-house, at Mercer, Westpac and KPMG advising on executive
remuneration, HR and governance matters.
Kerrie Matthews, BAppSc, GradCertRiskMgmt, GAICD
Project Director, Eneabba Project
Ms Matthews joined Iluka in 2022 as the Project Director, Eneabba Project. She is leading Iluka’s delivery of a fully integrated rare earth
refinery, the first of its type in Australia and one of few globally.
Ms Matthews most recent previous roles include Deputy Project Director for BHP’s South Flank Iron Ore Project and Project Manager
for the Ministers North Project. She also has senior experience in global exploration and social value roles, as well as blue collar
contracting organisations. Ms Matthews began her career in environment, health and safety and is also a Non-Executive director for the
Construction Training Fund (CTF), a statutory authority.
Daniel McGrath, B.Sc (Math)
Chief Technology Officer and Head of Rare Earths
Mr McGrath joined Iluka in 1993 and has held technical and operations management roles throughout Iluka for many years. Mr McGrath
is now focused on developing Iluka’s rare earths business as well as serving as chief technology officer. His most recent appointment
was as General Manager - Cataby and Southwest Operations where he oversaw mining and synthetic rutile operations along with the
technical development and metallurgy functions. Prior to this Mr McGrath has held senior operational positions at Iluka’s Western
Australian, Eastern Australian, and USA operations while also having held metallurgy and process engineering roles in Australia,
Indonesia and Sierra Leone.
Colin Nexhip, PhD (Chem Eng), BSc (Hons), B Ed
Chief Technology Officer
Mr Nexhip joined Iluka in 2023 as the Chief Technology Officer. Prior to joining Iluka Mr Nexhip was at Newmont and has been based in
the US for the last 15 years where he most recently held the role of Vice President – Assets & Energy Management. Mr Nexhip has over
25 years’ experience in the mining industry, including 15 years with Rio Tinto.
Adele Stratton, BA (Hons), FCA, GAICD
Chief Financial Officer and Head of Development
Ms Stratton joined Iluka in 2011, was appointed Chief Financial Officer in August 2018 and assumed accountabilities for Head of
Development in October 2020. She is a qualified chartered accountant with over 20 years’ experience working in both professional
practice and public listed companies. Ms Stratton commenced her career with KPMG, spending 7 years in the assurance practice both in
the UK, where she qualified as a chartered accountant, and Australia. Prior to joining Iluka, she worked in a number of finance roles at Rio
Tinto Iron Ore in Perth. Ms Stratton is the Iluka nominee Board member on Deterra Royalties Ltd, since its listing on the ASX in 2020.
Shane Tilka, BCom
General Manager, Australian Operations
Mr Tilka joined Iluka in November 2004 and has held operations management roles throughout Iluka. His most recent appointment was
General Manager - Jacinth Ambrosia and Midwest. Prior to this Mr Tilka was the Chief Operating Officer for Sierra Rutile Ltd, General
Manager for Iluka’s US Operations and has held other senior roles at Iluka’s Western Australian and South Australian operations.
69
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 COMPANY SECRETARY
Mr Ben Martin BMSc LLB MAICD is the Company Secretary of the Company. Mr Martin was appointed to the position of General Counsel
and Company Secretary in September 2021 and prior to that, he held positions in Iluka’s in-house legal and land management teams.
Before joining Iluka in 2014, Mr Martin was a solicitor at global law firm King & Wood Mallesons where he advised resources companies
on a range of project development, approvals, land access and regulatory compliance matters.
Mr Nigel Tinley BBus FCPA FGIA FCG (CS, CGP) GAICD also acts as Company Secretary for the Company. Mr Tinley was appointed to
the position of Joint Company Secretary in 2013 and prior to that, he held senior positions in Finance and Sales and Marketing. Before
joining Iluka in 2006, Mr Tinley held a range of accounting, financial and commercial roles over his 18 years with BHP Limited both in
Australia and internationally.
DIRECTORS AND OTHER OFFICERS’ REMUNERATION
Discussion of the Board’s policy for determining the nature and amount of remuneration for directors and senior executives and the
relationship between such policy and company performance are contained in the remuneration report on pages 72 to 97 of this Annual
Report.
PRINCIPAL ACTIVITIES
The principal activities and operations of the Group during the financial year were the exploration, project development, mining
operations, processing and marketing of mineral sands and rare earths, and rehabilitation. Iluka holds a 20% stake in Deterra Royalties
Limited (Deterra), the largest ASX-listed resources focused royalty company.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
The Company indemnifies all directors of the Company named in this report and current and former executive officers of the Company
and its controlled entities against all liabilities to persons (other than the Company or the related body corporate) which arise out of
the performance of their normal duties as director or executive officer unless the liability relates to conduct involving bad faith. The
Company also has a policy to indemnify the directors and executive officers against all costs and expenses incurred in defending an
action that falls within the scope of the indemnity and any resulting payments.
During the year the Company has paid a premium in respect of directors’ and executive officers’ insurance. The contract contains a
prohibition on disclosure of the amount of the premium and the nature of the liabilities under the policy.
INDEMNIFICATION OF AUDITORS
The Company’s auditor is PricewaterhouseCoopers. The terms of engagement of Iluka’s external auditor includes an indemnity in favour
of the external auditor. This indemnity is in accordance with PricewaterhouseCoopers’ standard Terms of Business and is conditional
upon PricewaterhouseCoopers acting as external auditor. Iluka has not otherwise indemnified or agreed to indemnify the external
auditors of Iluka at any time during the financial year.
NON-AUDIT SERVICES
The Group has, from time to time, employed the external auditor, PricewaterhouseCoopers, on assignments additional to their statutory
audit duties where the auditor’s expertise and experience with the Group are important.
Fees that were paid or payable during the year for non-audit services provided by the auditor of the parent entity, its network firms and
non-related audit firms is set out in note 28 of the financial report.
The Board of Directors has considered the position and, in accordance with advice received from the Audit and Risk Committee, is
satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001 for the following reasons:
»
»
all non-audit services were provided in accordance with Iluka’s Non-Audit Services Policy and External Auditor Guidelines; and
all non-audit services were subject to the corporate governance processes adopted by the company and have been reviewed by
the Audit & Risk Committee to ensure that they do not affect the integrity or objectivity of the auditor.
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2011 is set out on page 98.
70
ENVIRONMENTAL REGULATIONS
So far as the directors are aware, there have been no material breaches of the Group’s licences and all mining and exploration activities
have been undertaken in compliance with the relevant environmental regulations.
MATTERS SUBSEQUENT TO THE END OF THE FINANCIAL YEAR
The directors are not aware of any matter or circumstance not otherwise dealt with in the Directors’ Report or Financial Statements that
has or may significantly affect the operations of the entity, the results of its operations or the state of affairs of the entity in the current or
subsequent financial years.
DIVIDEND
The directors have declared a fully franked final dividend of 20 cents per ordinary share payable on 30 March 2023.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
In the opinion of the directors, likely developments in and expected results of the operations of the Group have been disclosed in
the Financial and Operational review on pages 24 to 42. Disclosure of any further material relating to those matters could result in
unreasonable prejudice to the interests of the Group.
CORPORATE GOVERNANCE STATEMENT
The Company’s Corporate Governance Statement for the year ended 31 December 2022 may be accessed from the Company’s website
at http://www.iluka.com/about-iluka/governance.
ROUNDING OF AMOUNTS
The Company is of a kind referred to in “ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191”, issued
by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the Directors’ Report and
accompanying Financial Report. Amounts in the Directors’ Report have been rounded off in accordance with that Rounding Instrument
to the nearest hundred thousand dollars, or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution of the directors.
R Cole
Chairman
T O’Leary
Managing Director
21 February 2023
71
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 REMUNERATION REPORT
MESSAGE FROM THE CHAIRMAN OF THE PEOPLE & PERFORMANCE COMMITTEE
Dear Shareholders
On behalf of the Board, I am pleased to present Iluka’s Remuneration Report (RReeppoorrtt) for the financial year to 31 December 2022
(22002222).
2022 PERFORMANCE HIGHLIGHTS
As outlined by our Chairman and Managing Director, 2022 was a significant year in Iluka’s evolution and the positioning of the
business as a global critical minerals company. Key company highlights in 2022 included:
■
■
■
Iluka’s significant diversification into rare earths. In 2022, Iluka’s Board approved the final investment decision on
Australia’s first fully integrated rare earths refinery at Eneabba in Western Australia. This coincided with Iluka concluding
a $1.25 billion strategic risk sharing agreement with the Australian Government to establish a domestic rare earths
industry;
Iluka’s continued investment in unlocking technically challenging Australian resources through technology. The
company has continued to internally develop innovative underground mining technology (which is planned to be employed
at the Balranald project) which are potential game changers for the industry; and
The demerger of Sierra Rutile (SRL), which was approved by shareholders in July. Iluka has evolved significantly since it
acquired SRL in 2016, with strategic and capital allocation priorities now focussed on key Australian critical minerals
operations and development projects.
Further details are set out in the Annual Report.
CHANGES TO 2022 REMUNERATION APPROACH
Executives continued to be rewarded through fixed remuneration and the Executive Incentive Plan (EEIIPP) in 2022, with no significant
change to the remuneration structure.
Fixed remuneration is regularly reviewed for Executives to ensure it is reflective of role responsibilities and to ensure it remains
market competitive. During 2022, fixed remuneration increases were received by the Chief Financial Officer and Head of
Development, the Head of Projects and Sales and Marketing and the General Manager, Australian Operations. Refer to section 3
for more detail.
Additionally, as disclosed in last year’s Report, new sustainability measures relating to the company’s climate change work
programme, energy efficiency in our operations and continuous improvement in the diversity and inclusiveness of our workplaces
were incorporated into the 2022 EIP scorecard. Measures will be updated in 2023 to build on the progress made in 2022.
These measures align with the focus and direction of Iluka’s sustainability strategy which is underpinned by three pillars – “trusted
by our people and our communities”, “responsible for the environment” and “operating in and providing products for a low carbon
world” (refer to Section 3 for more detail).
2022 REMUNERATION OUTCOMES
Iluka’s approach to executive remuneration is designed to operate through changing circumstances and environments.
In determining 2022 remuneration outcomes, the Board has carefully considered factors encompassing company performance,
individual achievements and alignment with stakeholder expectations. The following summarises the outcomes by component:
■
■
■
2022 EIP: the Board has determined an EIP outcome of 84% of maximum (126.5% target) for the Managing Director, based
on 121% achievement against target under the annual group scorecard and 143% achieved against individual strategic
objectives. As in prior years, the Managing Director’s award will be delivered in equity, with no cash incentive paid. Executive
Key Management Personnel (KKMMPP) outcomes were between 78 - 84% of maximum (depending on the individual executive).
Refer Section 3 for further details.
2019 EIP performance rights: for performance rights granted under the 2019 EIP, the Board determined a vesting of 100%
of the rights based on the Total Shareholder Return (TTSSRR) achievement of 152% percent (72nd percentile) measured against
Iluka’s peer group over the performance period. Refer Section 3 for further details.
Board fee movement: Sustainability Committee fees were introduced in 2022. No other changes to Non-executive Director
fees or fee pool were made during 2022. Refer Section 4 for further details.
The Board believes these outcomes fairly recognise the performance of the business and the disciplined performance of
management.
72
MESSAGE FROM THE CHAIRMAN OF THE PEOPLE & PERFORMANCE COMMITTEE
On behalf of the Board, I am pleased to present Iluka’s Remuneration Report (RReeppoorrtt) for the financial year to 31 December 2022
REMUNERATION REPORT
Dear Shareholders
(22002222).
2022 PERFORMANCE HIGHLIGHTS
As outlined by our Chairman and Managing Director, 2022 was a significant year in Iluka’s evolution and the positioning of the
business as a global critical minerals company. Key company highlights in 2022 included:
Iluka’s significant diversification into rare earths. In 2022, Iluka’s Board approved the final investment decision on
Australia’s first fully integrated rare earths refinery at Eneabba in Western Australia. This coincided with Iluka concluding
a $1.25 billion strategic risk sharing agreement with the Australian Government to establish a domestic rare earths
industry;
Iluka’s continued investment in unlocking technically challenging Australian resources through technology. The
company has continued to internally develop innovative underground mining technology (which is planned to be employed
at the Balranald project) which are potential game changers for the industry; and
The demerger of Sierra Rutile (SRL), which was approved by shareholders in July. Iluka has evolved significantly since it
acquired SRL in 2016, with strategic and capital allocation priorities now focussed on key Australian critical minerals
operations and development projects.
Further details are set out in the Annual Report.
CHANGES TO 2022 REMUNERATION APPROACH
Executives continued to be rewarded through fixed remuneration and the Executive Incentive Plan (EEIIPP) in 2022, with no significant
change to the remuneration structure.
Fixed remuneration is regularly reviewed for Executives to ensure it is reflective of role responsibilities and to ensure it remains
market competitive. During 2022, fixed remuneration increases were received by the Chief Financial Officer and Head of
Development, the Head of Projects and Sales and Marketing and the General Manager, Australian Operations. Refer to section 3
for more detail.
Additionally, as disclosed in last year’s Report, new sustainability measures relating to the company’s climate change work
programme, energy efficiency in our operations and continuous improvement in the diversity and inclusiveness of our workplaces
were incorporated into the 2022 EIP scorecard. Measures will be updated in 2023 to build on the progress made in 2022.
These measures align with the focus and direction of Iluka’s sustainability strategy which is underpinned by three pillars – “trusted
by our people and our communities”, “responsible for the environment” and “operating in and providing products for a low carbon
world” (refer to Section 3 for more detail).
2022 REMUNERATION OUTCOMES
Iluka’s approach to executive remuneration is designed to operate through changing circumstances and environments.
In determining 2022 remuneration outcomes, the Board has carefully considered factors encompassing company performance,
individual achievements and alignment with stakeholder expectations. The following summarises the outcomes by component:
2022 EIP: the Board has determined an EIP outcome of 84% of maximum (126.5% target) for the Managing Director, based
on 121% achievement against target under the annual group scorecard and 143% achieved against individual strategic
objectives. As in prior years, the Managing Director’s award will be delivered in equity, with no cash incentive paid. Executive
Key Management Personnel (KKMMPP) outcomes were between 78 - 84% of maximum (depending on the individual executive).
Refer Section 3 for further details.
2019 EIP performance rights: for performance rights granted under the 2019 EIP, the Board determined a vesting of 100%
of the rights based on the Total Shareholder Return (TTSSRR) achievement of 152% percent (72nd percentile) measured against
Iluka’s peer group over the performance period. Refer Section 3 for further details.
Board fee movement: Sustainability Committee fees were introduced in 2022. No other changes to Non-executive Director
fees or fee pool were made during 2022. Refer Section 4 for further details.
The Board believes these outcomes fairly recognise the performance of the business and the disciplined performance of
management.
■
■
■
■
■
■
CHANGES TO 2023 REMUNERATION APPROACH
During 2022 the Board conducted a remuneration review to ensure that Iluka has the most appropriate remuneration framework
in place to attract and retain key talent and to drive Iluka’s long-term business strategy. As a result of this extensive review, the
Board made the decision to transition away from the current EIP framework in favour of a more traditional STI and LTI arrangement.
We believe this approach will be supported by our stakeholders, including executives, and align more closely with broader market
practice. This framework will come into effect in 2023 and more information will be provided in the 2023 Remuneration Report.
On behalf of the Board, I invite you to review our Remuneration Report. We look forward to your ongoing feedback and continuing
discussions with our shareholders and their proxy advisers on our remuneration approach. Thank you for your ongoing support.
Yours sincerely
Andrea Sutton
Chair of the People and Performance Committee
73
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
74
2022 AT A GLANCE 2022 Key Achievements: 1Reflects NPAT and ROC for the Group incentive scorecard and is adjusted to remove profits from Deterra. . 2Relates to Iluka’s TSR over the 4 year performance period for the 2019 EIP from 1 January 2019 to 31 December 2022. How executive remuneration outcomes are aligned with company performance: 1Reported TSR for each year relates to the TSR calculated for to corresponding EIP performance period. How this year’s performance compares to previous years: The following table outlines historic business performance outcomes: KPI 2022 2021 20201 20191 2018 Net profit/(loss) after tax ($m) – Reported 588.5 365.9 2,410 (299.7) 303.9 Net profit/(loss) after tax ($m) – Underlying2,3 597.0 314.8 151.2 278.7 300.7 Underlying EBITDA (Mineral Sands) ($m)2 916.8 633.9 342.0 530.9 544.5 EBITDA (Mineral Sands) margin (%) 53.1 42.7 36.1 44.5 43.8 Free cash flow ($ million) 444.3 299.5 36.3 139.7 304.4 Earnings per share (cents) 138.6 86.7 570.4 (71.0) 72.2 Return on equity (%) 33 25.9 283.7 (24.5) 31.8 Closing share price ($)4 9.53 9.73 6.49 4.73 3.87 Dividends paid (cents)5 45 24 2 13 29 Franking credit level (%) 100 100 100 100 100 Average AUD: USD spot exchange rate (cents) 69.5 75.1 69.1 69.5 74.8 Revenue per tonne Z/R/SR sold ($/t) 2214.7 1,593 1,625 1,654 1,426 1 Reported earnings in 2019 and 2020 were impacted by significant impairments and write-downs; profit on demerger of Deterra Royalties and/or changes to rehabilitation provisions for closed sites. 2 Underlying Net profit/(loss) after tax and EBITDA (Mineral Sands) excludes adjustments relating to impairments and write-downs; profit on demerger; and changes to rehabilitation provisions for closed sites. 3 The reconciliation for the 2022 Underlying Net profit/(loss) after tax can be found on page 26 of the 2022 Annual Report. 4 2018 and 2019 represent the historical closing share price adjusted for the demerger of Deterra Royalties (effective October 2020) and Sierra Rutile limited (SRL) (effective July 2022). 2020 and 2021 represent the historical closing share price adjusted for the demerger of Sierra Rutile Limited. Source: NASDAQ 5 Dividends declared in relation to the year. 152%99%72%54%55%100%100%44%No Vesting25%20222021202020192018ILUKA LONG TERM PERFORMANCE RIGHTS VESTING OUTCOMES VS. TOTAL SHAREHOLDE RETURN (TSR)1Iluka TSRLong Term Performance Rights Vesting (%) TABLE OF CONTENTS
This Remuneration Report contains the following Sections.
SECTION 1
Who is covered by
this Report?
SECTION 2
Executive
remuneration
framework –
overview
SECTION 3
2022 Executive
KMP
Remuneration
Outcomes
SECTION 4
Non-executive
Director
Remuneration
SECTION 5
Remuneration
Governance
SECTION 6
Additional
Remuneration
Disclosures
SECTION 7
Impact of the SRL
Demerger on
Executive KMP
Incentives
Section 1 defines the KMP at Iluka covered in this Remuneration Report.
Page 76
Section 2 describes Iluka’s remuneration philosophy and the 2022 remuneration
structure for Executive KMP (including further detail on the EIP).
Page 77
Section 3 details 2022 remuneration outcomes for Executive KMP including fixed
remuneration, EIP outcomes and long term EIP performance rights vesting
outcomes where relevant.
Page 81
Section 4 details policy fee and benefits for the company’s Non-executive
Directors including relevant statutory remuneration disclosure.
Page 87
Section 5 provides an overview of key elements of the company’s remuneration
governance framework and other governance disclosures for 2022.
Page 89
Section 6 provides an update for all relevant statutory remuneration disclosures as
required by the Corporations Act 2001 (if not disclosed elsewhere in the Report).
Page 91
Section 7 outlines the impact of the SRL Demerger on Executive KMP incentives.
Page 96
75
2022 AT A GLANCE 2022 Key Achievements: 1Reflects NPAT and ROC for the Group incentive scorecard and is adjusted to remove profits from Deterra. . 2Relates to Iluka’s TSR over the 4 year performance period for the 2019 EIP from 1 January 2019 to 31 December 2022. How executive remuneration outcomes are aligned with company performance: 1Reported TSR for each year relates to the TSR calculated for to corresponding EIP performance period. How this year’s performance compares to previous years: The following table outlines historic business performance outcomes: KPI 2022 2021 20201 20191 2018 Net profit/(loss) after tax ($m) – Reported 588.5 365.9 2,410 (299.7) 303.9 Net profit/(loss) after tax ($m) – Underlying2,3 597.0 314.8 151.2 278.7 300.7 Underlying EBITDA (Mineral Sands) ($m)2 916.8 633.9 342.0 530.9 544.5 EBITDA (Mineral Sands) margin (%) 53.1 42.7 36.1 44.5 43.8 Free cash flow ($ million) 444.3 299.5 36.3 139.7 304.4 Earnings per share (cents) 138.6 86.7 570.4 (71.0) 72.2 Return on equity (%) 33 25.9 283.7 (24.5) 31.8 Closing share price ($)4 9.53 9.73 6.49 4.73 3.87 Dividends paid (cents)5 45 24 2 13 29 Franking credit level (%) 100 100 100 100 100 Average AUD: USD spot exchange rate (cents) 69.5 75.1 69.1 69.5 74.8 Revenue per tonne Z/R/SR sold ($/t) 2214.7 1,593 1,625 1,654 1,426 1 Reported earnings in 2019 and 2020 were impacted by significant impairments and write-downs; profit on demerger of Deterra Royalties and/or changes to rehabilitation provisions for closed sites. 2 Underlying Net profit/(loss) after tax and EBITDA (Mineral Sands) excludes adjustments relating to impairments and write-downs; profit on demerger; and changes to rehabilitation provisions for closed sites. 3 The reconciliation for the 2022 Underlying Net profit/(loss) after tax can be found on page 26 of the 2022 Annual Report. 4 2018 and 2019 represent the historical closing share price adjusted for the demerger of Deterra Royalties (effective October 2020) and Sierra Rutile limited (SRL) (effective July 2022). 2020 and 2021 represent the historical closing share price adjusted for the demerger of Sierra Rutile Limited. Source: NASDAQ 5 Dividends declared in relation to the year. 152%99%72%54%55%100%100%44%No Vesting25%20222021202020192018ILUKA LONG TERM PERFORMANCE RIGHTS VESTING OUTCOMES VS. TOTAL SHAREHOLDE RETURN (TSR)1Iluka TSRLong Term Performance Rights Vesting (%)ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
1. WHO IS COVERED BY THIS REPORT?
This Report details the remuneration arrangements for Iluka’s KMP. KMP are those persons who, directly or indirectly, have
authority and responsibility for planning, directing, and controlling activities of the company. The KMP members over the 2022
year comprised the following executives (EExxeeccuuttiivvee KKMMPP) and Non-executive Directors.
Name
Position
Term as KMP
Executive KMP
Current Members
T O’Leary
Managing Director and Chief Executive Officer (MMaannaaggiinngg DDiirreeccttoorr)
Full year
A Stratton
Chief Financial Officer and Head of Development
M Blackwell
Head of Projects and Sales & Marketing
S Tilka
General Manager, Australian Operations
Non-executive Directors
Current Members
R Cole1
M Bastos
S Corlett
L Saint
A Sutton
Former Members
G Martin2
Chairman, Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
Former Chairman, Independent Non-executive Director
Ceased 13 April
2022
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
1. R Cole was appointed as Chairman on 13 April 2022.
2. G Martin retired as Chairman on 13 April 2022.
76
1. WHO IS COVERED BY THIS REPORT?
This Report details the remuneration arrangements for Iluka’s KMP. KMP are those persons who, directly or indirectly, have
authority and responsibility for planning, directing, and controlling activities of the company. The KMP members over the 2022
year comprised the following executives (EExxeeccuuttiivvee KKMMPP) and Non-executive Directors.
Name
Position
Term as KMP
Executive KMP
Current Members
T O’Leary
Managing Director and Chief Executive Officer (MMaannaaggiinngg DDiirreeccttoorr)
Full year
A Stratton
Chief Financial Officer and Head of Development
M Blackwell
Head of Projects and Sales & Marketing
S Tilka
General Manager, Australian Operations
Non-executive Directors
Current Members
R Cole1
M Bastos
S Corlett
L Saint
A Sutton
Chairman, Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
Independent Non-executive Director
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Former Members
G Martin2
1. R Cole was appointed as Chairman on 13 April 2022.
2. G Martin retired as Chairman on 13 April 2022.
Former Chairman, Independent Non-executive Director
Ceased 13 April
2022
77
2. EXECUTIVE REMUNERATION FRAMEWORK – OVERVIEW 2.1 SNAPSHOT REMUNERATION PRINCIPLES Iluka’s Remuneration Principles (outlined below) provide the foundations for how remuneration is structured and awarded to achieve our purpose of delivering sustainable value to our shareholders. EXECUTIVE FRAMEWORK AND COMPONENTS Executive KMP remuneration at Iluka is comprised of a mix of fixed and at-risk components to attract, retain and motivate executives. The table below provides an overview of the different remuneration components within the Iluka Remuneration framework. Further detail on the EIP is outlined on the following page. Element Purpose 2022 approach Fixed remuneration Provide remuneration that is reflective of the knowledge, skills, and experience of executives. Includes base salary and superannuation and is set after considering: ■ Trajectory of the company’s growth and key strategic objectives ■ Relevant market comparators and scarcity of talent ■ Executive KMP’s experience and performance ■ Executive KMP’s role responsibilities EIP Ensure remuneration received by Executive KMP is closely linked to the company’s performance, aligning it with the returns generated for our shareholders over the long term. Reflects the variable remuneration awarded to Executive KMP based on the performance against an annual scorecard of financial and strategic measures. The Board assesses scorecard performance at the end of the year with the resulting award normally split into three components: ■ CCaasshh –– comprises a relatively small portion of the “at risk” component for all Executive KMP other than the Managing Director (who, from 2020, has not received a cash component). ■ RReessttrriicctteedd rriigghhttss – vest in equally weighted tranches on the first, second, third and fourth anniversary of the grant. ■ PPeerrffoorrmmaannccee rriigghhttss – subject to performance testing at two stages. The initial scorecard performance determines the amount of the grant. A further performance test relating to Iluka’s relative TSR performance is undertaken at the end of five years (including the annual scorecard year) with vesting based on a sliding scale. MMiinniimmuumm sshhaarreehhoollddiinngg rreeqquuiirreemmeenntt:: 200% of fixed remuneration (CEO), 100% of fixed remuneration (other Executive KMP) PAY MIX FOR PERFORMANCE The following diagram sets out the mix for fixed and at-risk remuneration for Executive KMP during 2022. Remuneration packages for Executive KMP are weighted towards at-risk remuneration to drive performance for our shareholders. ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
78
2.2 EXECUTIVE INCENTIVE PLAN – MORE DETAIL OVERVIEW The following diagram outlines the structure of EIP. As outlined previously, the Board intends to revert to a more traditional STI and LTI framework from FY23. Further details on the design of the EIP is outlined in the table below. 1 The Managing Director does not receive cash. 20% of the EIP award for other Executive KMP is paid in cash. EIP – KEY QUESTIONS AND ANSWERS Question AAnnsswweerr How is it paid? For the Managing Director, EIP awards are delivered 100% in deferred equity consisting of 60% restricted rights and 40% performance rights (with no cash component). For the Executive KMP, EIP awards are paid 20% cash, 40% restricted rights and 40% performance rights. How much can participants earn under EIP? The EIP opportunity is expressed as a percentage of fixed remuneration. TTaarrggeett ((%% ooff ffiixxeedd rreemmuunneerraattiioonn)) MMaaxxiimmuumm ((%% ooff ffiixxeedd rreemmuunneerraattiioonn)) Managing Director 140% 210% Other Executive KMP 110% 165% What performance measures will inform the EIP awards? The Board sets an annual scorecard to focus our Executive KMP on financial and strategic imperatives they can influence and are critical to Iluka’s long-term sustainability. In 2022, objectives for Executive KMP covered: ■ Financial performance (50%); ■ Production (10%); ■ Sustainability focusing on our people and communities, our environment and operating in, and providing products for, a lower carbon world (15%); and ■ Individual strategic measures (25%). In setting objectives, the Board aims to ensure that targets are quantifiable and drive the right commercial and strategic outcomes for Iluka. Section 3 provides a detailed explanation of the specific targets set in 2022, how they were measured and our assessment of performance. 22002222 22002233 22002244 22002255 22002266 Question
AAnnsswweerr
How EIP
awards are
determined?
Who assesses
the EIP
performance?
How is the
number of
rights to be
granted to
participants
determined?
What vesting
or
performance
condition apply
to the equity
awards?
EIP scorecard outcomes are calculated based on the following schedule, with a sliding scale operating
between threshold and target, and between target and stretch:
PPeerrffoorrmmaannccee LLeevveell
EEIIPP OOuuttccoommee ((%% TTaarrggeett))
Threshold
Target
Stretch (maximum)
50%
100%
150%
EIP outcomes are determined by the Board following an assessment of performance measures at the
end of the 2022 performance period.
The number of restricted rights and performance rights awarded to each participant is based on a face
value methodology. This is determined by dividing the dollar value of the deferred equity component by
the Volume Weighted Average Price (VVWWAAPP) of Iluka shares traded on the ASX over the five trading
days following the release of the company’s full year results.
Granted EIP equity is subject to vesting conditions including continued service and/or performance:
EEqquuiittyy
CCoonnddiittiioonnss
RReessttrriicctteedd rriigghhttss
Restricted rights will be granted following the end of the relevant vesting
periods and vest in 4 equally weighted tranches on the first, second, third
and fourth anniversary of the grant, subject to continued service.
PPeerrffoorrmmaannccee rriigghhttss
Performance rights will be subject to an additional performance test prior to
vesting.
Iluka’s relative TSR performance will be measured over a five-year period
commencing on 1 January 2022 against the S&P / ASX 200 Resources
Index constituents (excluding companies primarily engaged in the oil and
gas sector and non-mining activities). Vesting is subject to the sliding scale
below:
PPeerrffoorrmmaannccee lleevveell ttoo bbee
aacchhiieevveedd
Below 50th percentile
50th percentile
Between 50th and 75th percentile
75th percentile or above
PPeerrcceennttaaggee vveessttiinngg
0%
50%
Sliding scale vesting
100%
Are
participants
entitled to
voting rights
and dividends?
What happens
if participants
leave before
the vesting
date?
No dividends are paid on restricted rights or performance rights prior to vesting. For any restricted
rights or performance rights that ultimately vest, a cash payment equivalent to dividends paid by Iluka
during the period between grant of the awards and vesting will be made in respect of the awards that
vest. That is, no cash payment will be made in respect of dividends on awards which do not vest.
Unless the Board determines otherwise, in the event of an Executive KMP ceasing employment for
cause: all restricted rights and performance rights will lapse.
Any other circumstances (including death, total and permanent disability, retirement or redundancy):
unvested restricted rights and performance rights will remain on foot and be subject to the original
terms of the award.
What happens
on a change of
control?
The Board has discretion to determine that vesting of some or all of the equity awards be accelerated,
in the event of a takeover or other transaction that in the Board’s opinion should be treated as a change
of control event.
Do any
clawback or
malus
provisions
apply?
The Board may clawback incentives that have vested and that have been paid or awarded to
participants in certain circumstances. For example, restricted rights and performance rights may be
lapsed if a participant acts fraudulently or dishonestly or if there is a material misstatement or omission
in the accounts of a Group company.
79
2.2 EXECUTIVE INCENTIVE PLAN – MORE DETAIL OVERVIEW The following diagram outlines the structure of EIP. As outlined previously, the Board intends to revert to a more traditional STI and LTI framework from FY23. Further details on the design of the EIP is outlined in the table below. 1 The Managing Director does not receive cash. 20% of the EIP award for other Executive KMP is paid in cash. EIP – KEY QUESTIONS AND ANSWERS Question AAnnsswweerr How is it paid? For the Managing Director, EIP awards are delivered 100% in deferred equity consisting of 60% restricted rights and 40% performance rights (with no cash component). For the Executive KMP, EIP awards are paid 20% cash, 40% restricted rights and 40% performance rights. How much can participants earn under EIP? The EIP opportunity is expressed as a percentage of fixed remuneration. TTaarrggeett ((%% ooff ffiixxeedd rreemmuunneerraattiioonn)) MMaaxxiimmuumm ((%% ooff ffiixxeedd rreemmuunneerraattiioonn)) Managing Director 140% 210% Other Executive KMP 110% 165% What performance measures will inform the EIP awards? The Board sets an annual scorecard to focus our Executive KMP on financial and strategic imperatives they can influence and are critical to Iluka’s long-term sustainability. In 2022, objectives for Executive KMP covered: ■ Financial performance (50%); ■ Production (10%); ■ Sustainability focusing on our people and communities, our environment and operating in, and providing products for, a lower carbon world (15%); and ■ Individual strategic measures (25%). In setting objectives, the Board aims to ensure that targets are quantifiable and drive the right commercial and strategic outcomes for Iluka. Section 3 provides a detailed explanation of the specific targets set in 2022, how they were measured and our assessment of performance. 22002222 22002233 22002244 22002255 22002266 ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Question
AAnnsswweerr
In determining whether to exercise discretion, the Board will have regard to all relevant factors at the
time, which may include the performance of the Company and participant over the performance period
and the proportion of the performance or deferral period that has elapsed.
What does the
Board take into
account when
considering
whether to
exercise
discretion?
80
What does the
In determining whether to exercise discretion, the Board will have regard to all relevant factors at the
Board take into
time, which may include the performance of the Company and participant over the performance period
account when
and the proportion of the performance or deferral period that has elapsed.
Question
AAnnsswweerr
considering
whether to
exercise
discretion?
3. 2022 EXECUTIVE KMP REMUNERATION OUTCOMES
3.1 2022 FIXED REMUNERATION OUTCOMES
The Board regularly reviews executive remuneration levels against market comparators (based on a number of factors including
revenue, industry and operational factors including international scope and complexity) to ensure fixed remuneration is set at
market competitive levels.
Following a benchmarking review in 2022, the significant changes that took place in the business, and having regard to the fact
that competition for talent within the resources industry remains strong (particularly in Western Australia), the Board determined
to increase the fixed remuneration of Executive KMP excluding the Managing Director during 2022 (as set out in the table below).
The Board considered that an increase to the fixed remuneration was appropriate for the:
•
CChhiieeff FFiinnaanncciiaall OOffffiicceerr aanndd HHeeaadd ooff DDeevveellooppmmeenntt ((AA SSttrraattttoonn)) aanndd HHeeaadd ooff PPrroojjeeccttss aanndd SSaalleess aanndd MMaarrkkeettiinngg ((MM BBllaacckkwweellll))
reflecting that the scope of their roles increased substantially in October 2020 but no adjustment was made to their fixed
remuneration at that time due to the uncertainty created by COVID-19. Both executives are critical to the business and the
increases reflect the additional scope of the roles; and
GGeenneerraall MMaannaaggeerr,, AAuussttrraalliiaann OOppeerraattiioonnss ((SS TTiillkkaa)) reflecting his criticality to the business (given his experience at all of Iluka’s
domestic and international operational locations). It is recognised that the fixed remuneration and overall remuneration
package was positioned well below the median of the market with the increase now positioning the role closer to the
expected market for this role.
•
The Board will continue to monitor remuneration levels based on the factors set out in the Executive Remuneration Framework
(see Section 2 for more detail).
Executive KMP
2022 Fixed Remuneration1
2021 Fixed Remuneration
T O’Leary
A Stratton
M Blackwell
S Tilka
$1,400,000
$730,000
$730,000
$650,000
1
Fixed remuneration increases were effective from 1 March 2022
$1,400,000
$630,000
$655,000
$550,000
81
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
82
3.2 2022 EIP SCORECARD AND OUTCOMES ACHIEVED The EIP Scorecard is approved by the Board at the commencement of the financial year and focuses executives on business priorities that support the delivery of Iluka’s Corporate five-year plan. Outlined below are the targets that were set for 2022, and the level of performance achieved. Scorecard measure and target Weight Performance and outcome Threshold – Target – Stretch FINANCIALS 50% Outcome – 127% of target; 85% of maximum achieved Group ROC (%)1 20% STRETCH Group ROC is included in the EIP scorecard to ensure that Iluka is achieving earnings growth in a manner that adds value for shareholders. Iluka generated a significant return on capital of 84.9% adjusted during the year, demonstrating the delivery of Iluka’s pursuit of sustainable pricing within the industry and being recognised as a reliable supplier of critical minerals. The assets performed well, with record production achieved at SR2 synthetic rutile kiln. Group NPAT1 15% STRETCH Group NPAT is included in the EIP scorecard to support the required focus on profitability. Adjusted NPAT of $558.8M was above stretch. 2022 saw market demand for zircon and high grade titanium feedstocks exceed supply, with energy prices and competitor issues challenging market dynamics. The cost base of operations was impacted by the inflationary environment, but this was offset by an ability to increase profit margins across the product suite and drive productivity improvements for synthetic rutile production. Unit Cash Costs of Production $/t Z/R/SR Target $907/t 15% BELOW TARGET Unit Cash Costs of Production is included in the EIP scorecard to support the required focus on costs within the business. The Group’s Unit Cash Costs of Production of $957/t, was between threshold and target. Inflationary pressures on labour, consumables, fuel, power, and transport increased costs in the year, which had a direct impact on unit costs. 1Disclosure of financial targets. No specific targets are disclosed in relation to the financial earnings measures due to commercial sensitivity. Iluka’s approach to the marketing and pricing of its products is key to achievement of the company’s objective to deliver sustainable value. We believe maintaining confidentiality on financial earnings targets, even on a retrospective basis, is critical to our competitive advantage and is in the best interests of shareholders. The targets and outcomes are adjusted to exclude the income derived from Iluka’s investment in Deterra Royalties and the impact of the SRL demerger. PRODUCTION 10% Outcome – 129% of target; 86% of maximum achieved Group Z/R/SR kt Target 660kt 10% ABOVE TARGET Optimising production is key to delivering value to shareholders. Overall production of 679kt was above target performance, driven by record synthetic rutile production from SR2 kiln and higher than planned zircon in concentrate production. Iluka 2022 performance Scorecard measure
and target
Weight
Performance and outcome
Threshold – Target – Stretch
SUSTAINABILITY
15%
Trusted by our People & Communities
Outcome – 96% of target; 64% of
maximum achieved
Group Total
Recordable Injury
Frequency Rate (TTRRIIFFRR))
Reduction to 2.3
2.5%
Critical Control
Management
Programme
Implementation
2.5%
Diversity & Inclusion
2.5%
Responsible for the environment
Group Closure Index
(%)
Reduction of
rehabilitation liability
through closure index
target of 104%
2.5%
Group environmental
level 3 and above
incidents
Target of 8 or less
2.5%
BELOW THRESHOLD
Our first and fundamental responsibility remains the same – the safety of our
people. Reducing serious potential injuries has been a specific safety focus for
Iluka. Threshold performance was not achieved in 2022 as the Group’s TRIFR
exceeded threshold performance of 2.5. This was attributable to an increase in
injuries (predominately musculoskeletal injuries and minor lacerations).
STRETCH
This measure was introduced in 2022 to support the imbedding of the Critical
Control Management (CCCCMM) programme across operations and projects
targeting critical control field verifications. The CCM programme engages
employees in the identification, elimination, control and mitigation of fatal risk.
This metric is assessed as the ratio of Supervisor/Manager Critical Control
Verifications (CCCCVV) to Critical Control Checks (CCCCCC) in field checks by
employees. Stretch performance was achieved in respect of this measure.
Iluka’s CCM programme was embedded across all Australian operating sites,
with 228 employees and 145 contractors completing CCM training in 2022.
Serious potential injuries (SPIs) decreased to 46 in 2022 compared to 61 in
2021, partly attributable to the CCM programme and increasing the visible
presence of the Iluka Leadership Team at operational sites.
STRETCH
Iluka is focussed on building and maintaining an engaged, diverse and capable
workforce. Reflecting this, a new “Diversity & Inclusion” metric was introduced for
2022 to build employee capability in this area. Stretch performance against this
metric was achieved following the development and rollout of training relating to
focus on behaviour
cultural awareness, mental health awareness and
expectations (including modules relating to sexual harassment).
STRETCH
A key focus for Iluka is effectively rehabilitating closed sites. Stretch
performance was achieved, primarily as a result of reduced clearing at our
operating mines, supported by increased rehabilitation at our close sites. A total
of 574 hectares were rehabilitated during 2022.
BELOW THRESHOLD
In line with our responsibility for the environment, Iluka is committed to reducing
environmental incidents. The Group had 14 level 3 and above environmental
incidents in 2022, resulting in below threshold performance against this
measure. The most common cause of these incidents were spills of mineral
containing NORM, most of which were small volumes and all of which were
contained and cleaned up. The remaining incidents were associated with
hydrocarbon spills, releases of non-toxic sediment-laden or saline water, and
one incident was raised for recurrent lower level incidents (Level 1 or 2).
Operating in and providing products for a low carbon world
ABOVE TARGET
Climate Change Work
Programme
2.5%
This was a new metric introduced for 2022 in line with Iluka’s commitment to
reduce its carbon footprint. Above target performance was achieved in 2022
due to the progression of key initiatives of the Work Programme including100%
of sites (including operations or rehabilitation sites) and functions undertaking an
exercise, through the CORE program, to identify high impact energy efficiency
opportunities.
GROUP SCORECARD2 Outcome –121% of target; 81 % of maximum achieved
2
Financials, Production, Sustainability
83
3.2 2022 EIP SCORECARD AND OUTCOMES ACHIEVED The EIP Scorecard is approved by the Board at the commencement of the financial year and focuses executives on business priorities that support the delivery of Iluka’s Corporate five-year plan. Outlined below are the targets that were set for 2022, and the level of performance achieved. Scorecard measure and target Weight Performance and outcome Threshold – Target – Stretch FINANCIALS 50% Outcome – 127% of target; 85% of maximum achieved Group ROC (%)1 20% STRETCH Group ROC is included in the EIP scorecard to ensure that Iluka is achieving earnings growth in a manner that adds value for shareholders. Iluka generated a significant return on capital of 84.9% adjusted during the year, demonstrating the delivery of Iluka’s pursuit of sustainable pricing within the industry and being recognised as a reliable supplier of critical minerals. The assets performed well, with record production achieved at SR2 synthetic rutile kiln. Group NPAT1 15% STRETCH Group NPAT is included in the EIP scorecard to support the required focus on profitability. Adjusted NPAT of $558.8M was above stretch. 2022 saw market demand for zircon and high grade titanium feedstocks exceed supply, with energy prices and competitor issues challenging market dynamics. The cost base of operations was impacted by the inflationary environment, but this was offset by an ability to increase profit margins across the product suite and drive productivity improvements for synthetic rutile production. Unit Cash Costs of Production $/t Z/R/SR Target $907/t 15% BELOW TARGET Unit Cash Costs of Production is included in the EIP scorecard to support the required focus on costs within the business. The Group’s Unit Cash Costs of Production of $957/t, was between threshold and target. Inflationary pressures on labour, consumables, fuel, power, and transport increased costs in the year, which had a direct impact on unit costs. 1Disclosure of financial targets. No specific targets are disclosed in relation to the financial earnings measures due to commercial sensitivity. Iluka’s approach to the marketing and pricing of its products is key to achievement of the company’s objective to deliver sustainable value. We believe maintaining confidentiality on financial earnings targets, even on a retrospective basis, is critical to our competitive advantage and is in the best interests of shareholders. The targets and outcomes are adjusted to exclude the income derived from Iluka’s investment in Deterra Royalties and the impact of the SRL demerger. PRODUCTION 10% Outcome – 129% of target; 86% of maximum achieved Group Z/R/SR kt Target 660kt 10% ABOVE TARGET Optimising production is key to delivering value to shareholders. Overall production of 679kt was above target performance, driven by record synthetic rutile production from SR2 kiln and higher than planned zircon in concentrate production. Iluka 2022 performance ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
3.3 MANAGING DIRECTOR INDIVIDUAL OBJECTIVES
Individual strategic objectives were set based on individual KMP accountabilities. Outlined below is the assessment of the
Managing Director (MD)’s performance against the Individual Strategy scorecard measure and corresponding EIP outcome:
Scorecard
measure
(weight)
INDIVIDUAL
STRATEGY (25%)
Advance staged
diversification of
portfolio into rare
earths in a prudent
manner
Pursue value
accretive
opportunities in
mineral sands to
deliver sustainable
value over the long
term with a view to
extending reserve
life
Optimise
sustainable value
from investment in
Sierra Rutile and the
Sembehun
opportunity
Optimise price and
volume settings
Performance
Threshold – Target - Stretch
Outcome – 143% of target; 95% of maximum
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Entered into risk sharing partnership with the Australian Government by way of a
non-recourse loan with Export Finance Australia (EFA Loan)
Final Investment Decision (FID) taken to proceed with execution of Eneabba
Refinery in April 2022
Eneabba Phase 2 commissioned on time
All environmental and other approvals required to commence construction of the
Eneabba Refinery have been obtained and remain in place.
Entered into strategic partnership with Northern Minerals Limited (NTU) for the
supply of rare earths concentrate (future feedstock for the Eneabba Refinery),
along with an equity and convertible loan investment in NTU
Restart of SR1: the restart of synthetic rutile kiln 1 at Capel (following idling in 2009) was
commissioned ahead of time and on budget and with a strong safety record and no lost time
injuries
Balranald: Substantial progress made on Definitive Feasibility Study (DFS) to facilitate FID
taken in February 2023
Wimmera: PFS completed to facilitate project ‘gating’ to DFS in February 2023. The technical
confidence around the production of rare earth concentrate (as feed for the Eneabba
Refinery) is high; the selected technology for zircon purification (to reduce contaminants in
the zircon) is to be the subject of a demonstration plant
Material advancements were made in PFS work in relation to other deposits in Western
Australia (Tutunup), South Australia (Atacama) and New South Wales (Euston)
The successful demerger of Sierra Rutile from Iluka to create Sierra Rutile Holdings
Limited (SRX) as a separate listed entity on the ASX was completed in August 2022
Through the demerger, Iluka has been successfully repositioned to focus on
technology advancements in mineral sands in Australia (eg, Balranald and
Wimmera) as well as the rare earths diversification
The security and reliability of supply from Iluka, together with moderate demand and
constrained industry supply, provided Iluka opportunities to achieve positive product pricing
while maintaining focus on sustainable pricing outcomes across the product portfolio and
diversity of end markets
Offtake commitments for premium synthetic rutile increase to ~200ktpa under 'take or pay’
arrangement for the next four years
Iluka has successfully rebalanced its geographical exposure across our portfolio of
customers
The Individual strategy scorecard area outcomes for other Executive KMP ranged from 78 – 84% of target.
3.4 OVERALL EIP SCORECARD OUTCOME FOR THE MD
Scorecard measure
Weight
Outcome
Weighted
Outcome
Threshold – Target – Stretch
Group Scorecard
Individual Strategy MD
Outcome
75%
25%
121%
91.0%
143%
35.5%
OVERALL MD RESULT
126.5%
84
3.3 MANAGING DIRECTOR INDIVIDUAL OBJECTIVES
3.5 EIP AWARDS FROM 2022 SCORECARD OUTCOMES
The following table presents the outcomes of the EIP award attributed to the 2022 performance year. The face value of EIP
restricted rights and performance rights has been presented, as the fair value will not be determined until the grant is made in
March 2023.
Executive
KMP
T O’Leary
A Stratton
M Blackwell
S Tilka
Maximum
EIP
opportunity
$2,940,000
$1,204,500
$1,204,500
$1,072,500
% of
target
EIP
earned
126.5%
126.5%
123.7%
117.5%
% of
maximum
EIP earned
% of
maximum
EIP forfeited
EIP
Cash
EIP
Restricted
Rights
EIP
Performan
ce Rights
Total
84%
84%
82%
78%
16%
16%
18%
22%
N/A
$203,098
$198,681
$167,971
$1,487,640
$406,195
$397,362
$335,940
$991,760
$406,194
$397,361
$335,940
$2,479,400
$1,015,487
$993,404
$839,851
3.6 VESTING OF 2019 EIP PERFORMANCE RIGHTS
33% of Executive KMPs’ total 2019 EIP award was granted as performance rights.
These performance rights were tested and assessed again by the Board based on the Iluka’s TSR performance in relation to the
S&P / ASX 200 Resources Index (excluding companies primarily engaged in the oil and gas sector and non-mining activities) over
the 4 years to 31 December 2022 (as per the vesting schedule below).
The Board determined a vesting of 100% of the performance rights based on the relative TSR achievement of the 72nd percentile
against Iluka’s peer group over the performance period.
The 2019 EIP Performance Rights were assessed as follows:
Relative TSR
Weighting:
Actual score:
Calculation1:
100%
TSR of (152%) 72nd percentile of comparator group.
100% vesting where Iluka’s TSR is above the 50th percentile of peer group (as per the terms
of the 2019 EIP Performance Rights).
1
From 2020, a sliding scale in respect of relative TSR was adopted (see Section 2.2 for more detail).
Individual strategic objectives were set based on individual KMP accountabilities. Outlined below is the assessment of the
Managing Director (MD)’s performance against the Individual Strategy scorecard measure and corresponding EIP outcome:
Performance
Threshold – Target - Stretch
Scorecard
measure
(weight)
INDIVIDUAL
STRATEGY (25%)
Advance staged
diversification of
portfolio into rare
earths in a prudent
manner
Pursue value
accretive
opportunities in
mineral sands to
deliver sustainable
value over the long
term with a view to
extending reserve
life
Optimise
sustainable value
from investment in
Sierra Rutile and the
Sembehun
opportunity
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Outcome – 143% of target; 95% of maximum
Entered into risk sharing partnership with the Australian Government by way of a
non-recourse loan with Export Finance Australia (EFA Loan)
Final Investment Decision (FID) taken to proceed with execution of Eneabba
Refinery in April 2022
Eneabba Phase 2 commissioned on time
All environmental and other approvals required to commence construction of the
Eneabba Refinery have been obtained and remain in place.
Entered into strategic partnership with Northern Minerals Limited (NTU) for the
supply of rare earths concentrate (future feedstock for the Eneabba Refinery),
along with an equity and convertible loan investment in NTU
Restart of SR1: the restart of synthetic rutile kiln 1 at Capel (following idling in 2009) was
commissioned ahead of time and on budget and with a strong safety record and no lost time
injuries
taken in February 2023
Balranald: Substantial progress made on Definitive Feasibility Study (DFS) to facilitate FID
Wimmera: PFS completed to facilitate project ‘gating’ to DFS in February 2023. The technical
confidence around the production of rare earth concentrate (as feed for the Eneabba
Refinery) is high; the selected technology for zircon purification (to reduce contaminants in
the zircon) is to be the subject of a demonstration plant
Material advancements were made in PFS work in relation to other deposits in Western
Australia (Tutunup), South Australia (Atacama) and New South Wales (Euston)
The successful demerger of Sierra Rutile from Iluka to create Sierra Rutile Holdings
Limited (SRX) as a separate listed entity on the ASX was completed in August 2022
Through the demerger, Iluka has been successfully repositioned to focus on
technology advancements in mineral sands in Australia (eg, Balranald and
Wimmera) as well as the rare earths diversification
The security and reliability of supply from Iluka, together with moderate demand and
constrained industry supply, provided Iluka opportunities to achieve positive product pricing
while maintaining focus on sustainable pricing outcomes across the product portfolio and
Optimise price and
volume settings
diversity of end markets
Offtake commitments for premium synthetic rutile increase to ~200ktpa under 'take or pay’
arrangement for the next four years
Iluka has successfully rebalanced its geographical exposure across our portfolio of
customers
The Individual strategy scorecard area outcomes for other Executive KMP ranged from 78 – 84% of target.
3.4 OVERALL EIP SCORECARD OUTCOME FOR THE MD
Scorecard measure
Weight
Outcome
Threshold – Target – Stretch
Weighted
Outcome
Group Scorecard
121%
91.0%
Individual Strategy MD
Outcome
75%
25%
143%
35.5%
OVERALL MD RESULT
126.5%
85
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
3.7 SUMMARY OF REALISED REMUNERATION PAID TO EXECUTIVE KMP IN 2022
This Section uses non-IFRS information to show the “realised remuneration” received by Executive KMP for 2022. This is a
voluntary disclosure intended to demonstrate the link between the remuneration received by Executive KMP and the performance
of Iluka over 2022. Refer to following Section 3.8 for statutory remuneration disclosure.
Executive
KMP
Fixed
Remuneration
Other1
Cash2
Restricted Rights2
EIP
T O’Leary
A Stratton
M Blackwell
S Tilka
$1,400,000
$730,000
$730,000
$650,000
$58,117
$26,733
$26,411
$10,638
$0
$203,098
$198,681
$167,971
$1,487,640
$406,195
$397,362
$335,940
2019 EIP
Performance
Rights
vesting3
$814,299
$280,289
$286,459
$134,111
Total
$3,760,056
$1,646,315
$1,638,913
$1,298,660
Represents car parking for T O’Leary, A Stratton and M Blackwell, FBT value of car benefit for S Tilka and dividend equivalent payments in relation to vesting of 2019
EIP Tranche 3, 2020 EIP Tranche 2 and 2021 EIP Tranche 1 payable in March 2023.
Relates to outcome from 2022 EIP. Restricted rights vest in 4 tranches in March 2024, 2025, 2026 and 2027. This represents the face value of the grant being made.
The estimated value of the 2019 EIP Performance Rights vesting in March 2023 was calculated using the closing share price of $9.53 at 30 December 2022. The actual
value will be calculated using the closing price at the date of vesting (1 March 2023). Value also includes a dividend equivalent payment payable in March 2023, with
respect to vested rights under the plan.
1
2
3
3.8 EXECUTIVE KMP STATUTORY REMUNERATION DISCLOSURES
Details of the remuneration of the KMP, prepared in accordance with the requirements of the Corporations Act 2001 (Cth) and
the relevant Australian Accounting Standards, are set out in the following tables.
Short-term Benefits
Post Employment
Benefits
Other long-
term benefits
%
Performa-
nce based
Remuner-
ation
55%
48%
47%
46%
48%
47%
41%
45%
50%
47%
Name
Year
Base Salary
EIP Cash
1
Non-
Monetary
2
Benefits
Superann-
uation
Benefits
Termina
-tion
Benefits
Accrued AL
and LSL
3,5
T O’Leary
A Stratton
M
Blackwell
S Tilka
2022
2021
2022
2021
2022
2021
2022
2021
$1,384,087
$1,377,369
$708,666
$607,369
$713,680
$632,369
$625,252
$527,369
N/A
N/A
$203,098
$188,982
$198,681
$194,319
$167,971
$167,101
$12,656
$12,426
$13,222
$12,426
$12,656
$12,426
$2,886
$5,897
$24,430
$22,631
$24,430
$22,631
$24,430
$22,631
$24,430
$22,631
$0
$0
$0
$0
$0
$0
$0
$0
$87,030
$103,490
$24,726
$28,981
$5,039
$7,796
$142,128
$30,399
Share
Based
4
Payments
$1,874,375
$1,428,147
$495,207
$388,293
$498,400
$410,327
$394,234
$311,026
Statutory
Total
$3,382,578
$2,944,063
$1,469,349
$1,248,682
$1,452,886
$1,279,868
$1,356,901
$1,064,423
TToottaall
2022
2021
$41,420
$43,175
$569,750
$550,402
$3,431,685
$3,144,476
$97,720
$90,524
EIP cash payments for 2022 will be made in March 2023. EIP cash payments for 2021 were made during the reporting period in March 2022. No cash payments were
made to the CEO for 2022.
Represents car parking for Executive KMP based in Perth, FBT value of car benefit for S Tilka and 10-year service award for A Stratton.
Represents the movement in the annual and long-service leave provisions during the year. Any reduction in accrued annual leave reflects more leave taken that which
accrued in the period.
Amounts relate to the fair value of awards made under various incentive plans attributable to the year measured in accordance with AASB 2 Share Based Payments.
The 2021 comparative disclosures for accrued annual leave and long service leave amounts have been restated due to a prior year calculation error.
$7,661,714
$6,537,036
$3,262,216
$2,537,793
$258,923
$170,666
$0
$0
1
2
3
4
5
86
3.7 SUMMARY OF REALISED REMUNERATION PAID TO EXECUTIVE KMP IN 2022
This Section uses non-IFRS information to show the “realised remuneration” received by Executive KMP for 2022. This is a
voluntary disclosure intended to demonstrate the link between the remuneration received by Executive KMP and the performance
of Iluka over 2022. Refer to following Section 3.8 for statutory remuneration disclosure.
Executive
KMP
Fixed
Remuneration
Other1
Cash2
Restricted Rights2
2019 EIP
Performance
Total
EIP
T O’Leary
A Stratton
M Blackwell
S Tilka
$1,400,000
$730,000
$730,000
$650,000
$58,117
$26,733
$26,411
$10,638
$0
$203,098
$198,681
$167,971
$1,487,640
$406,195
$397,362
$335,940
Represents car parking for T O’Leary, A Stratton and M Blackwell, FBT value of car benefit for S Tilka and dividend equivalent payments in relation to vesting of 2019
EIP Tranche 3, 2020 EIP Tranche 2 and 2021 EIP Tranche 1 payable in March 2023.
Relates to outcome from 2022 EIP. Restricted rights vest in 4 tranches in March 2024, 2025, 2026 and 2027. This represents the face value of the grant being made.
The estimated value of the 2019 EIP Performance Rights vesting in March 2023 was calculated using the closing share price of $9.53 at 30 December 2022. The actual
value will be calculated using the closing price at the date of vesting (1 March 2023). Value also includes a dividend equivalent payment payable in March 2023, with
respect to vested rights under the plan.
3.8 EXECUTIVE KMP STATUTORY REMUNERATION DISCLOSURES
Details of the remuneration of the KMP, prepared in accordance with the requirements of the Corporations Act 2001 (Cth) and
the relevant Australian Accounting Standards, are set out in the following tables.
Rights
vesting3
$814,299
$280,289
$286,459
$134,111
$3,760,056
$1,646,315
$1,638,913
$1,298,660
Short-term Benefits
Post Employment
Benefits
Other long-
term benefits
Name
Year
Base Salary
EIP Cash
1
Non-
Superann-
Termina
Monetary
Benefits
2
uation
Benefits
-tion
Benefits
Accrued AL
and LSL
3,5
Share
Based
Payments
4
Statutory
Total
T O’Leary
A Stratton
M
Blackwell
S Tilka
TToottaall
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
$1,384,087
$1,377,369
N/A
N/A
$708,666
$607,369
$713,680
$632,369
$625,252
$527,369
$203,098
$188,982
$198,681
$194,319
$167,971
$167,101
$3,431,685
$569,750
$3,144,476
$550,402
$12,656
$12,426
$13,222
$12,426
$12,656
$12,426
$2,886
$5,897
$41,420
$43,175
$24,430
$22,631
$24,430
$22,631
$24,430
$22,631
$24,430
$22,631
$97,720
$90,524
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$87,030
$1,874,375
$3,382,578
$103,490
$1,428,147
$2,944,063
$24,726
$28,981
$5,039
$7,796
$142,128
$30,399
$258,923
$170,666
$495,207
$388,293
$498,400
$410,327
$394,234
$311,026
$1,469,349
$1,248,682
$1,452,886
$1,279,868
$1,356,901
$1,064,423
$3,262,216
$7,661,714
$2,537,793
$6,537,036
EIP cash payments for 2022 will be made in March 2023. EIP cash payments for 2021 were made during the reporting period in March 2022. No cash payments were
made to the CEO for 2022.
accrued in the period.
Represents car parking for Executive KMP based in Perth, FBT value of car benefit for S Tilka and 10-year service award for A Stratton.
Represents the movement in the annual and long-service leave provisions during the year. Any reduction in accrued annual leave reflects more leave taken that which
Amounts relate to the fair value of awards made under various incentive plans attributable to the year measured in accordance with AASB 2 Share Based Payments.
The 2021 comparative disclosures for accrued annual leave and long service leave amounts have been restated due to a prior year calculation error.
%
Performa-
nce based
Remuner-
ation
55%
48%
47%
46%
48%
47%
41%
45%
50%
47%
1
2
3
1
2
3
4
5
4. NON-EXECUTIVE DIRECTOR REMUNERATION
4.1 2022 NON-EXECUTIVE DIRECTOR FEE POLICY
The Board sets the fees for its Non-executive Directors in line with the key objectives of Iluka’s Non-Executive Director
remuneration policy set out below. Fees are reviewed annually and are set at a level that is sufficient to attract and retain high
calibre Directors with the skills and experience required to oversee a business of Iluka’s similar size and complexity
.
MMaarrkkeett
ccoommppeettiittiivvee
The Board’s policy is to remunerate Non-executive Directors at market-competitive rates to attract and
retain Non-executive Directors of the requisite expertise having regard to:
•
•
•
market data;
the size and complexity Iluka’s operations; and
the workload and time commitment of Directors.
PPrreesseerrvvee aanndd
ssaaffeegguuaarrdd
iinnddeeppeennddeennccee
aanndd iimmppaarrttiiaalliittyy
AAlliiggnnmmeenntt wwiitthh
sshhaarreehhoollddeerrss
4.2 AGGREGATE FEE
•
•
•
•
Non-executive Director remuneration consists of base fees, and additional fees for the Chair and
members of any Board Committee (with the exception of the Nomination Committee).
No element of Non-executive Director remuneration is ‘at-risk’ (i.e. Directors are not entitled to
any performance-related pay such as share or bonus schemes designed for Executive KMP or
employees) to preserve their independence and impartiality.
Non-executive Directors are required to hold securities in Iluka to create alignment between the
interests of Non-executive Directors and shareholders.
Non-executive Directors are subject to a minimum shareholding requirement equal to 1 times
their annual Board base member fee (exclusive of superannuation). Refer to section 5.2 for
further detail.
The current annual aggregate fee pool for Non-executive Directors is capped at $1.8 million (including statutory contributions),
as approved by shareholders at Iluka’s AGM in May 2015.
4.3 2022 FEES & OTHER BENEFITS
Non-executive Director fees for 2022 are outlined in the table below. After considering the relevant market data for Non-executive
Directors, the Board determined that there would be no change to the Non-executive Director fees in 2022 from 2021 levels.
However Committee Fees for the Sustainability Committee were introduced on 14 April 2022.
2022 Board and Committee Fees
(excl. of superannuation)
BBooaarrdd
AAuuddiitt aanndd RRiisskk CCoommmmiitttteeee
PPeeooppllee aanndd PPeerrffoorrmmaannccee CCoommmmiitttteeee
NNoommiinnaattiioonn aanndd GGoovveerrnnaannccee CCoommmmiitttteeee
SSuussttaaiinnaabbiilliittyy CCoommmmiitttteeee
Chair
Member
2021
$321,400
$36,100
$30,600
Nil
Nil
2022
$321,400
$36,100
$30,600
Nil
$30,600
2021
$128,800
$18,100
$15,350
Nil
Nil
2022
$128,800
$18,100
$15,350
Nil
$15,350
The minimum required employer superannuation contribution up to the statutory maximum is paid into each Non-executive
Director’s nominated eligible fund and is in addition to the above fees. The statutory value for superannuation increased in 2022.
Non-executive Directors are not entitled to retirement benefits other than statutory superannuation or other statutory required
benefits.
87
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
4.4 STATUTORY REMUNERATION TABLE
The fees paid to Non-executive Directors in 2022 are outlined below, prepared in accordance with the requirements of the
Corporations Act 2001 (Cth) and the relevant Australian Accounting Standards.
Name
Year
Current Non-executive Directors
Board and
Committee Fees
Non-
Monetary
Benefits
Superannuation
Statutory Total
$275,757
$154,432
$168,757
$146,900
$157,864
$146,900
$175,864
$164,900
$155,043
$115,947
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$22,523
$15,070
$17,319
$14,323
$16,192
$14,323
$18,037
$16,078
$15,903
$11,375
R Cole
L Saint
S Corlett
M Bastos
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
Former Non-executive Directors
G Martin1
2022
2021
2022
2021
2022
2021
H Ranck2
TToottaall ffeeeess
A Sutton
$7,040
$22,631
N/A
$5,048
$97,014
$98,848
As noted above, G Martin retired as Chairman on 13 April 2022. Remuneration disclosures reflect the period he was a KMP.
H Ranck ceased on 9 March 2021. The remuneration disclosures for 2021 reflect the period he was a director.
$91,829
$321,400
N/A
$53,133
$1,025,114
$1,103,612
$0
$0
N/A
$0
$0
$0
$298,280
$169,502
$186,076
$161,223
$174,056
$161,223
$193,901
$180,978
$170,946
$127,322
$98,869
$344,031
N/A
$58,181
$1,122,128
$1,202,460
1
2
88
4.4 STATUTORY REMUNERATION TABLE
The fees paid to Non-executive Directors in 2022 are outlined below, prepared in accordance with the requirements of the
Corporations Act 2001 (Cth) and the relevant Australian Accounting Standards.
Name
Year
Superannuation
Statutory Total
Board and
Committee Fees
Non-
Monetary
Benefits
Current Non-executive Directors
R Cole
M Bastos
S Corlett
L Saint
A Sutton
G Martin1
H Ranck2
TToottaall ffeeeess
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
2022
2021
$275,757
$154,432
$168,757
$146,900
$157,864
$146,900
$175,864
$164,900
$155,043
$115,947
$91,829
$321,400
N/A
$53,133
$1,025,114
$1,103,612
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
$0
N/A
$0
$0
$0
$22,523
$15,070
$17,319
$14,323
$16,192
$14,323
$18,037
$16,078
$15,903
$11,375
$7,040
$22,631
N/A
$5,048
$97,014
$98,848
$298,280
$169,502
$186,076
$161,223
$174,056
$161,223
$193,901
$180,978
$170,946
$127,322
$98,869
$344,031
N/A
$58,181
$1,122,128
$1,202,460
Former Non-executive Directors
1
2
As noted above, G Martin retired as Chairman on 13 April 2022. Remuneration disclosures reflect the period he was a KMP.
H Ranck ceased on 9 March 2021. The remuneration disclosures for 2021 reflect the period he was a director.
89
5. REMUNERATION GOVERNANCE 5.1 REMUNERATION GOVERNANCE FRAMEWORK KMP remuneration decision making is governed by the Iluka remuneration governance framework. The Iluka People and Performance Committee Charter can be found at wwwwww..iilluukkaa..ccoomm//aabboouutt--iilluukkaa//ggoovveerrnnaannccee. 5.2 MINIMUM SHAREHOLDING REQUIREMENT (MSR) KMP are required to acquire and hold a personally significant shareholding in Iluka to align to the interests of shareholders over a reasonable time frame taking into account vesting and taxation obligations. See Section 6.3 and 6.4 for details of current KMP shareholdings. Executive KMP The MSR policy for Executive KMP is as below: MMSSRR ppoolliiccyy %% ooff FFiixxeedd RReemmuunneerraattiioonn ((yyeeaarr--eenndd)) Managing Director Other Executives 200% 100% As of 31 December 2022, all members of the Executive KMP meet the MSR. Non-executive Directors The Board is committed to Non-executive Directors acquiring and holding a shareholding within three years of appointment. In January 2022, the Board approved a change to the Policy, requiring the Chairman and other Non-executive Directors to hold such a number that the aggregate value is at least equal to 100% of their annual Board base member fee (exclusive of superannuation)1. As at 31 December 2022, all Non-executive Directors meet the MSR. See Section 6 for details of current KMP shareholdings. 1Excludes committee fees and superannuation ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
5.3 SECURITIES TRADING POLICY
Security Trading
Policy
Directors and employees (including Executive KMP) are prohibited from trading in financial products issued
or created over the company’s securities created by third parties, and from trading in associated products
and entering into transactions which operate to limit the economic risk of holdings of unvested Iluka
securities or vested Iluka securities which are subject to a holding lock.
The Security Trading Policy is available on the company’s website at wwwwww..iilluukkaa..ccoomm.
5.4 EXECUTIVE EMPLOYMENT AGREEMENTS
Iluka’s Executive KMP are employed on terms set out in individual employment agreements which do not contain a fixed term. Key
terms of the agreements are as follows:
Termination Notice Period by
Iluka or Employee
Termination
Benefit
Executive KMP
Position
T O'Leary
Managing Director
A Stratton
Chief Financial Officer and Head of
Development
6 months
6 months
M Blackwell
Head of Projects and Sales & Marketing
3 months
S Tilka
General Manager, Australian Operations
3 months
6 months
6 months
6 months
6 months
If the Executive KMP’s employment is terminated by Iluka (other than for gross misconduct or on other grounds for summary
dismissal), the executive may be eligible to receive a termination payment to a maximum of 6 months fixed remuneration (inclusive
of any payment made in lieu of notice).
Iluka may terminate Executive KMP’s employment agreements without notice and without providing payment in lieu of notice
where there is gross misconduct or other grounds for summary dismissal.
5.5 ENGAGEMENT OF EXTERNAL REMUNERATION CONSULTANTS
External remuneration consultants were engaged by the PPC in 2022 to provide advice and market insights in relation to executive
remuneration arrangements. The remuneration consultants did not provide a ‘Remuneration Recommendation’ as defined in the
Corporations Act 2011 during the 2022 financial year.
90
5.3 SECURITIES TRADING POLICY
Security Trading
Directors and employees (including Executive KMP) are prohibited from trading in financial products issued
Policy
or created over the company’s securities created by third parties, and from trading in associated products
and entering into transactions which operate to limit the economic risk of holdings of unvested Iluka
securities or vested Iluka securities which are subject to a holding lock.
The Security Trading Policy is available on the company’s website at wwwwww..iilluukkaa..ccoomm.
Iluka’s Executive KMP are employed on terms set out in individual employment agreements which do not contain a fixed term. Key
5.4 EXECUTIVE EMPLOYMENT AGREEMENTS
terms of the agreements are as follows:
Executive KMP
Position
T O'Leary
Managing Director
Termination Notice Period by
Termination
Iluka or Employee
Benefit
A Stratton
Chief Financial Officer and Head of
Development
M Blackwell
Head of Projects and Sales & Marketing
3 months
S Tilka
General Manager, Australian Operations
3 months
6 months
6 months
6 months
6 months
6 months
6 months
If the Executive KMP’s employment is terminated by Iluka (other than for gross misconduct or on other grounds for summary
dismissal), the executive may be eligible to receive a termination payment to a maximum of 6 months fixed remuneration (inclusive
of any payment made in lieu of notice).
Iluka may terminate Executive KMP’s employment agreements without notice and without providing payment in lieu of notice
where there is gross misconduct or other grounds for summary dismissal.
5.5 ENGAGEMENT OF EXTERNAL REMUNERATION CONSULTANTS
External remuneration consultants were engaged by the PPC in 2022 to provide advice and market insights in relation to executive
remuneration arrangements. The remuneration consultants did not provide a ‘Remuneration Recommendation’ as defined in the
Corporations Act 2011 during the 2022 financial year.
6. ADDITIONAL REMUNERATION DISCLOSURES
6.1 EXECUTIVE KMP SHARE–BASED REMUNERATION
RESTRICTED RIGHTS/SHARES
The table below shows the number of restricted rights/shares (RRRRss) that were granted, vested and forfeited during the 2022
year. The table also includes additional rights granted to keep participants “whole” in relation to the demergers of Deterra
Royalties in 2020 and Sierra Rutile Ltd in 2022. The terms and conditions of previous years’ incentive awards are outlined in the
relevant year’s Remuneration Report, available at wwwwww..IIlluukkaa..ccoomm.
Number of restricted rights
Value of restricted rights
Award
Grant date
Balance
at
1 Januar
y 2022
KMP start
date
Granted
during
20221
Vested / exercised into
shares in 2022
Lapsed during 2021
#
%
#
%
T O’Leary
2018 EIP RRs
(shares)
2019 EIP RRs4,8
2020 EIP RRs5
2021 EIP RRs6
A Stratton
2018 EIP RRs
(shares)
2019 EIP RRs4,8
2020 EIP RRs5
2021 EIP RRs6
M Blackwell
2018 EIP RRs
(shares)
2019 EIP RRs4
2020 EIP RRs5
2021 EIP RRs6
S Tilka
2018 EIP RRs
(shares)
2019 SRL
Restricted
Share7
2019 EIP RRs4,8
2020 EIP RRs5
2021 EIP RRs6
1 March 2019
39,997
-
(39,997)
33%
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
and18 Aug
2022
13 April 2022
and 18 Aug
2022
82,032
1,481
(41,016)
33%
70,827
1,918
(17,707)
25%
-
157,545
-
-
1 March 2019
11,116
-
(11,116)
33%
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
and 18 Aug
2022
23 Feb 2022
and 18 Aug
2022
25,520
461
(12,760)
33%
24,904
675
(6,226)
25%
-
36,600
-
-
1 March 2019
12,882
-
(12,882)
33%
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
and 18 Aug
2022
23 Feb 2022
and 18 Aug
2022
26,080
471
(13,040)
33%
24,879
674
(6,220)
25%
-
37,634
-
-
1 March 2019
4,183
1 March 2019
12,718
-
-
(4,183)
33%
(12,718)
100%
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
and 18 Aug
2022
23 Feb 2022
and 18 Aug
2022
10,240
185
(5,120)
33%
15,900
431
(3,975)
25%
-
32,362
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance
at
31 Dec
2022
Granted in
20222
$
Value
vested /
exercised
into
shares in
20223
$
-
$411,969
#
-
42,497
$14,973
$422,465
55,038
$19,391
157,545
$1,962,276
-
-
-
-
$114,495
13,221
$4,661
$131,428
19,353
$6,824
36,600
$401,111
-
-
-
-
$132,685
13,511
$4,762
$134,312
19,333
$6,814
37,634
$412,443
-
-
-
-
-
-
$43,085
$130,995
5,305
$1,870
$52,736
12,356
$4,357
32,362
$354,666
-
-
91
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
1
2
3
4
5
6
7
8
Restricted rights granted in respect to the 2021 EIP, which form part of the share based payments for 2021 to 2025 inclusive. It includes top-up of Rights for the
2019 EIP, 2020 EIP and 2021 EIP following the demerger for Sierra Rutile Ltd in September 2022.
Value at point of grant, was $10.99 for KMP and $12.54 for MD’s grant.
Value at point of vest. Share price at 1 March 2022 was $10.30.
The initial grant date reflects the original date Restricted Rights were allocated in relation to the 2019 EIP award. "Top up" rights were granted in Dec 2020 as a result
of the Deterra Royalties demerger, in order to keep participants "whole". Further details can be found in the 2020 Remuneration Report. Additional "Top up" rights
were granted as a result of the Sierra Rutile Ltd demerger, in order to keep participants "whole" and further details can be found in section 7 of this report.
The initial grant date reflects the original Restricted Right were allocated in relation to the 2020 EIP award. "Top up" rights were granted in Aug 2022 as a result of the
Sierra Rutile Ltd demerger, in order to keep participants "whole".
The initial grant date reflects the original Restricted Right were allocated in relation to the 2021 EIP award. "Top up" rights were granted in Aug 2022 as a result of the
Sierra Rutile Ltd demerger, in order to keep participants "whole".
S Tilka became a KMP on the 27 October 2020. The opening balance reflects the remainder of his previously awarded 2019 Restricted Share Plan award granted to
Mr Tilka in March 2019, (which were released to him in March 2022).
Starting balance corrected by one (1) Right for T O'Leary, A Stratton and S Tilka due to incorrect reporting of vested/exercised in 2021 report.
PERFORMANCE RIGHTS
The table below shows the number of performance rights (PPRRss) that were granted, vested and forfeited during the 2022 year:
Number of performance rights
Value of performance
rights
Award
Grant date
Balance
at
1 Januar
y 2022
KMP start
date
Granted
during
20221
Vested / exercised into
shares in 2022
Lapsed during 2022
#
%
#
%
T O’Leary
2018 EIP PRs4
2019 EIP PRs5
2020 EIP PRs6
2021 EIP PRs7
A Stratton
2018 EIP PRs4
2019 EIP PRs5
2020 EIP PRs6
2021 EIP PRs7
M Blackwell
2018 EIP PRs4
2019 EIP PRs5
2020 EIP PRs6
2021 EIP PRs7
S Tilka
2018 EIP PRs4
2019 EIP PRs5
2020 EIP PRs6
1 March 2019
and 30 Dec
2020
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
and 18 Aug
2022
13 April 2022
and 18 Aug
2022
1 March 2019
and Dec 2020
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
and 18 Aug
2022
23 Feb 2022
and 18 Aug
2022
1 March 2019
and Dec 2020
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
and 23 Sep
2022
23 Feb 2022
and 18 Aug
2022
1 March 2019
and Dec 2020
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
and 18 Aug
2022
138,682
-
(138,682)
100%
78,088
2,819
47,218
1,705
-
105,031
-
-
-
-
-
-
42,642
-
(42,642)
100%
26,878
971
16,603
600
-
36,600
-
-
-
-
-
-
49,417
-
(49,417)
100%
27,470
992
16,586
599
-
37,634
-
-
-
-
-
-
19,848
-
(19,848)
100%
12,860
465
9,947
360
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
92
#
-
Balance
at
31 Dec
2022
Granted in
20222
$
Value
vested /
exercised
into
shares in
20223
$
-
$1,428,425
80,907
$28,500
48,923
$17,238
105,031
$1,197,701
-
-
-
-
-
$439,213
27,849
$9,817
17,203
$6,066
36,600
$372,852
-
-
-
-
-
$508,995
28,462
$10,029
17,185
$6,066
37,634
$362,852
-
-
-
-
-
$204,434
13,325
$4,701
10,307
$3,640
-
-
1
2
3
4
5
6
7
8
Restricted rights granted in respect to the 2021 EIP, which form part of the share based payments for 2021 to 2025 inclusive. It includes top-up of Rights for the
2019 EIP, 2020 EIP and 2021 EIP following the demerger for Sierra Rutile Ltd in September 2022.
Value at point of grant, was $10.99 for KMP and $12.54 for MD’s grant.
Value at point of vest. Share price at 1 March 2022 was $10.30.
The initial grant date reflects the original date Restricted Rights were allocated in relation to the 2019 EIP award. "Top up" rights were granted in Dec 2020 as a result
of the Deterra Royalties demerger, in order to keep participants "whole". Further details can be found in the 2020 Remuneration Report. Additional "Top up" rights
were granted as a result of the Sierra Rutile Ltd demerger, in order to keep participants "whole" and further details can be found in section 7 of this report.
The initial grant date reflects the original Restricted Right were allocated in relation to the 2020 EIP award. "Top up" rights were granted in Aug 2022 as a result of the
Sierra Rutile Ltd demerger, in order to keep participants "whole".
Sierra Rutile Ltd demerger, in order to keep participants "whole".
The initial grant date reflects the original Restricted Right were allocated in relation to the 2021 EIP award. "Top up" rights were granted in Aug 2022 as a result of the
S Tilka became a KMP on the 27 October 2020. The opening balance reflects the remainder of his previously awarded 2019 Restricted Share Plan award granted to
Mr Tilka in March 2019, (which were released to him in March 2022).
Starting balance corrected by one (1) Right for T O'Leary, A Stratton and S Tilka due to incorrect reporting of vested/exercised in 2021 report.
PERFORMANCE RIGHTS
The table below shows the number of performance rights (PPRRss) that were granted, vested and forfeited during the 2022 year:
Number of performance rights
Value of performance
rights
Balance
at
1 Januar
y 2022
KMP start
date
Granted
during
20221
Vested / exercised into
shares in 2022
Lapsed during 2022
#
%
#
%
Balance
at
31 Dec
2022
Granted in
20222
$
Value
vested /
exercised
into
shares in
20223
$
2018 EIP PRs4
and 30 Dec
138,682
-
(138,682)
100%
-
$1,428,425
Award
Grant date
T O’Leary
2019 EIP PRs5
78,088
2,819
2020 EIP PRs6
and 18 Aug
47,218
1,705
1 March 2019
2020
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
2022
13 April 2022
and 18 Aug
2022
1 March 2019
and Dec 2020
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
2022
23 Feb 2022
and 18 Aug
2022
1 March 2019
and Dec 2020
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
2022
23 Feb 2022
and 18 Aug
2022
1 March 2019
and Dec 2020
1 March 2020,
30 Dec 2020
and 18 Aug
2022
1 March 2021
and 18 Aug
2022
2021 EIP PRs7
A Stratton
2018 EIP PRs4
2021 EIP PRs7
M Blackwell
2018 EIP PRs4
2021 EIP PRs7
S Tilka
2018 EIP PRs4
2019 EIP PRs5
26,878
971
2020 EIP PRs6
and 18 Aug
16,603
600
2019 EIP PRs5
27,470
992
2020 EIP PRs6
and 23 Sep
16,586
599
2019 EIP PRs5
12,860
465
2020 EIP PRs6
9,947
360
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
#
-
80,907
$28,500
48,923
$17,238
27,849
$9,817
17,203
$6,066
28,462
$10,029
17,185
$6,066
13,325
$4,701
10,307
$3,640
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
105,031
105,031
$1,197,701
42,642
-
(42,642)
100%
-
-
$439,213
-
36,600
36,600
$372,852
49,417
-
(49,417)
100%
-
-
$508,995
-
37,634
37,634
$362,852
19,848
-
(19,848)
100%
-
-
$204,434
Award
Grant date
Balance
at
1 Januar
y 2022
KMP start
date
Granted
during
20221
2021 EIP PRs7
23 Feb 2022
and 18 Aug
2022
-
32,362
Number of performance rights
Value of performance
rights
Vested / exercised into
shares in 2022
Lapsed during 2022
Balance
at
31 Dec
2022
Granted in
20222
$
#
-
%
-
#
-
%
#
-
32,362
$320,621
Value
vested /
exercised
into
shares in
20223
$
-
1
2
3
4
5
6
7
Performance rights granted in respect of the 2021 EIP, which form part of the share based payments for 2021 to 2025 inclusive.
Fair Value of $9.90 at point of grant for A Stratton, M Blackwell & S Tilka. FV for MD’s grant is $11.45.
Value at point of vest. Share price at 1 March 2022 was $10.30. SRL Top-Up value based on Share price on date of board approval for the 17 August 2022 which was
$10.11.
The initial grant date reflects the original date performance rights were allocated in relation to the 2018 EIP awards. “Top up” rights were granted in Dec 2020 as a
result of the Deterra Royalties demerger, in order to keep participants “whole”. Further detail can be found in the 2020 Remuneration Report.
The initial grant date reflects the original date performance rights were allocated in relation to the 2019 EIP awards. “Top up” rights were granted in Dec 2020 as a
result of the Deterra Royalties demerger, in order to keep participants “whole”. Further detail can be found in the 2020 Remuneration Report. Additional "Top up"
rights were granted as a result of the Sierra Rutile Ltd demerger, in order to keep participants "whole" and further details can be found in section 7 of this report.
The initial grant date reflects the original performance were allocated in relation to the 2020 EIP award. "Top up" rights were granted in Aug 2022 as a result of the
Sierra Rutile Ltd demerger, in order to keep participants "whole".
The initial grant date reflects the original performance were allocated in relation to the 2021 EIP award. "Top up" rights were granted in Aug 2022 as a result of the
Sierra Rutile Ltd demerger, in order to keep participants "whole".
93
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
6.3 SHAREHOLDINGS OF EXECUTIVE KMP AND THEIR RELATED PARTIES
Name
T O’Leary
A Stratton
M Blackwell
S Tilka
Balance held
at
1 January
20221
900,311
106,220
89,765
43,041
Number of shares
Vesting/
exercise of
share rights
pursuant to
Awarded as
Restricted
Shares
pursuant to
EIP
138,682
42,642
49,417
19,848
EIP
160,944
37,736
38,779
32,978
Other
changes2
(18,122)
(68,677)
-
-
1
2
3
Includes shares held directly or through a nominee or agent (e.g. family trust).
Other changes may include changes due to personal trades and forfeited shares.
As at 31 December 2022 with share price of $9.53.
6.4 SHAREHOLDINGS OF NON-EXECUTIVE DIRECTORS AND THEIR RELATED PARTIES
Balance held
at 31
December
20221
1,199,937
168,476
109,284
95,867
Minimum
shareholding
met?3
Yes
Yes
Yes
Yes
Number of shares1
Net movement
Balance held at
31 December 2022
Minimum
shareholding met?2
15,000
842
6,047
208
-
-
37,000
23,664
16,040
18,441
22,000
30,000
Yes
Yes
Yes
Yes
Yes
No
Non-Executive directors do not receive share based remuneration and movements in their shareholdings reflect on-market trades.
Minimum shareholding requirements changed in January 2022 and this assessment reflects these changes.
Includes shares held indirectly through a nominee or agent (e.g. family trust).
Adjustment to 2021 closing balance of 233 shares from Dividend Reinvestment Plan (DRP) not previously advised to ASX as a result of an administrative issue relating
Balance held
at
1 January
2022
22,000
22,822
9,993
18,233
22,000
30,000
Name
R Cole3
M Bastos3
S Corlett
L Saint4
A Sutton
G Martin3,5
1
2
3
4
5
Former Non-executive Directors
to Ms Saint’s custodial account.
G Martin retired as Chairman on 13 April 2022.
6.5 OTHER DISCLOSURES
On-market share purchases
Iluka issued 730,000 shares to satisfy employee incentive schemes in 2022, at an average price of $11.04 per share.
During the financial year there were no product or services purchases by Executive KMP from the Group (2021: nil) and there are
Transactions with key management personnel
no amounts payable at 31 December 2022 (2021: nil).
Loans with KMPs
There have been no loans to Executive KMP during the financial year (2021: nil).
6.2 FAIR VALUE OF EQUITY GRANTS
The fair value of each restricted right or performance right and the vesting year for each incentive plan is set out below. The
maximum value of restricted rights and/or performance rights yet to vest is not able to be determined as it is dependent on
satisfaction of service and performance conditions and Iluka’s future share price. The minimum value of unvested restricted rights
and/or performance rights is nil.
Incentive
Plan
Grant Date
Grant Type
Fair Value
per Right at
Grant Date
$1
Vesting Date
Expiry Date
2018 EIP2
1 March 2020 and
30 Dec 2020
2019 EIP3
1 March 2020, 30
Dec 2020 and 18
Aug 2022
Restricted rights
9.35
1 March 2020, 1 March
2021, 1 March 2022
1 March 2020, 1 March
2021, 1 March 2022
Performance
rights
5.67
1 March 2022
1 March 2022
Restricted rights
9.19
1 March 2021, 1 March
2022, 1 March 2023
1 March 2021, 1 March
2022, 1 March 2023
Performance
rights
6.83
1 March 2023
1 March 2023
2020 EIP4
1 March 2021 and
23 Sep 2022
Restricted rights
7.47
1 March 2022, 1 March
2023, 1 March 2024, 1
March 2025
1 March 2022, 1 March
2023, 1 March 2024, 1
March 2025
Performance
rights
6.15/6.36
1 March 2025
1 March 2025
23 February 2022
Restricted rights
10.99
1 March 2023, 1 March
2024,1 March 2025,1
March 2026
1 March 2023, 1 March
2024, 1 March 2025, 1
March 2026
23 February 2022
Performance
rights
9.90
1 March 2026
1 March 2026
13 April 2022
Restricted rights
12.54
1 March 2023, 1 March
2024, 1 March 2025, 1
March 2026
1 March 2023, 1 March
2024, 1 March 2025,
1 March 2026
13 April 2022
Performance
rights
11.45
1 March 2026
1 March 2026
2021 EIP5
2021 EIP
(MD)6
2022 EIP7 March 2023
$9.53
Restricted rights
Performance
rights
1 March 2024, 1 March
2025, 1 March 2026, 1
March 2027
1 March 2024, 1 March
2025, 1 March 2026, 1
March 2027
1 March 2027
1 March 2027
1
2
3
4
5
6
7
The fair value is calculated in accordance with the measurement criteria of Accounting Standard AASB 2 Share Based Payments.
Represents the fair value on the grant date of restricted rights, and fair value of performance rights awarded under the 2018 EIP for which the performance period
concluded on 31 December 2018.
Represents the fair value on the grant date of restricted rights, and fair value of performance rights to be awarded under the 2019 EIP for which the performance period
concluded on 31 December 2019 .
Represents the fair value on the grant date of restricted rights, and fair value of $6.15 for performance rights awarded to Executive KMP, other than the MD and fair
value of $6.36 for the Managing Director’s award under the 2020 EIP for which the performance period concluded on 31 December 2020. Shareholder approval for
the grant of restricted rights and performance rights to the Managing Director was obtained under ASX Listing Rule 10.14 at the 2020 Annual General Meeting.
Represents the share price on the grant date of restricted rights, and fair value of $9.90 for performance rights awarded to Executive KMP.
Represents the share price on the grant date of restricted rights and fair value of $11.45 for the Managing Director’s award under the 2021 EIP for which the
performance period concluded on 31 December 2021. Shareholder approval for the grant of restricted rights and performance rights to the Managing Director was
obtained under ASX Listing Rule 10.14 at the 2021 Annual General Meeting
Represents the estimated fair value of restricted rights and performance rights to be awarded under the 2022 EIP for which the performance period concluded on 31
December 2022, calculated using the closing share price of $9.53 at 31 December 2022. The fair value will be determined in 2023 following the release of the
company’s 2022 annual results.
94
6.2 FAIR VALUE OF EQUITY GRANTS
and/or performance rights is nil.
Incentive
Plan
2018 EIP2
1 March 2020 and
30 Dec 2020
2019 EIP3
1 March 2020, 30
Dec 2020 and 18
Aug 2022
2020 EIP4
1 March 2021 and
23 Sep 2022
Grant Date
Grant Type
Vesting Date
Expiry Date
Fair Value
per Right at
Grant Date
$1
Restricted rights
9.35
1 March 2020, 1 March
1 March 2020, 1 March
2021, 1 March 2022
2021, 1 March 2022
5.67
1 March 2022
1 March 2022
Restricted rights
9.19
1 March 2021, 1 March
1 March 2021, 1 March
2022, 1 March 2023
2022, 1 March 2023
6.83
1 March 2023
1 March 2023
Restricted rights
7.47
2023, 1 March 2024, 1
2023, 1 March 2024, 1
1 March 2022, 1 March
1 March 2022, 1 March
March 2025
March 2025
6.15/6.36
1 March 2025
1 March 2025
23 February 2022
Restricted rights
10.99
2024,1 March 2025,1
2024, 1 March 2025, 1
1 March 2023, 1 March
1 March 2023, 1 March
March 2026
March 2026
23 February 2022
9.90
1 March 2026
1 March 2026
13 April 2022
Restricted rights
12.54
1 March 2023, 1 March
2024, 1 March 2025, 1
1 March 2023, 1 March
2024, 1 March 2025,
March 2026
1 March 2026
2021 EIP5
2021 EIP
(MD)6
13 April 2022
11.45
1 March 2026
1 March 2026
2022 EIP7 March 2023
$9.53
1 March 2024, 1 March
1 March 2024, 1 March
2025, 1 March 2026, 1
2025, 1 March 2026, 1
March 2027
March 2027
1 March 2027
1 March 2027
1
2
3
4
5
6
7
The fair value is calculated in accordance with the measurement criteria of Accounting Standard AASB 2 Share Based Payments.
Represents the fair value on the grant date of restricted rights, and fair value of performance rights awarded under the 2018 EIP for which the performance period
Represents the fair value on the grant date of restricted rights, and fair value of performance rights to be awarded under the 2019 EIP for which the performance period
concluded on 31 December 2018.
concluded on 31 December 2019 .
Represents the fair value on the grant date of restricted rights, and fair value of $6.15 for performance rights awarded to Executive KMP, other than the MD and fair
value of $6.36 for the Managing Director’s award under the 2020 EIP for which the performance period concluded on 31 December 2020. Shareholder approval for
the grant of restricted rights and performance rights to the Managing Director was obtained under ASX Listing Rule 10.14 at the 2020 Annual General Meeting.
Represents the share price on the grant date of restricted rights, and fair value of $9.90 for performance rights awarded to Executive KMP.
Represents the share price on the grant date of restricted rights and fair value of $11.45 for the Managing Director’s award under the 2021 EIP for which the
performance period concluded on 31 December 2021. Shareholder approval for the grant of restricted rights and performance rights to the Managing Director was
obtained under ASX Listing Rule 10.14 at the 2021 Annual General Meeting
Represents the estimated fair value of restricted rights and performance rights to be awarded under the 2022 EIP for which the performance period concluded on 31
December 2022, calculated using the closing share price of $9.53 at 31 December 2022. The fair value will be determined in 2023 following the release of the
company’s 2022 annual results.
Performance
rights
Performance
rights
Performance
rights
Performance
rights
Performance
rights
Restricted rights
Performance
rights
The fair value of each restricted right or performance right and the vesting year for each incentive plan is set out below. The
maximum value of restricted rights and/or performance rights yet to vest is not able to be determined as it is dependent on
satisfaction of service and performance conditions and Iluka’s future share price. The minimum value of unvested restricted rights
6.3 SHAREHOLDINGS OF EXECUTIVE KMP AND THEIR RELATED PARTIES
Number of shares
Name
Balance held
at
1 January
20221
Awarded as
Restricted
Shares
pursuant to
EIP
160,944
37,736
38,779
32,978
Includes shares held directly or through a nominee or agent (e.g. family trust).
Other changes may include changes due to personal trades and forfeited shares.
As at 31 December 2022 with share price of $9.53.
Vesting/
exercise of
share rights
pursuant to
EIP
138,682
42,642
49,417
19,848
900,311
106,220
89,765
43,041
T O’Leary
A Stratton
M Blackwell
S Tilka
1
2
3
Other
changes2
-
(18,122)
(68,677)
-
Balance held
at 31
December
20221
1,199,937
168,476
109,284
95,867
Minimum
shareholding
met?3
Yes
Yes
Yes
Yes
6.4 SHAREHOLDINGS OF NON-EXECUTIVE DIRECTORS AND THEIR RELATED PARTIES
Name
Balance held
at
1 January
2022
22,000
22,822
9,993
18,233
22,000
30,000
R Cole3
M Bastos3
S Corlett
L Saint4
A Sutton
Former Non-executive Directors
G Martin3,5
Number of shares1
Net movement
Balance held at
31 December 2022
Minimum
shareholding met?2
15,000
842
6,047
208
-
-
37,000
23,664
16,040
18,441
22,000
30,000
Yes
Yes
Yes
Yes
Yes
No
1
2
3
4
5
Non-Executive directors do not receive share based remuneration and movements in their shareholdings reflect on-market trades.
Minimum shareholding requirements changed in January 2022 and this assessment reflects these changes.
Includes shares held indirectly through a nominee or agent (e.g. family trust).
Adjustment to 2021 closing balance of 233 shares from Dividend Reinvestment Plan (DRP) not previously advised to ASX as a result of an administrative issue relating
to Ms Saint’s custodial account.
G Martin retired as Chairman on 13 April 2022.
6.5 OTHER DISCLOSURES
On-market share purchases
Iluka issued 730,000 shares to satisfy employee incentive schemes in 2022, at an average price of $11.04 per share.
Transactions with key management personnel
During the financial year there were no product or services purchases by Executive KMP from the Group (2021: nil) and there are
no amounts payable at 31 December 2022 (2021: nil).
Loans with KMPs
There have been no loans to Executive KMP during the financial year (2021: nil).
95
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
7. IMPACT OF THE SRL DEMERGER ON EXECUTIVE KMP INCENTIVES
7.1 OVERVIEW
As outlined above, during 2022, Iluka undertook a demerger of SRL by way of a capital reduction and an in-specie dividend to
existing Iluka shareholders. This transaction impacted Iluka incentive awards on foot at the time of demerger, including those
held by Executive KMP.
Executive KMP did not hold any restricted share awards which would participate in the demerger. Restricted rights and
performance rights under the EIP were not able to participate in the demerger and, as a result of the transaction, the value of
Iluka shares underlying each restricted right or performance right was reduced. To address the reduction in value, the Board
determined that additional allocations of rights (Additional Rights) would need to be made, in order to preserve the overall
value of the incentives following the SRL demerger, and to ensure that participants were no better or worse off as a result of
the demerger. A summary of the additional rights granted to Executive KMP during 2022 is outlined below.
Detailed information on the treatment of Iluka incentive awards on the SRL Demerger is set out in Section 5.6 of the Sierra
Rutile Demerger Booklet. The demerger scheme booklet and other details relating to the demerger are available in Iluka’s
demerger suite: https://iluka.com/investors-media/sierra-rutile.
7.2 APPROACH TO ADDITIONAL RIGHTS ALLOCATIONS
The Additional Rights were granted in August 2022 on substantially the same terms and conditions as the original awards. The
terms and conditions of the original awards are set out in the relevant Remuneration Reports1 2.
The calculation method used to determine the number of additional rights to be granted (rounded down to the nearest whole
right) was as follows:
No. of applicable
Restricted/Performance
Rights under the Award
held before the Demerger
X
(
Iluka 5-day post-Demerger
VWAP
SRL 5-day post-Demerger
VWAP
+
Iluka 5-day post-Demerger VWAP
No. of applicable
Restricted/Performance
Rights under the Award
held before the
Demerger
) –
1
2
The terms and conditions of the relevant plans are set out as follows: 2019 EIP (2019 Remuneration Report); 2020 EIP (2020 Remuneration Report); and 2021 EIP
(2021 Remuneration Report).
For the performance rights under the top-up to the 2019 EIP award, the TSR performance condition will capture the performance of both Iluka and Sierra Rutile for
the remainder of the performance period post-demerger. For the performance rights under the top-up to the 2020 and 2021 EIP awards, the TSR performance
condition will exclude the performance for Sierra Rutile for the post-demerger period.
96
7. IMPACT OF THE SRL DEMERGER ON EXECUTIVE KMP INCENTIVES
7.3 SUMMARY OF TOP UP ALLOCATIONS
7.1 OVERVIEW
held by Executive KMP.
As outlined above, during 2022, Iluka undertook a demerger of SRL by way of a capital reduction and an in-specie dividend to
existing Iluka shareholders. This transaction impacted Iluka incentive awards on foot at the time of demerger, including those
Executive KMP did not hold any restricted share awards which would participate in the demerger. Restricted rights and
performance rights under the EIP were not able to participate in the demerger and, as a result of the transaction, the value of
Iluka shares underlying each restricted right or performance right was reduced. To address the reduction in value, the Board
determined that additional allocations of rights (Additional Rights) would need to be made, in order to preserve the overall
value of the incentives following the SRL demerger, and to ensure that participants were no better or worse off as a result of
the demerger. A summary of the additional rights granted to Executive KMP during 2022 is outlined below.
Detailed information on the treatment of Iluka incentive awards on the SRL Demerger is set out in Section 5.6 of the Sierra
Rutile Demerger Booklet. The demerger scheme booklet and other details relating to the demerger are available in Iluka’s
demerger suite: https://iluka.com/investors-media/sierra-rutile.
7.2 APPROACH TO ADDITIONAL RIGHTS ALLOCATIONS
The Additional Rights were granted in August 2022 on substantially the same terms and conditions as the original awards. The
terms and conditions of the original awards are set out in the relevant Remuneration Reports1 2.
The calculation method used to determine the number of additional rights to be granted (rounded down to the nearest whole
right) was as follows:
No. of applicable
Restricted/Performance
Rights under the Award
X
held before the Demerger
(
Iluka 5-day post-Demerger
SRL 5-day post-Demerger
held before the
VWAP
+
VWAP
Iluka 5-day post-Demerger VWAP
No. of applicable
Restricted/Performance
Rights under the Award
) –
Demerger
The terms and conditions of the relevant plans are set out as follows: 2019 EIP (2019 Remuneration Report); 2020 EIP (2020 Remuneration Report); and 2021 EIP
1
2
(2021 Remuneration Report).
For the performance rights under the top-up to the 2019 EIP award, the TSR performance condition will capture the performance of both Iluka and Sierra Rutile for
the remainder of the performance period post-demerger. For the performance rights under the top-up to the 2020 and 2021 EIP awards, the TSR performance
condition will exclude the performance for Sierra Rutile for the post-demerger period.
The table below sets out Additional Rights granted to Executive KMP in 2022 as outlined in the SRL demerger documentation
in order to preserve the overall value of the incentives following the SRL demerger, and to ensure that participants were no
better or worse off as a result of the demerger in relation to their existing awards.
Number of original rights
Number of Additional Rights
Name
Plan
Restricted Rights
T O’Leary
A Stratton
M Blackwell
S Tilka
2019 EIP
2020 EIP
2021 EIP
2019 EIP
2020 EIP
2021 EIP
2019 EIP
2020 EIP
2021 EIP
2019 EIP
2020 EIP
2021 EIP
41,016
53,120
152,056
12,760
18,678
35,324
13,040
18,659
36,322
5,120
11,925
31,234
Performance
Rights
78,088
47,218
101,371
26,878
16,603
35,324
27,470
16,586
36,322
12,860
9,947
31,234
Restricted Rights
1,481
1,918
5,489
461
675
1,276
471
674
1,312
185
431
1,128
Performance
Rights
2,819
1,705
3,660
971
600
1,276
992
599
1,312
465
360
1,128
97
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
Auditor’s Independence Declaration
As lead auditor for the audit of Iluka Resources Limited for the year ended 31 December 2022, I
declare that to the best of my knowledge and belief, there have been:
(a)
no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b)
no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Iluka Resources Limited and the entities it controlled during the period.
Helen Bathurst
Partner
PricewaterhouseCoopers
Perth
21 February 2023
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
ILUKA RESOURCES LIMITED ABN 34 008 675 018
FINANCIAL REPORT - 31 DECEMBER 2022
Financial statements
Consolidated statement of profit or loss
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
Directors' declaration
Independent auditor's report to the members
100
101
102
103
104
105
157
158
ABOUT THIS REPORT
These financial statements are the consolidated financial statements of the Group consisting of Iluka Resources
Limited and its subsidiaries (the Group). The financial statements are presented in Australian dollars.
Iluka Resources Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered
office and principal place of business is:
Iluka Resources Limited
Level 17
240 St Georges Terrace
Perth WA 6000
A description of the nature of the Group's operations and its principal activities is included in the operating and
financial review section of the Directors' Report, which is not part of these financial statements.
The financial statements were authorised for issue by the directors on 21 February 2023. The directors have the
power to amend and reissue the financial statements.
Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All ASX
releases, financial reports and other relevant information are available at www.iluka.com.
99
99
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE YEAR ENDED 31 DECEMBER 2022
ILUKA RESOURCES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
Profit for the period
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss
Currency translation of foreign operations
Movements in foreign exchange cash flow hedges, net of tax
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit obligations
Total other comprehensive loss for the year, net of tax
17
17
17
Total comprehensive income for the year, attributable to:
Equity holders of Iluka Resources Limited
Non-controlling interest
[]
Total comprehensive income for the year attributable to the equity
holders of the parent arises from:
Continuing operations
Discontinued operations
Notes
2022
$m
2021
$m
588.5
365.9
-
-
-
-
(9.2)
(1.9)
3.8
(7.3)
-
358.6
357.6
1.0
346.0
11.6
(17.5)
(2.5)
11.0
(9.0)
-
579.5
575.5
4.0
504.3
71.2
CONTINUING OPERATIONS
Revenue
Other income
Expenses
Equity accounted share of profit - Deterra
Interest and finance charges
Rehabilitation and mine closure provision discount unwind and rate changes
Total finance costs
Profit before income tax
Income tax expense
Profit after income tax from continuing operations
DISCONTINUED OPERATIONS
Profit after tax from discontinued operations
Profit for the period, attributable to:
Equity holders of Iluka Resources Limited
Non-controlling interest¹
Earnings per share from continuing operations attributable to the ordinary equity
holders of the parent
Basic earnings per share
Diluted earnings per share
Earnings per share attributable to ordinary equity holders of the parent
Basic earnings per share
Diluted earnings per share
Notes
2022
$m
2021
$m
5
1,611.3
1,316.1
-
-
6
24
15
22.9
(922.7)
29.6
(6.0)
(5.0)
(11.0)
9.3
(841.9)
18.4
(5.2)
(7.8)
(13.0)
730.1
488.9
11
(212.8)
(134.6)
-
-
23
23
-
517.3
354.3
71.2
-
588.5
584.5
4.0
-
-
-
Cents
116.9
115.9
139.3
138.1
11.6
-
365.9
364.9
1.0
-
-
Cents
83.9
83.2
86.7
86.0
1 Profit for the period attributable to non-controlling interest comprises profit from Sierra Rutile attributable to the International
Finance Corporation prior to demerger - refer to note 23.
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
100
101
100
ILUKA RESOURCES LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2022
Notes
2022
$m
2021
$m
Profit for the period
588.5
365.9
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss
Currency translation of foreign operations
Movements in foreign exchange cash flow hedges, net of tax
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit obligations
Total other comprehensive loss for the year, net of tax
17
17
17
Total comprehensive income for the year, attributable to:
Equity holders of Iluka Resources Limited
Non-controlling interest
[]
Total comprehensive income for the year attributable to the equity
holders of the parent arises from:
Continuing operations
Discontinued operations
-
-
-
(17.5)
(2.5)
11.0
(9.0)
-
579.5
575.5
4.0
504.3
71.2
-
(9.2)
(1.9)
3.8
(7.3)
-
358.6
357.6
1.0
346.0
11.6
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
101
101
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2022
ASSETS
Current assets
Cash and cash equivalents
Receivables
Inventories
Total current assets
Non-current assets
Investments accounted for using the equity method
Financial assets at fair value through profit or loss
Property, plant and equipment
Deferred tax assets
Inventories
Right of use assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Payables
Derivative financial instruments
Current tax payable
Provisions
Lease liabilities
Total current liabilities
Non-current liabilities
Interest-bearing liabilities
Provisions
Financial liabilities at fair value through profit or loss
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Retained earnings
Non-controlling interests
Total equity
Notes
2022
$m
2021
$m
15
13
14
24
25
9
12
14
10
21
8
10
15
8
23
10
16
17
17
22
521.7
275.1
543.3
1,340.1
449.5
20.0
1,116.0
35.0
18.3
22.9
1,661.7
294.8
253.7
489.7
1,038.2
455.7
-
1,009.5
39.1
65.0
28.7
1,598.0
3,001.8
2,636.2
143.7
4.4
135.3
81.5
8.9
373.8
33.0
679.6
-
20.6
733.2
174.8
0.5
28.5
100.1
8.7
312.6
-
690.8
11.0
27.2
729.0
1,107.0
1,041.6
1,894.8
1,594.6
1,129.6
16.6
748.6
-
1,894.8
1,148.3
31.0
413.9
1.4
1,594.6
ILUKA RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Attributable to owners of
Iluka Resources Limited
Share
Other
Retained
capital
reserves
earnings
$m
$m
$m
Total
$m
NCI
$m
Total
equity
$m
Notes
17
17
1,150.5
37.1
104.3 1,291.9
0.4 1,292.3
-
(11.1)
(11.1)
(0.1)
364.9
3.8
368.7
0.1
364.9
(7.3)
357.6
1.0
-
1.0
365.9
(7.3)
358.6
Balance at 1 January 2021
Profit for the year
Other comprehensive income (loss)
Total comprehensive income
Transfer of asset revaluation reserve
Transactions with owners in their capacity
as owners:
Transfer of shares to employees, net of tax
Share-based payments, net of tax
Dividends paid
18
Purchase of treasury shares, net of tax
space
-
-
-
-
-
3.0
3.8
(9.0)
(2.2)
-
-
(3.0)
8.1
-
-
-
-
-
(59.2)
5.1
(59.2)
8.1
(55.4)
(9.0)
(56.3)
Balance at 31 December 2021
1,148.3
31.0
413.9
1,593.2
1.4 1,594.6
Attributable to owners of
Iluka Resources Limited
Share
Other
Retained
capital
reserves
earnings
$m
$m
$m
Total
$m
NCI
$m
1,148.3
31.0
413.9 1,593.2
1.4 1,594.6
(20.0)
(20.0)
(17.5)
584.5
11.0
595.5
17.5
4.0
4.0
-
-
Transactions with owners in their capacity as owners:
Balance at 1 January 2022
Profit for the year
Other comprehensive income (loss)
Total comprehensive income
Transfer of FCTR on demerger
space
Shares issued
Purchase of treasury shares, net of tax
Transfer of shares to employees, net of tax
Share-based payments, net of tax
Dividends paid
Transactions with non-controlling interests
Transfer of loss in ownership changes
Return of capital - SRL demerger
space
Notes
17
17
17
16
18
23
23
23
-
-
-
-
-
-
-
8.1
(5.8)
10.0
10.0
(41.0)
(18.7)
-
-
-
-
-
(10.0)
11.0
5.4
16.7
584.5
(9.0)
575.5
8.1
(5.8)
11.0
-
-
-
-
-
-
-
-
-
(261.6)
(251.6)
5.4
(5.4)
(16.7)
23.1
(278.3)
(273.9)
(5.4)
(279.3)
(41.0)
(41.0)
Balance at 31 December 2022
1,129.6
16.6
748.6 1,894.8
- 1,894.8
-
-
-
-
-
-
8.1
(55.4)
(9.0)
(56.3)
Total
equity
$m
588.5
(9.0)
579.5
8.1
(5.8)
11.0
(251.6)
-
-
-
-
-
-
-
-
-
-
-
-
-
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
102
103
102
365.9
(7.3)
358.6
-
-
8.1
(55.4)
(9.0)
(56.3)
-
-
-
-
-
-
ILUKA RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
Attributable to owners of
Iluka Resources Limited
Share
capital
$m
Other
reserves
$m
Retained
earnings
$m
Total
$m
NCI
$m
Total
equity
$m
Balance at 1 January 2021
Profit for the year
Other comprehensive income (loss)
Total comprehensive income
Transfer of asset revaluation reserve
Notes
17
17
1,150.5
-
-
-
-
37.1
-
(11.1)
(11.1)
104.3 1,291.9
0.4 1,292.3
364.9
3.8
368.7
364.9
(7.3)
357.6
1.0
-
1.0
(0.1)
0.1
-
Transactions with owners in their capacity
as owners:
Transfer of shares to employees, net of tax
Share-based payments, net of tax
Dividends paid
Purchase of treasury shares, net of tax
18
space
Balance at 31 December 2021
Balance at 1 January 2022
Profit for the year
Other comprehensive income (loss)
Total comprehensive income
Notes
17
17
17
Transfer of FCTR on demerger
space
Transactions with owners in their capacity as owners:
Shares issued
Purchase of treasury shares, net of tax
Transfer of shares to employees, net of tax
Share-based payments, net of tax
Dividends paid
Transactions with non-controlling interests
Transfer of loss in ownership changes
Return of capital - SRL demerger
18
23
23
23
16
3.0
-
3.8
(9.0)
(2.2)
(3.0)
8.1
-
-
5.1
-
-
(59.2)
-
(59.2)
-
8.1
(55.4)
(9.0)
(56.3)
1,148.3
31.0
413.9
1,593.2
1.4 1,594.6
Attributable to owners of
Iluka Resources Limited
Share
capital
$m
Other
reserves
$m
Retained
earnings
$m
Total
$m
NCI
$m
Total
equity
$m
1,148.3
31.0
413.9 1,593.2
1.4 1,594.6
-
-
-
-
-
(20.0)
(20.0)
(17.5)
584.5
11.0
595.5
17.5
584.5
(9.0)
575.5
-
8.1
(5.8)
10.0
-
10.0
-
-
(41.0)
(18.7)
-
-
(10.0)
11.0
-
5.4
16.7
-
23.1
-
-
-
-
(261.6)
-
(16.7)
-
(278.3)
8.1
(5.8)
-
11.0
(251.6)
5.4
-
(41.0)
(273.9)
4.0
-
4.0
-
-
-
-
-
-
(5.4)
-
-
(5.4)
588.5
(9.0)
579.5
-
8.1
(5.8)
-
11.0
(251.6)
-
-
(41.0)
(279.3)
space
Balance at 31 December 2022
1,129.6
16.6
748.6 1,894.8
- 1,894.8
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
103
103
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
Cash flows from operating activities
Receipts from customers
Repayments of government assistance - JobKeeper
Payments to suppliers and employees
Operating cash flow
.
Interest received
Interest paid
Income taxes paid
Exploration expenditure
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Sale of property, plant and equipment
Payments for options contracts
Payment for investment in listed securities
Dividends received - Deterra
Net cash outflow from investing activities
Cash flows from financing activities
Repayment of borrowings
Proceeds from borrowings
Purchase of treasury shares
Dividends paid
Debt refinance costs
Settlement of put option
Principal element of lease payments
Net cash outflow from financing activities
Net increase in cash and cash equivalents
.
Cash and cash equivalents at 1 January
Cash associated with SRL - demerged
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at end of period
Notes
2022
$m
2021
$m
1,674.7
-
(963.5)
711.2
6.2
(1.5)
(104.1)
(10.3)
601.5
(152.6)
0.1
-
(20.0)
35.7
(136.8)
-
40.7
-
(146.8)
(7.7)
(11.5)
(8.8)
(134.1)
330.6
294.8
(105.6)
1.9
521.7
1,386.1
(13.9)
(858.3)
513.9
0.6
(1.7)
(149.9)
(8.0)
354.9
(53.6)
2.0
(0.1)
-
14.8
(36.9)
(117.2)
78.2
(11.9)
(55.4)
-
-
(6.6)
(112.9)
205.1
87.1
-
2.6
294.8
31
25
24
23
23
15
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
104
104
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
CONTENTS OF THE NOTES TO THE FINANCIAL STATEMENTS
Basis of preparation
1.
2.
3.
Reporting entity
Basis of preparation
Critical accounting estimates and judgements
Key numbers
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
Capital
15.
16.
17.
18.
19.
Risk
20.
21.
Segment information
Revenue
Expenses
Impairment of assets
Provisions
Property, plant and equipment
Leases
Income tax
Deferred tax
Receivables
Inventories
Net cash and finance costs
Contributed equity
Reserves and retained earnings
Dividends
Earnings per share
Financial risk management
Hedging
Group structure
22.
23.
24.
25.
Controlled entities and deed of cross guarantee
Demerger of Sierra Rutile Limited
Equity accounted associate - Deterra Royalties Limited (Deterra)
Acquisition of interest in Northern Minerals Limited
Other notes
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
Contingent liabilities
Commitments
Remuneration of auditors
Share-based payments
Post-employment benefit obligations
Reconciliation of profit after income tax to net cash inflow from operating activities
Key Management Personnel
Parent entity financial information
Related party transactions
New and amended standards
Page
106
106
106
108
109
109
112
113
115
115
118
120
122
124
125
126
127
127
129
130
132
133
134
134
137
139
139
142
146
148
149
149
149
150
151
152
153
154
155
156
156
105
105
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 Iluka Resources Limited and its subsidiaries together are referred to as the Group in this financial report.
(ii) Associates
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Associates are all entities over which the Group has significant influence but not control or joint control. This is
generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting from the date on which the investee becomes an
associate. Deterra Royalties Limited is accounted for as an associate.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy
described in note 7.
(iii) Employee Share Trust
The Group's Employee Share Schemes are administered through the Iluka Resources Limited Employee Share
Plan Trust (the trust). This trust is consolidated, as the substance of the relationship is that the trust is controlled
by the Group. Shares in the Company held by the trust are disclosed as treasury shares in the consolidated
financial statements and deducted from contributed equity, net of tax.
(b) Foreign currency translation
presentation currency.
The consolidated financial statements are presented in Australian dollars, which is the Company's functional and
Where Group companies based in Australia transact in foreign currencies, these transactions are translated into
Australian dollars using the exchange rate on that day. Foreign currency monetary assets and liabilities are
translated to Australian dollars at each reporting date exchange rate. Non-monetary assets and liabilities that are
measured at fair value in a foreign currency are translated to Australian dollars at the exchange rate when the fair
value was determined. Foreign currency differences are generally recognised in profit or loss. Non-monetary
items that are measured based on historical cost in a foreign currency are not re-translated.
The financial position of foreign operations is translated into Australian dollars at the exchange rates at the
reporting date. The income and expenses of foreign operations are translated into Australian dollars at average
exchange rates each month. Foreign currency differences are recognised in other comprehensive income and
accumulated in the foreign currency translation reserve.
(c) Rounding of amounts
The Company is of a kind referred to in Rounding Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to the rounding of amounts in the financial statements. In accordance with
that Rounding Instrument, amounts in the financial statements have been rounded to the nearest hundred
thousand dollars, or in certain cases, the nearest thousand dollars or nearest dollar.
The notes include information which is required to understand the financial statements and is material and
relevant to the operations and the financial position and performance of the Iluka Group.
Information is
considered relevant and material if:
• The amount is significant due to its size or nature;
• The amount is important in understanding the results of the Group;
• It helps to explain the impact of significant changes in the Group's business; or
• It relates to an aspect of the Group's operations that is important to its future performance.
BASIS OF PREPARATION
This section of the financial report sets out the Group’s accounting policies that relate to the financial statements
as a whole. This section also sets out information related to critical accounting estimates and judgements
applied to these financial statements.
1 REPORTING ENTITY
Iluka Resources Limited (Company or parent entity) is domiciled in Australia. The financial statements are for the
Group consisting of Iluka Resources Limited and its subsidiaries.
2 BASIS OF PREPARATION
These general purpose financial statements have been prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations
Act 2001. Iluka Resources Limited is a for-profit entity and is primarily involved in mineral sands and rare earths
exploration, project development, mining operations, processing and marketing.
The consolidated financial statements of Iluka Resources Limited also comply with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
These financial statements have been prepared under the historical cost convention except for financial assets
and liabilities which are required to be measured at fair value.
New and amended standards adopted by the Group, and their related impacts on the financial statements (if
any), are detailed in note 35.
(a) Principles of consolidation
(i) Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Iluka Resources
Limited as at 31 December 2022 and the results of all subsidiaries for the year then ended. A list of controlled
entities (subsidiaries) at year-end is contained in note 22(a).
The financial statements of subsidiaries are included in the consolidated financial statements from the date on
which control commences until the date on which control ceases. Accounting policies of subsidiaries are
changed where necessary to ensure consistency with the policies adopted by the Group.
Intercompany transactions, balances, and unrealised gains on transactions between Group companies, are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of
the asset transferred.
During the year, Iluka demerged its subsidiary, Sierra Rutile Limited (refer to note 23).
The Group accounts for business combinations using the acquisition method when control is transferred to the
Group. Cost is measured as the fair value of the assets given, shares issued, or liabilities incurred or assumed at
the date of exchange. Transaction costs are expensed as incurred, except if related to the issue of debt or equity
securities.
106
107
106
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(ii) Associates
Associates are all entities over which the Group has significant influence but not control or joint control. This is
generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates
are accounted for using the equity method of accounting from the date on which the investee becomes an
associate. Deterra Royalties Limited is accounted for as an associate.
The carrying amount of equity-accounted investments is tested for impairment in accordance with the policy
described in note 7.
(iii) Employee Share Trust
The Group's Employee Share Schemes are administered through the Iluka Resources Limited Employee Share
Plan Trust (the trust). This trust is consolidated, as the substance of the relationship is that the trust is controlled
by the Group. Shares in the Company held by the trust are disclosed as treasury shares in the consolidated
financial statements and deducted from contributed equity, net of tax.
(b) Foreign currency translation
The consolidated financial statements are presented in Australian dollars, which is the Company's functional and
presentation currency.
Where Group companies based in Australia transact in foreign currencies, these transactions are translated into
Australian dollars using the exchange rate on that day. Foreign currency monetary assets and liabilities are
translated to Australian dollars at each reporting date exchange rate. Non-monetary assets and liabilities that are
measured at fair value in a foreign currency are translated to Australian dollars at the exchange rate when the fair
value was determined. Foreign currency differences are generally recognised in profit or loss. Non-monetary
items that are measured based on historical cost in a foreign currency are not re-translated.
The financial position of foreign operations is translated into Australian dollars at the exchange rates at the
reporting date. The income and expenses of foreign operations are translated into Australian dollars at average
exchange rates each month. Foreign currency differences are recognised in other comprehensive income and
accumulated in the foreign currency translation reserve.
(c) Rounding of amounts
The Company is of a kind referred to in Rounding Instrument 2016/191, issued by the Australian Securities and
Investments Commission, relating to the rounding of amounts in the financial statements. In accordance with
that Rounding Instrument, amounts in the financial statements have been rounded to the nearest hundred
thousand dollars, or in certain cases, the nearest thousand dollars or nearest dollar.
107
107
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
3 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The Group makes estimates and assumptions concerning the future in applying its accounting policies. The
resulting accounting estimates will, by definition, seldom equal related actual results. This note provides an
overview of areas that involve a higher degree of judgement or complexity, and of items which are more likely to
be materially adjusted if estimates or assumptions significantly differ
from actual outcomes. Detailed
information about each of these estimates and judgements is included in other notes together with information
about the basis of calculation for each affected line item in the financial statements.
The areas involving significant estimates or judgements are:
-
-
Rehabilitation and mine closure provisions
Net realisable value and classification of product inventory
Note
8
14
Estimates and underlying assumptions are reviewed on an ongoing basis, with revisions recognised in the period
in which the estimates are revised and future periods affected.
The Group recognises the physical and transitional impacts of climate change may affect its assets, productivity,
the markets in which it sells its products, and the jurisdictions in which it operates. The Group continues to
develop its assessment of the potential impacts of climate change and the transition to a lower carbon economy
and, where possible, the potential financial impacts have been considered in the preparation of these financial
statements.
The Group’s physical and transition risk assessment process is ongoing. Changes in the Group’s climate strategy
or global decarbonisation initiatives may impact the Group’s significant judgements and key estimates and
materially impact financial results and the carrying values of certain assets and liabilities in future reporting
periods.
108
108
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
KEY NUMBERS
4 SEGMENT INFORMATION
(a) Description of segments
The Group has identified its operating segments based on the internal reports that are reviewed and used by the
executive management team (the chief operating decision-makers) in assessing performance and in determining
the allocation of resources.
During the current reporting period, the Group changed the internal reporting basis of its operations to match
changes in the operational structure of the business, with the resulting new operating segments of the Group
being as follows:
Jacinth-Ambrosia/Mid West (JA/MW) comprises the mining operations at Jacinth-Ambrosia located in South
Australia, and associated processing operations at the Narngulu mineral separation plant in mid-west Western
Australia.
Cataby/South West (C/SW) comprises mining activities at Cataby and processing of ilmenite at Synthetic Rutile
Kilns 1 and 2, located in Western Australia.
Rare Earths (RE) comprises the Eneabba Rare Earths Refinery currently being constructed in Western Australia
and associated feasibility studies alongside Phase 1 and 2 of the Eneabba development, and the Group's
investment in Northern Minerals Limited.
United States/Murray Basin (US/MB) comprises rehabilitation obligations in the United States (Florida and
Virginia), where mining and processing activities were substantially completed in December 2015, and certain
idle assets located in Australia (Murray Basin).
Sierra Rutile (SRL) is no longer an operating segment of the group. This operating segment comprised the
mineral sands mining and processing operations in Sierra Leone, which were demerged during the current
reporting period. The financial position and performance of SRL are reflected as a discontinued operation as
outlined in note 23. Rare Earths (RE) became an operating segment during the reporting period. Comparative
information for new or changed segments has been restated.
Cash, debt and tax balances are managed at a group level, together with exploration and other corporate
activities, and are not allocated to segments.
Where finished product capable of sale to a third party is transferred between operating segments, the transfers
are made at arm’s length prices. Any transfers of intermediate products between operating segments are made
at cost. No such transfers took place between segments during the year ended 31 December 2022 (2021: $nil).
(b) Segment information
2022
JA/MW
$m
C/SW
$m
RE
$m
US/MB
$m
Total
$m
Total segment sales of critical minerals
Total segment freight revenue
Depreciation and amortisation expense
Changes in rehabilitation recognised in profit or loss
Total segment result
Segment assets
Segment liabilities
Segment capital expenditure
Additions to non-current segment assets
778.9
58.6
(49.3)
3.0
462.6
661.3
344.9
15.8
33.8
753.5
28.9
(91.4)
(4.9)
363.0
1,025.1
359.3
60.7
97.6
-
-
-
-
-
113.6
81.1
42.2
93.3
0.4
-
(0.8)
(9.2)
(17.1)
172.0
139.0
20.0
20.0
1,532.8
87.5
(141.5)
(11.1)
808.5
1,972.0
924.3
138.7
244.7
109
109
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
2021
JA/MW
$m
C/SW
$m
RE
$m
US/MB
$m
Total
$m
Total segment sales of critical minerals
Total segment freight revenue
Depreciation and amortisation expense
Changes in rehabilitation recognised in profit or loss
Total segment result
Segment assets
Segment liabilities
Segment capital expenditure
Additions to non-current segment assets
599.6
39.5
(43.8)
(9.7)
331.6
685.5
323.5
36.7
36.7
639.1
19.5
(81.0)
(1.0)
237.3
852.2
315.2
17.5
66.6
-
-
-
-
-
-
-
-
-
14.4
3.9
(0.2)
31.1
32.0
149.1
177.5
7.5
7.5
1,253.1
62.9
(125.0)
20.4
600.9
1,686.8
816.2
61.7
110.8
Mineral sands revenue is derived from sales to external customers domiciled in various geographical regions.
Details of segment revenue by location of customers are as follows:
China
Asia excluding China
Europe
Americas
Other countries
Sale of goods
2022
$m
2021
$m
524.3
253.5
343.9
337.8
73.3
1,532.8
490.4
214.5
229.8
256.8
61.6
1,253.1
Revenue of $294.1 million and $150.8 million was derived from two external customers of the mineral sands
segments, which individually account for greater than 10% of the total segment revenue (2021: revenues of
$265.3 million and $183.9 million from two external customers).
110
110
Segment result is reconciled to profit before income tax as follows:
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Segment result
Interest income
Asset sales and other income
Marketing and selling
Corporate and other costs
Major Projects, Engineering and Innovation
Depreciation
Interest and finance charges
Net foreign exchange gains
Equity accounted profit - Deterra
Gain on remeasurement of put option
Impairment - exploration assets
Profit before income tax from continuing operations
2022
$m
808.5
7.4
-
(11.6)
(73.9)
(37.0)
(2.9)
(4.5)
14.5
29.6
-
-
730.1
Total segment assets and total segment liabilities are reconciled to the balance sheet as follows:
Segment assets
Corporate assets
Cash and cash equivalents
Deferred tax assets
Investment in Deterra Resources Limited
Total assets as per the balance sheet
Segment liabilities
Corporate liabilities
Current tax payable
Total liabilities as per the balance sheet
1,972.0
23.6
521.7
35.0
449.5
3,001.8
924.3
47.4
135.3
1,107.0
2021
$m
600.9
0.5
(0.2)
(9.1)
(66.2)
(45.2)
(3.0)
(5.3)
7.8
18.4
(3.4)
(6.3)
488.9
1,800.1
46.6
294.8
39.0
455.7
2,636.2
938.1
75.0
28.5
1,041.6
111
111
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 5 REVENUE
Continuing operations
Sales revenue
Sale of goods
Freight revenue
(a) Sale of mineral sands
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Notes
2022
$m
2021
$m
5(a)
5(b)
1,523.8
87.5
1,253.2
62.9
1,611.3
1,316.1
The Group earns revenue by mining, processing, and subsequently selling mineral sands (including zircon, rutile,
synthetic rutile and ilmenite) by export to customers based in the Americas, Europe, China, the rest of Asia, and
other countries under a range of commercial terms.
Revenue from the sale of product is recognised when control has been transferred to the customer, generally
being when the product has been dispatched and is no longer under the physical control of the Group. In cases
where control of product is transferred to the customer before dispatch takes place, revenue is recognised when
the customer has formally acknowledged their legal ownership of the product, which includes all inherent risks
associated with control of the product. In these cases, product is clearly identified and immediately available to
the customer.
Sales to customers are generally denominated in US Dollars, which are translated into the functional currency of
the Group using the spot exchange rate applicable on the transaction date. The effect of variable consideration
arising from rebates, discounts and other similar arrangements with customers is included in revenue to the
extent that it is highly probable that there will be no significant reversal of the cumulative amount of revenue
recognised when any pricing uncertainty is resolved. Revenue is recognised net of duties and other taxes.
The Group does not expect to have any contracts where the period between the transfer of the promised goods
or services to the customer and payment by the customer exceeds one year. Accordingly, the group does not
adjust transaction prices for the time value of money.
(b) Freight revenue
The Group also earns revenue from freighting its products to customers in accordance with the Incoterms in
each particular sales contract. Freight revenue is recognised to the extent that the freight service has been
delivered, specifically with reference to the proportion of completed freight distance to total freight distance,
which is determined by the Group at each reporting date.
Freight revenue is allocated from the overall contract price at its standalone selling price (where observable) or
otherwise at its estimated cost plus margin.
Freight revenue includes $3.8 million relating to contracts in place at the end of the prior year (2021: $0.7 million).
No freight revenue has been deferred at the end of the current year in relation to unfulfilled shipping obligations.
112
112
6 EXPENSES
Continuing operations
-
Expenses
Cash costs of production
Depreciation/amortisation
Inventory movement - cash costs of production
Inventory movement - non-cash production costs
Cost of goods sold
Ilmenite concentrate and by-product costs
Depreciation (idle, corporate and other)
Idle capacity charges
Changes in rehabilitation costs for closed sites
Government royalties
Marketing and selling costs
Corporate and other costs
Major projects, exploration and innovation
Put option remeasurement loss
Net loss on disposal of property, plant and equipment
Impairment - exploration assets
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Notes
2022
$m
2021
$m
6(a)
6(b)
6(c)
6(d)
6(e)
6(f)
6(g)
508.3
141.1
(29.1)
(9.9)
610.4
12.7
3.3
12.5
11.1
47.2
116.5
72.0
37.0
-
-
-
922.7
373.7
119.0
63.0
11.6
567.3
20.1
9.0
18.3
(20.4)
33.3
96.3
62.8
45.2
3.4
0.3
6.3
841.9
(a) Cash costs of production
Cash costs of production include costs for mining and concentrating, transport of heavy mineral concentrate,
mineral separation, synthetic rutile production, externally purchased ilmenite, and production overheads; but
exclude Australian state royalties which are reported separately.
(922.7)
(841.9)
(b) Cost of goods sold
Cost of goods sold is the inventory value of each tonne of finished product sold. All production is added to
inventory at cost, which includes direct costs and an appropriate portion of fixed and variable overhead
expenditure, including depreciation and amortisation, allocated on the basis of relative sales value. The inventory
value recognised as cost of goods sold for each tonne of finished product sold is the weighted average value per
tonne for the stockpile from which the product is sold.
Inventory movement represents the movement in balance sheet inventory of work in progress and finished
goods, including the non-cash depreciation and amortisation components and movement in the net realisable
value adjustments.
(c) Ilmenite concentrate and by-product costs
Ilmenite and by-product costs include by-product costs such as for iron concentrate processing, activated
carbon, monazite treatment, and wet high intensity magnetic separation (WHIMS) ilmenite transport costs.
(d) Idle capacity charges
Idle capacity charges reflect ongoing costs incurred during periods of no or restricted production.
113
113
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 (e) Rehabilitation costs for closed sites
7 IMPAIRMENT OF ASSETS
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
These costs relate to adjustments to the rehabilitation provision for closed sites arising from the annual review
of rehabilitation programmes and estimate, and are recognised in profit or loss. Details regarding the annual
review for the current reporting period, together with the applicable accounting policy details, are outlined in note
8.
(f) Corporate and other costs
Corporate and other costs reflect expenses required to operate, govern, and grow the business and operations,
including employee expenses, office costs, and other overheads for finance, legal, human resources, and senior
management. Also included are $25.1 million (2021: $24.3 million) of centralised support costs to serve the
information
including resource development and mine planning, procurement and logistics,
operations,
technology, human resources support, and insurance premiums.
(g) Major projects, exploration and innovation
These costs relate to activities associated with developing our resources,
planning.
including exploration and mine
(h) Other required disclosures
Expenses also include the following:
Employee benefits (excluding share-based payments)
Share-based payments
Exploration expenditure
Operating leases
Inventory NRV write-downs/(reversals) - finished goods and WIP
2022
$m
2021
$m
194.1
15.7
10.9
0.7
0.9
161.4
10.6
9.3
3.9
(1.2)
(222.3)
(184.0)
Assets are assessed for the presence of impairment indicators whenever events or changes in circumstances
suggest that their carrying amounts may not be recoverable. For the purposes of impairment indicator
assessments (and, if required, impairment testing) operating assets are grouped at the lowest levels for which
there are separately identifiable cash flows (Cash Generating Units - CGUs).
If an impairment indicator is found to be present for a CGU, then the Group estimates its recoverable amount and
compares it to its carrying amount. The recoverable amount of each CGU is determined as the higher of
value-in-use and fair value less costs of disposal (FVLCD) estimated based on the discounted present value of
future cash flows (a level 3 fair value estimation method) and other adjustments. Assets that are not currently in
use and not scheduled to be brought back into use (idle assets) are considered on a standalone basis. If
necessary, an impairment charge is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount.
The Group assessed CGUs and assets for the presence of impairment indicators, including those which may
have arisen due to the continuing global economic impact of the ongoing COVID-19 pandemic.
No impairment indicators were found to be present in respect of any CGU at 31 December 2022, accordingly no
impairment testing was required.
8 PROVISIONS
Current
Rehabilitation and mine closure
Employee benefits - long service leave
Workers compensation and other provisions
Non-current
Rehabilitation and mine closure
Employee benefits - long service leave
Retirement benefit obligations
Notes
8(a)
8(b)
8(a)
8(b)
30
2022
$m
66.8
13.4
1.3
81.5
668.6
3.4
7.6
679.6
2021
$m
81.2
12.0
6.9
100.1
660.5
3.7
26.6
690.8
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that resources will be expended to settle the obligation and a reliable estimate can be made
of the amount of the obligation.
114
115
114
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
7 IMPAIRMENT OF ASSETS
Assets are assessed for the presence of impairment indicators whenever events or changes in circumstances
suggest that their carrying amounts may not be recoverable. For the purposes of impairment indicator
assessments (and, if required, impairment testing) operating assets are grouped at the lowest levels for which
there are separately identifiable cash flows (Cash Generating Units - CGUs).
If an impairment indicator is found to be present for a CGU, then the Group estimates its recoverable amount and
compares it to its carrying amount. The recoverable amount of each CGU is determined as the higher of
value-in-use and fair value less costs of disposal (FVLCD) estimated based on the discounted present value of
future cash flows (a level 3 fair value estimation method) and other adjustments. Assets that are not currently in
use and not scheduled to be brought back into use (idle assets) are considered on a standalone basis. If
necessary, an impairment charge is recognised for the amount by which the asset’s carrying amount exceeds its
recoverable amount.
The Group assessed CGUs and assets for the presence of impairment indicators, including those which may
have arisen due to the continuing global economic impact of the ongoing COVID-19 pandemic.
No impairment indicators were found to be present in respect of any CGU at 31 December 2022, accordingly no
impairment testing was required.
8 PROVISIONS
Current
Rehabilitation and mine closure
Employee benefits - long service leave
Workers compensation and other provisions
Non-current
Rehabilitation and mine closure
Employee benefits - long service leave
Retirement benefit obligations
Notes
8(a)
8(b)
8(a)
8(b)
30
2022
$m
66.8
13.4
1.3
81.5
668.6
3.4
7.6
679.6
2021
$m
81.2
12.0
6.9
100.1
660.5
3.7
26.6
690.8
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that resources will be expended to settle the obligation and a reliable estimate can be made
of the amount of the obligation.
115
115
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 (a) Rehabilitation and mine closure
The movements in the rehabilitation and mine closure provision are set out below:
Movements in rehabilitation and mine closure provisions
Balance at 1 January
Change in provisions - reassessment of provision for closed sites
Change in provisions - additions to property, plant and equipment
Rehabilitation and mine closure provision discount unwind
Foreign exchange rate movements
Amounts spent during the year
Rehabilitation discount rate changes - for open sites
Rehabilitation discount rate changes - for closed sites - continuing operations
Rehabilitation discount rate changes - for closed sites - discontinued operation
SRL provision derecognised on demerger
Balance at 31 December
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Notes
$m
741.7
10.1
122.2
15.3
10.2
(58.3)
(25.4)
(10.3)
(7.7)
(62.4)
735.4
15(d)
23
23
The Group has obligations to dismantle and remove certain items of property, plant and equipment and to restore
and rehabilitate the land on which they sit.
A provision is raised for the estimated cost of performing the rehabilitation and restoration obligations existing at
balance date, discounted to present value using an appropriate pre-tax discount rate.
Where the obligation is related to an item of property, plant and equipment, its cost includes the present value of
the estimated costs of dismantling and removing the asset, and restoring and rehabilitating the site on which it is
located. Costs that relate to obligations arising from waste created by the production process are recognised as
production costs in the period in which they arise.
The increase in the provision associated with unwinding of the discount rate is recognised as a finance cost -
refer to note 15(d).
Increases in the expected rehabilitation liability that relate to closed sites are expensed to profit or loss. Changes
to profit or loss are reported within the expense item rehabilitation costs for closed sites in note 6.
The total rehabilitation and mine closure provision of $735.4 million (2021: $741.7 million) includes $253.1
million (2021: $299.8 million) for assets no longer in use.
Open site rehabilitation liabilities increased by $122.2 million (2021: increased by $49.3 million). The increase in
the current period is due to an increase in disturbed area, and higher earth moving rates at Jacinth-Ambrosia
($49.0 million) and at Cataby ($48.0 million); and increased mining footprint at Eneabba Rare Earths due to
progress on construction of the Eneabba Rare Earths Refinery ($15.1 million). Jacinth-Ambrosia and Cataby
comprise $196.4 million and $199.8 million of the rehabilitation provision balance, respectively.
Key estimate: Rehabilitation and mine closure provisions
The Group’s assessment of the present value of the rehabilitation and mine closure provisions requires the use
of significant estimates and judgements, including the future cost of performing the work required, timing of the
cash flows, discount rates, final remediation strategy, and future land use requirements. The provision can also
be impacted prospectively by changes to legislation or regulations.
The provisions are reassessed at least annually. A change in any of the assumptions used to determine the
provisions could have a material impact on the carrying value of the provision. In the case of provisions for
assets which remain in use, adjustments to the provision are offset by a change in the carrying value of the
related asset. Where the provisions are for assets no longer in use, such as mines and processing sites that
have been closed, any adjustment is reflected directly in profit or loss.
116
116
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Key estimate: Discount rate for provisions
Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability to the extent they are not
included in the cash flows.
Rehabilitation and mine closure provisions for Australia and the US are remeasured at each reporting date by
discounting risk adjusted cash flows at discount rates representing the risk-free rates of applicable government
bonds for the currencies in which each respective provision is recognised.
A one percent increase in only the discount rate used to calculate rehabilitation and mine closure provisions
would result in a decrease to their closing balance of $65.3 million. Of this amount, $53.9 million would be
recognised as a decrease in rehabilitation assets for open sites, and $11.4 million would be recognised as a
credit in profit or loss for closed or previously impaired sites.
(b) Employee benefits
The employee benefits provision relates to long service leave entitlements measured as the present value of
expected future payments to be made in respect of services provided by employees up to the reporting date,
discounted using market yields at the reporting date on corporate bonds with terms to maturity and currency that
match, as closely as possible, the estimated future cash outflows. Liabilities for annual leave are included in
payables.
The current provision represents amounts for vested long service leave for which the Group does not have an
unconditional right to defer settlement, regardless of when the actual settlement is expected to occur. However,
based on past experience, the Group does not expect all employees to take the full amount of accrued leave or
require payment within the next 12 months.
117
117
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 9 PROPERTY, PLANT AND EQUIPMENT
(a) Property, plant and equipment
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
At 1 January 2021
Cost
Accumulated depreciation¹
Opening written down value
Additions
Disposals
Depreciation
Exchange differences²
Impairments
Transfers
Closing written down value
At 31 December 2021
Cost
Accumulated depreciation¹
Closing written down value
Plant
Year ended 31 December 2022
Additions
Disposals
Depreciation
Exchange differences²
Impairment reversal - SRL
Demerger of SRL
Closing written down value
Plant
At 31 December 2022
Cost
Accumulated depreciation¹
Closing written down value
Plant,
machinery &
equipment
$m
Mine
reserves &
development
$m
Exploration
&
evaluation
$m
Land &
buildings $m
Total
$m
301.1
(156.5)
144.6
2,450.0
(2,050.6)
399.4
1,215.8
(703.6)
512.2
35.0
(24.4)
10.6
4,001.9
(2,935.1)
1,066.8
0.1
-
(10.8)
2.9
-
(0.2)
136.6
51.8
(0.4)
(85.5)
1.1
-
0.2
366.5
58.9
-
(69.1)
(0.1)
(6.3)
-
495.6
-
-
-
0.2
-
-
10.8
110.8
(0.4)
(165.4)
4.0
(6.3)
-
1,009.5
311.8
(175.2)
136.6
2,482.7
(2,116.2)
366.5
1,288.9
(793.3)
495.6
35.5
(24.7)
10.8
4,118.9
(3,109.4)
1,009.5
3.6
-
(1.8)
3.3
-
(1.1)
140.6
100.7
-
(65.7)
0.2
-
(2.8)
398.9
150.1
-
(70.5)
0.2
24.6
(34.6)
565.4
0.1
-
-
0.2
8.7
(8.7)
11.1
254.5
-
(138.0)
3.9
33.3
(47.2)
1,116.0
196.8
(56.2)
140.6
2,120.4
(1,721.5)
398.9
1,122.9
(557.5)
565.4
27.2
(16.1)
11.1
3,467.3
(2,351.3)
1,116.0
¹Accumulated depreciation includes cumulative impairment charges.
(d) Assets not being depreciated
²Exchange differences arising on translation of the gross cost and accumulated depreciation of items of property, plant and
equipment held by foreign operations are reflected net.
Property, plant and equipment is stated at cost, less accumulated depreciation and impairment charges. Cost
includes:
•
•
•
expenditure that is directly attributable to the acquisition of the items;
direct costs associated with the commissioning of plant and equipment, including pre-commissioning costs
in testing the processing plant;
if the asset is constructed by the Group, the cost of all materials used in construction, direct labour on the
project, project management costs and unavoidable borrowing costs incurred during construction of assets
with a construction period greater than 12 months and an appropriate proportion of variable and fixed
•
the present value of the estimated costs of dismantling and removing the asset, and restoring and
overheads; and
rehabilitating the site on which it is located.
As set out in note 8, in the case of rehabilitation provisions for assets which remain in use, adjustments to the
carrying value of the provision are offset by a change in the carrying value of the related asset. Total additions in
the year include $96.8 million (2021: $49.3 million) relating to rehabilitation.
(b) Maintenance and repairs
Certain items of plant used in the primary extraction, separation and secondary processing of extracted minerals
are subject to a major overhaul on a cyclical basis. Costs incurred during such overhauls are characterised as
either capital in nature or repairs and maintenance. Work performed may involve:
(i) the replacement of a discrete sub-component asset, in which case an asset addition is recognised and the
(ii) demonstrably extending the useful life or functionality of an existing asset, in which case the relevant cost is
book value of the replaced item is written off; and
added to the capitalised cost of the asset in question.
Costs incurred during a major cyclical overhaul which do not constitute (i) or (ii) above, are written off as repairs
and maintenance as incurred. General repairs and maintenance which are not characterised as part of a major
cyclical overhaul are expensed as incurred.
(c) Depreciation and amortisation
Items of property, plant and equipment are depreciated on a straight-line basis over their useful
lives. The
estimated useful life of buildings is the shorter of applicable mine life or 25 years; plant and equipment is
between 2 and 20 years. Land is not depreciated.
Expenditure on mine reserves and development is amortised over the life of mine, based on the rate of depletion
of the economically recoverable reserves (units of production methodology).
If production has not yet
commenced, or the mine is idle, amortisation is not charged.
Included in plant, machinery and equipment, mine reserves and development, and land and buildings are amounts
totalling $60.5 million, $48.5 million and $0.9 million, respectively, relating to assets under construction which are
currently not being depreciated (including those related to the Rare Earths operating segment) as the assets are
not ready for use (2021: $41.7 million, $10.4 million and $nil, respectively).
In addition, within property, plant and equipment, excluding exploration and land assets, are amounts totalling
$99.1 million which have not been depreciated in the year as mining of the related area of interest has not yet
commenced (2021: $63.2 million).
118
119
118
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(a) Property, plant and equipment
Property, plant and equipment is stated at cost, less accumulated depreciation and impairment charges. Cost
includes:
•
•
•
•
expenditure that is directly attributable to the acquisition of the items;
direct costs associated with the commissioning of plant and equipment, including pre-commissioning costs
in testing the processing plant;
if the asset is constructed by the Group, the cost of all materials used in construction, direct labour on the
project, project management costs and unavoidable borrowing costs incurred during construction of assets
with a construction period greater than 12 months and an appropriate proportion of variable and fixed
overheads; and
the present value of the estimated costs of dismantling and removing the asset, and restoring and
rehabilitating the site on which it is located.
As set out in note 8, in the case of rehabilitation provisions for assets which remain in use, adjustments to the
carrying value of the provision are offset by a change in the carrying value of the related asset. Total additions in
the year include $96.8 million (2021: $49.3 million) relating to rehabilitation.
(b) Maintenance and repairs
Certain items of plant used in the primary extraction, separation and secondary processing of extracted minerals
are subject to a major overhaul on a cyclical basis. Costs incurred during such overhauls are characterised as
either capital in nature or repairs and maintenance. Work performed may involve:
(i) the replacement of a discrete sub-component asset, in which case an asset addition is recognised and the
book value of the replaced item is written off; and
(ii) demonstrably extending the useful life or functionality of an existing asset, in which case the relevant cost is
added to the capitalised cost of the asset in question.
Costs incurred during a major cyclical overhaul which do not constitute (i) or (ii) above, are written off as repairs
and maintenance as incurred. General repairs and maintenance which are not characterised as part of a major
cyclical overhaul are expensed as incurred.
(c) Depreciation and amortisation
Items of property, plant and equipment are depreciated on a straight-line basis over their useful
lives. The
estimated useful life of buildings is the shorter of applicable mine life or 25 years; plant and equipment is
between 2 and 20 years. Land is not depreciated.
Expenditure on mine reserves and development is amortised over the life of mine, based on the rate of depletion
of the economically recoverable reserves (units of production methodology).
If production has not yet
commenced, or the mine is idle, amortisation is not charged.
(d) Assets not being depreciated
Included in plant, machinery and equipment, mine reserves and development, and land and buildings are amounts
totalling $60.5 million, $48.5 million and $0.9 million, respectively, relating to assets under construction which are
currently not being depreciated (including those related to the Rare Earths operating segment) as the assets are
not ready for use (2021: $41.7 million, $10.4 million and $nil, respectively).
In addition, within property, plant and equipment, excluding exploration and land assets, are amounts totalling
$99.1 million which have not been depreciated in the year as mining of the related area of interest has not yet
commenced (2021: $63.2 million).
119
119
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(e) Exploration, evaluation and development expenditure
Exploration and evaluation expenditure is accumulated separately for each area of interest. Such expenditure
comprises net direct costs and an appropriate portion of related overhead expenditure. Expenditure is carried
forward when incurred in areas for which the Group has rights of tenure and where economic mineralisation is
indicated, but activities have not yet reached a stage which permits a reasonable assessment of the existence or
otherwise of economically recoverable ore reserves, and active and significant operations in relation to the area
are continuing. Each such project is regularly reviewed. If the project is abandoned or if it is considered unlikely
the project will proceed to development, accumulated costs to that point are written off immediately.
Each area of interest is limited to a size related to a known mineral resource capable of supporting a mining
operation. Identifiable exploration assets acquired from another mining company are recognised as assets at
their cost of acquisition.
Projects are advanced to development status when it is expected that accumulated and future expenditure on
development can be recouped through project development or sale. Capitalised exploration is transferred to Mine
Reserves once the related ore body achieves JORC reserve status (reported in accordance with JORC, 2012) and
has been included in the life of mine plan.
All of the above expenditure is carried forward up to commencement of operations at which time it is amortised
in accordance with the reserves and development depreciation policy noted in (c) above.
(f)
Impairment of PPE
Refer to note 7 for details on impairment testing.
10 LEASES
(a) Amounts recognised in the statement of financial position
Right-of-use assets
Buildings
Plant, machinery and equipment
Lease liabilities
Current
Non-current
2022
$m
7.2
15.7
22.9
8.9
20.6
29.5
2021
$m
8.2
20.5
28.7
8.7
27.2
35.9
Additions to the right-of-use assets during the reporting period were $1.7 million (2021: $21.1 million).
Right-of-use assets are reflected net of incentives received. The maturity analysis of lease liabilities is included in
note 20(d).
120
120
(b) Amounts recognised in the statement of profit or loss
Amortisation charge of right-of-use assets
Buildings
Plant, machinery and equipment
Borrowing costs
Expense relating to short term leases, low value leases and leases with variable
payments
...
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
2022
$m
2021
$m
1.0
6.3
7.3
1.0
0.8
1.0
5.0
6.0
0.9
4.0
Payments for the principal element of leases of $8.8 million (2021: $6.6 million) are included in the statement of
cash flows.
The group leases various offices, warehouses, equipment and vehicles. Rental contracts are typically made for
fixed periods of 6 months to 10 years, but may have extension options as described below.
Contracts may contain both lease and non-lease components. The group allocates the consideration in the
contract to the lease and non-lease components based on their relative stand-alone prices.
Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
The lease agreements do not impose any covenants other than the security interests in the leased assets that are
held by the lessor. Leased assets may not be used as security for borrowing purposes.
Lease liabilities
Liabilities arising from a lease are initially measured on a present value basis by discounting the following lease
payments to their present value:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payments that are based on an index or a rate, initially measured using the index or rate as at the
commencement date
• amounts expected to be payable by the group under residual value guarantees
• the exercise price of a purchase option if the group is reasonably certain to exercise that option, and
• payments of penalties for terminating the lease, if the lease term reflects the group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of
the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily
determined, which is generally the case for leases in the Group, the incremental borrowing rate is used, being the
rate that the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar
value to the right-of-use asset in a similar economic environment with similar terms, security and conditions. The
weighted average borrowing rate used for the year was 4.2% (2021: 3.1%).
Subsequent to initial recognition, lease liabilities are carried at amortised cost. Payments are allocated between
repayment of principal and borrowing costs, which are charged to profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period.
121
121
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Right-of-use assets
Right-of-use assets are initially recognised at cost, comprising:
• The amount of the lease liability
• Any lease payments made at or before the commencement date, less any incentives received
• Initial direct costs, and
• Restoration costs.
Subsequently, right-of-use assets are depreciated over the shorter of the asset's useful life and the lease term on
a straight-line basis. Where the Group is reasonably certain to exercise a purchase option, the right-of-use asset
is depreciated over the underlying asset’s useful life.
Short term leases, leases of low value assets and leases containing variable payments
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term
of 12 months or less.
11 INCOME TAX
Income tax expense comprises current and deferred tax and is recognised in profit or loss, as disclosed in (a)
below, except to the extent that it relates to items recognised directly in equity or other comprehensive income as
disclosed in (c) below.
(a) Income tax expense
Current tax
Deferred tax
(Over)/under provided in prior years
Income tax expense is attributable to:
Profit from continuing operations
Profit from discontinued operation
Aggregate income tax expense
2022
$m
202.0
10.7
0.1
212.8
212.8
-
212.8
2021
$m
146.6
(5.4)
(2.1)
139.1
134.6
4.5
139.1
122
122
(b) Reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
Profit from discontinued operations before income tax expense
Tax at the Australian tax rate of 30% (2021: 30%)
Tax effect of amounts not deductible (taxable) in calculating taxable income:
Equity accounted share of profit - Deterra
Non-assessable income
SRL minimum tax
Non-deductible expenses
Other items
Losses not recognised by overseas operations
Demerger distribution
Difference in overseas tax rates
(Over)/under provision in prior years
Income tax expense
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
730.1
71.2
801.3
240.4
(8.9)
(0.5)
-
1.8
(25.8)
1.2
4.5
212.7
-
0.1
212.8
488.9
16.1
505.0
151.5
(5.4)
(23.6)
5.4
3.7
0.5
10.0
-
142.1
(0.9)
(2.1)
139.1
(644.1)
No tax benefits have been recognised in respect of exploration activities of overseas operations as their recovery
is not currently considered probable.
(1,014.1)
The idling of the US operations at the end of 2015 means that the recovery of US state tax losses are not
considered probable. Unrecognised US state tax losses for which no deferred tax asset has been recognised are
US$250.8 million (equivalent to $370.7 million) at 31 December 2022 (2021: US$251.0 million, equivalent to
$346.3 million).
Unused capital losses for which no deferred tax asset has been recognised are approximately $81.1 million
(2021: $80.5 million) (tax at the Australian rate of 30%: $24.3 million (2021: $24.1 million)). The benefit of these
unused capital losses will only be obtained if sufficient future capital gains are made and the losses remain
available under tax legislation.
(c) Tax expense relating to items of other comprehensive income
Changes in fair value of foreign exchange cash flow hedges
Actuarial gains (losses) on retirement benefit obligation
2022
$m
0.7
(3.3)
(2.6)
2021
$m
0.6
(1.1)
(0.5)
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based
on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities
attributable to temporary differences and to unused tax losses. The current tax charge is calculated using the tax
rates and tax laws enacted or substantively enacted at the reporting date in the countries where the Group
operates and generates taxable income.
123
123
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 12 DEFERRED TAX
Deferred tax asset:
The balance comprises temporary differences attributable to:
Employee provisions
Provisions
Lease liabilities
Other
Gross deferred tax assets
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
2022
$m
2021
$m
9.0
204.8
8.9
9.3
232.0
8.2
178.4
10.7
5.7
203.0
Amount offset from deferred tax liabilities pursuant to set-off provision
Net deferred tax assets
(197.0)
35.0
(163.9)
39.1
Deferred tax liability:
The balance comprises temporary differences attributable to:
Property, plant and equipment
Inventory
Treasury shares
Right-of-use assets
Receivables
Other
Gross deferred tax liabilities
Amount offset to deferred tax assets pursuant to set-off provision
Net deferred tax liabilities
Movements in net deferred tax balance:
Balance at 1 January
(Charged)/credited to the income statement
Over provision in prior years
Charged directly to equity
Transfers
Balance at 31 December
Deferred tax policy
(168.9)
(17.4)
(1.6)
(8.3)
(0.5)
(0.3)
(197.0)
197.0
-
39.1
(10.7)
3.4
3.5
(0.3)
35.0
(134.5)
(15.3)
(3.1)
(10.3)
(0.3)
(0.4)
(163.9)
163.9
-
28.4
5.4
1.0
4.4
(0.1)
39.1
Deferred income tax is provided on all temporary differences at the balance sheet date between accounting
carrying amounts and the tax bases of assets and liabilities.
Deferred income tax liabilities are recognised for all taxable temporary differences, other than for the exemptions
permitted under accounting standards.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
assets and unused tax losses, to the extent it is probable that taxable profit will be available to utilise these
deductible temporary differences, other than for the exemptions permitted under accounting standards. The
carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred
income tax asset to be utilised.
124
124
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are also recognised in equity and not in the income
statement.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable
entity and the same taxation authority.
13 RECEIVABLES
Trade receivables
Other receivables
Prepayments
2022
$m
248.0
8.0
19.1
275.1
2021
$m
213.8
16.5
23.4
253.7
Trade receivables are recognised initially at the value of the invoice sent to the customer and subsequently at the
amount considered recoverable, translated using the spot exchange rate at balance date with translation
differences accounted for in line with the Group's accounting policy (refer note 2). Recognition occurs at the
earlier of dispatch or formal acknowledgement of legal ownership by a customer, as this is the point in time that
the consideration is unconditional because only the passage of time is required before payment is due. Trade
receivables are generally due within 53 days of the invoice being issued (2021: 47 days).
The Group has applied the simplified approach to measuring expected credit losses (ECL), which uses a lifetime
expected loss allowance for all trade receivables. Based on the payment profiles of sales over the past three
years and historical credit losses experienced within this period, the Group concluded that the lifetime ECL would
be negligible and therefore no loss allowance was required at 31 December 2022 (2021: nil). The amount of any
impairment loss is recognised in the Consolidated Statement of Profit or Loss and Other Comprehensive Income
within other expenses.
Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no
reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan
with the group, and a failure to make contractual payments for a period of greater than 120 days past due.
Impairment losses on trade receivables and subsequent recoveries of amounts previously written off are
recognised within other expenses.
There was $18.8 million overdue at balance date (2021: $3.4 million), of which $nil million is more than 28 days
overdue (2021: $nil million). This overdue amount was fully settled subsequent to the reporting date. Due to the
short-term nature of the Group’s receivables, their carrying value is considered to approximate fair value.
(a) Trade receivables purchase facility
Iluka has a purchase facility for the sale of eligible trade receivables. Sold trade receivables are not derecognised
because the majority of the risks and rewards of ownership, including credit risk, are retained by the Group.
Instead, the amount of sold receivables is reflected as a continuing involvement asset (included in other
receivables) with a corresponding continuing involvement liability (included in payables) for the same amount.
Trade receivables include $nil of sold trade receivables at the reporting date (2021: $18.9 million - a
corresponding liability is included under payables in the comparative period for the same amount, representing
the Group’s risk associated with sold trade receivables).
125
125
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(b) Credit risk
At 31 December 2022 the trade receivables balance was $248.0 million, with $39.0 million by letters of credit. As
a result, the Group had $209.0 million of uninsured receivables at the reporting date (2021: $183.5 million
uninsured receivables). Further details regarding the Group's approach to managing customer credit risk are
outlined in note 20(b).
14 INVENTORIES
Current
Work in progress
Finished goods
Consumable stores
Total current inventories
Non-current
Work in progress
Total non-current inventories
Total inventories
2022
$m
2021
$m
304.8
205.6
32.9
543.3
18.3
18.3
224.6
220.9
44.2
489.7
65.0
65.0
561.6
554.7
Inventories are valued at the lower of weighted average cost and estimated net realisable value. The net
realisable value is the estimated selling price in the normal course of business, less any anticipated costs of
completion and the estimated costs to sell, including royalties.
There are separate inventory stockpile values for each product, including Heavy Mineral Concentrate (HMC) and
other intermediate products, at each inventory location.
Weighted average cost includes direct costs and an appropriate portion of fixed and variable overhead
expenditure, including depreciation and amortisation. As a result of mineral sands being co-products from the
same mineral separation process, costs are allocated to inventory on the basis of the relative sales value of the
finished goods produced. No cost is attributed to by-products, except direct costs.
Finished goods inventory of $1.2 million (2021: $36.1 million) is carried at net realisable value, with all other
product inventory carried at cost.
Consumable stores include ilmenite acquired from third parties, flocculant, coal, diesel and warehouse stores. A
regular and ongoing review is undertaken to establish the extent of surplus, obsolete or damaged stores, which
are then valued at estimated net realisable value.
Inventories expected to be sold (or consumed in the case of stores) within 12 months after the balance sheet
date are classified as current assets; all other inventories are classified as non-current assets.
126
126
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Key estimate: Net realisable value and classification of product inventory
The Group’s assessment of the net realisable value and classification of its inventory holdings requires the use
of estimates, including the estimation of the relevant future product price and the likely timing of the sale of the
inventory.
During the year, inventory write-downs of $0.9 million occurred for work in progress or finished goods (2021:
$1.2 million write down reversal). If finished goods future selling prices were 5% lower than expected, an
inventory write-down of $0.1 million would be required at 31 December 2022 (2021: $1.6 million).
Inventory of $18.3 million (2021: $65.0 million) was classified as non-current as it is not expected to be
processed and sold within 12 months of the balance sheet date.
CAPITAL
15 NET CASH AND FINANCE COSTS
Cash and cash equivalents
Cash at bank and in hand
Deposits at call
Total cash and cash equivalents
Non-current interest-bearing liabilities (unsecured)
EFA loan facility
Deferred borrowing costs
Total interest-bearing liabilities
Net cash
(a) Cash and cash equivalents
2022
$m
2021
$m
116.7
405.0
521.7
(40.7)
7.7
(33.0)
92.6
202.2
294.8
-
-
-
488.7
294.8
Cash and cash equivalents include cash on hand and deposits held at call with financial institutions with original
maturities of three months or less.
Cash and deposits are at floating interest rates between 0.1% and 4.4% (2021: 0.1% and 3.3%) on Australian and
foreign currency denominated deposits.
(b) Interest-bearing liabilities
Interest-bearing liabilities are initially recognised at fair value less directly attributable transaction costs, with
subsequent measurement at amortised cost using the effective interest rate method. Under the amortised cost
method the difference between the amount initially recognised and the redemption amount is recognised in profit
or loss over the period of the borrowings on an effective interest basis.
Interest-bearing liabilities are classified as current liabilities unless the Group has an unconditional right to defer
settlement for at least 12 months after the balance sheet date.
The Group has access to the following facilities at the reporting date:
127
127
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 (i) Multi Optional Facility Agreement (MOFA)
(ii) Rehabilitation and mine closure provision discount unwind
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
The Multi Optional Facility Agreement comprises a series of unsecured committed five year bilateral revolving
credit facilities with several domestic and foreign institutions. The Group renegotiated the terms of the MOFA
during the reporting period, resulting in the facility increasing to A$640.0 million (denominated in AUD) from
A$512.0 million at the end of the comparative period (denominated in AUD and USD).
The table below details the facility expiries:
A$million
At 31 December 2022
At 31 December 2021
Total
facility
640.0
512.0
Facility Expiry
2023
-
2024
70.0
2025
-
512.0
-
2026
-
-
2027
570.0
-
Undrawn MOFA facilities at 31 December 2022 were A$640.0 million (2021: A$512.0 million).
Subsequent to the reporting date, the Group cancelled $70 million of the MOFA due to expire in 2024.
(ii) Export Finance Australia (EFA) facility
The Group announced approval of the Eneabba Rare Earths Refinery (ERER) project on 3 April 2022 (as outlined
in the ASX notice released on that date), following completion of the related feasibility studies and finalisation of
a risk sharing agreement with the Australian Government.
Amongst other terms, the risk sharing agreement stipulates that Iluka Eneabba Pty Ltd (a newly formed special
purpose entity of the Group) has access to a loan to fund the construction and commissioning of ERER under the
Australian Government’s Critical Minerals Facility, administered by Export Finance Australia (EFA).
Total available funds under the EFA facility amount to $1,250 million, is non-recourse to Iluka and has a variable
interest rate equal to the BBSY + 3% with a term of up to 16 years expiring in 2038. At 31 December 2022, $40.7
million was drawn against the facility, leaving $1,209.3 million undrawn.
(c) Interest rate exposure
As at the reporting date, $40.7 million was drawn down on the EFA facility and is subject to an effective weighted
average floating interest rate of 6.3%. No amount remained drawn down on the MOFA facility as at the current or
prior reporting date. The contractual repricing date of all floating rate interest-bearing liabilities at the balance
date is within one year.
(d) Finance costs
Interest charges on interest-bearing liabilities
Bank fees and similar charges
Amortisation of deferred borrowing costs
Lease borrowing costs
Rehabilitation and mine closure provision discount unwind
Rehabilitation provision discount rate changes
Total finance costs
(i) Amortisation of deferred borrowing costs
2022
$m
0.5
4.1
0.4
1.0
15.3
(10.3)
11.0
2021
$m
0.8
3.9
0.7
0.9
6.7
-
13.0
Fees paid on establishment of borrowing facilities are recognised as transaction costs and amortised over the
shorter of the loan term or expected repayment (or modification) date.
Rehabilitation and mine closure unwind represents the cost associated with the passage of time. Rehabilitation
provisions are recognised as the discounted value of the present obligation to restore, dismantle and rehabilitate
with the increase in the provision due to passage of time being recognised as a finance cost in accordance with
the policy described in note 8(a).
(iii) Rehabilitation provision discount rate changes
Changes to the discount rate for closed sites is recorded as a finance cost. Iluka re-set the risk free discount
rates used in calculating rehabilitation provisions in the current reporting period to match the 15-year Australian
Government Bond and 5-year US Treasury Bond rates at the reporting date, which are used as proxies for risk-free
discount rates - refer to note 8.
16 CONTRIBUTED EQUITY
Balance on 1 January, comprising
Ordinary shares - fully paid
Treasury shares - net of tax
Movements in ordinary share capital
2022 Interim Dividend - DRP
2021 Final Dividend - DRP
2021 Interim Dividend - DRP
2020 Final Dividend - DRP
Share issue
Capital return - SRL Demerger
-
-
2022
Shares
2021
Shares
2022
$m
2021
$m
423,202,342
422,769,681
(1,211,152)
(199,929)
421,991,190
422,569,752
1,155.5
(7.2)
1,148.3
1,151.7
(1.2)
1,150.5
695,704
304,105
730,000
-
-
-
-
-
351,254
81,407
-
-
-
-
-
-
6.9
3.1
8.1
(41.0)
-
-
-
-
3.3
0.5
-
-
-
-
-
-
Movements in treasury shares, net of tax
Employee share allocations
Treasury share purchases
1,473,617
(730,000)
572,970
(1,584,193)
10.0
(5.8)
3.0
(9.0)
Balance on 31 December, comprising
Ordinary shares - fully paid
Treasury shares - net of tax
424,464,616
421,991,190
424,932,151
423,202,342
(467,535)
(1,211,152)
1,129.6
1,132.5
(2.9)
1,148.3
1,155.5
(7.2)
(a) Ordinary share capital
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands, every holder of ordinary
shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to
one vote. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
128
129
128
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(ii) Rehabilitation and mine closure provision discount unwind
Rehabilitation and mine closure unwind represents the cost associated with the passage of time. Rehabilitation
provisions are recognised as the discounted value of the present obligation to restore, dismantle and rehabilitate
with the increase in the provision due to passage of time being recognised as a finance cost in accordance with
the policy described in note 8(a).
(iii) Rehabilitation provision discount rate changes
Changes to the discount rate for closed sites is recorded as a finance cost. Iluka re-set the risk free discount
rates used in calculating rehabilitation provisions in the current reporting period to match the 15-year Australian
Government Bond and 5-year US Treasury Bond rates at the reporting date, which are used as proxies for risk-free
discount rates - refer to note 8.
16 CONTRIBUTED EQUITY
Balance on 1 January, comprising
Ordinary shares - fully paid
Treasury shares - net of tax
Movements in ordinary share capital
2022 Interim Dividend - DRP
2021 Final Dividend - DRP
2021 Interim Dividend - DRP
2020 Final Dividend - DRP
Share issue
Capital return - SRL Demerger
-
2022
Shares
2021
Shares
2022
$m
2021
$m
423,202,342
(1,211,152)
421,991,190
422,769,681
(199,929)
422,569,752
1,155.5
(7.2)
1,148.3
1,151.7
(1.2)
1,150.5
695,704
304,105
-
-
730,000
-
-
-
-
351,254
81,407
-
-
-
6.9
3.1
-
-
8.1
(41.0)
-
10.0
(5.8)
-
-
-
3.3
0.5
-
-
-
3.0
(9.0)
-
Movements in treasury shares, net of tax
Employee share allocations
Treasury share purchases
-
1,473,617
(730,000)
-
572,970
(1,584,193)
-
Balance on 31 December, comprising
Ordinary shares - fully paid
Treasury shares - net of tax
424,464,616
421,991,190
424,932,151
(467,535)
423,202,342
(1,211,152)
1,129.6
1,132.5
(2.9)
1,148.3
1,155.5
(7.2)
(a) Ordinary share capital
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in
proportion to the number of and amounts paid on the shares held. On a show of hands, every holder of ordinary
shares present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share is entitled to
one vote. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
129
129
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
The Group issues ordinary shares to shareholders who elect to receive shares instead of cash dividends as part
of the Dividend Reinvestment Plan (DRP), the terms of which are detailed in the ASX announcement dated 27
February 2018. During the year, the Group issued the following shares under the DRP:
space
2021 final
2022 interim
(b) Treasury shares
Date issued
Price per share
Number of ordinary
shares issued
7 April 2022
30 September 2022
10.49
9.94
304,105
695,704
Treasury shares are shares in Iluka Resources Limited acquired on market and held for the purpose of issuing
shares under the Directors, Executives and Employees Share Acquisition Plan and the Employee Share Plan.
(c) Capital return - SRL Demerger
All of the issued Sierra Rutile shares were transferred to eligible shareholders on a one-for-one basis under the
demerger (refer to note 23), as outlined in the ASX release on 30 September 2022. The Australian Tax Office
published the final class ruling regarding the tax treatment of the demerger on 28 September 2022. Under the
ruling, the cost base of Iluka shares is to be apportioned between Iluka and Sierra Rutile shares, resulting in a
reduction in the capital of the Group amounting to $41.0 million, which is reflected as a reduction in the share
capital of the Group. There was no change to the number of issued ordinary shares as a result of this capital
reduction.
17 RESERVES AND RETAINED EARNINGS
Asset revaluation reserve
Balance at 1 January
Transfer to retained earnings on disposal
Balance at 31 December
blank
Hedge reserve
Balance at 1 January
Changes in the fair value of hedging instruments recognised in equity
Reclassified to profit or loss
Deferred tax
Balance 31 December
blank
Share-based payments reserve
Balance at 1 January
Share-based payments, net of tax
Transfer of shares to employees, net of tax
Balance at 31 December
blank
Foreign currency translation
Balance at 1 January
Currency translation of US operation
Currency translation of SRL up to demerger
Transfer of FCTR on demerger of SRL
Translation differences on other foreign operations
Balance at 31 December
130
Notes
17(a)
17(b)
17(c)
17(d)
2022
$m
10.7
-
10.7
(1.0)
(8.8)
5.2
1.1
(3.5)
7.3
11.0
(10.0)
8.3
36.2
(8.4)
(13.6)
(17.5)
4.4
1.1
2021
$m
10.8
(0.1)
10.7
0.9
(5.0)
2.4
0.7
(1.0)
2.2
8.1
(3.0)
7.3
45.3
(9.2)
(1.8)
-
1.9
36.2
130
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Notes
2022
$m
2021
$m
17(e)
(22.1)
5.4
16.7
-
16.6
413.9
584.5
(261.6)
-
17.5
11.0
(16.7)
748.6
(22.1)
-
-
(22.1)
31.1
104.3
364.9
(59.2)
0.1
-
3.8
-
413.9
blank
Other reserves
Balance at 1 January
Transactions with non-controlling interests
Transfer of loss in ownership changes
Balance at 31 December
blank
Total reserves
blank
Retained earnings
Balance at 1 January
Net profit for the year attributable to the equity holders of the parent
Dividends paid
Transfer from asset revaluation reserve
Transfer of FCTR on demerger of SRL
Actuarial gains on retirement benefit obligation, net of tax
Transactions with non-controlling interest
Balance at 31 December
(a) Asset revaluation reserve
The asset revaluation reserve records revaluations of non-current assets prior to the adoption of AIFRS.
Transfers are made to retained earnings on disposal of previously revalued assets.
(b) Hedge reserve
Iluka uses foreign currency instruments as part of its foreign currency risk management strategy associated with
its US dollar denominated sales, as described in note 21. The foreign currency instruments are designated to
cash flow hedge relationships. To the extent these hedges are effective, the change in fair value of the hedging
instrument is recognised in the cash flow hedge reserve.
(c) Share-based payments reserve
The employee share-based payments reserve is used to recognise the fair value of equity instruments granted
but not yet issued to employees under the Group's various equity-based incentive schemes. Shares issued to
employees are acquired on-market prior to the issue. Shares not yet issued to employees are shown as treasury
shares. When shares are issued to employees the cost of the on-market acquisition, net of tax, is transferred
from treasury shares (refer note 16) to the share-based payment reserve.
(d) Foreign currency translation reserve
Exchange differences arising on translation of the net investment in foreign operations are recognised in the
foreign currency translation reserve net of applicable income tax, as described in note 2(b)and reclassified to
retained earnings when the net investment is disposed of.
(e) Other reserves
The impact on equity of transactions related to changes in the structure of the Group are accumulated in other
reserves. In the current reporting period, the reserve was reduced by $5.4 million and $16.7 million in relation to
derecognition of the non-controlling interest previously held by the International Finance Corporation (IFC) and
the transfer of the remaining reserve balance to retained earnings when the Group lost control of Sierra Rutile on
demerger, respectively. Refer to note 23.
131
131
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 18 DIVIDENDS
Final dividend
for 2021 of12 cents per share, fully franked
for 2020 of 2 cents per share, fully franked
-
Interim dividend
for 2022 of 25 cents per share, fully franked
for 2021 of 12 cents per share, fully franked
-
Distributions
SRL demerger dividend
-
Total dividends
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
2022
$m
2021
$m
50.7
-
-
106.1
-
-
104.8
-
261.6
-
8.6
-
-
50.6
-
-
-
59.2
23
Of the total $106.1 million interim dividend declared for 2022 and the total $50.6 million final dividend declared
for 2021, shareholders respectively took up $6.9 million and $3.1 million as ordinary shares as part of the
Dividend Reinvestment Plan. Refer to note 16(a).
Iluka transferred all of the shares it held in Sierra Rutile Limited to shareholders as a non-cash dividend as part of
the demerger outlined in note 23. The total value of the distribution was measured at the fair value of Sierra Rutile
shares on demerger date ($145.8 million), of which $104.8 million is reflected as a dividend and $41.0 million is
reflected as a capital reduction - refer to note 16(c).
Since balance date the directors have determined a final dividend for 2022 of 20 cents per share, fully franked.
The dividend is payable on 30 March 2023 for shareholders on the register as at 7 March 2023. The aggregate
amount of the proposed dividend is $84.9 million, which has not been included in provisions at balance sheet
date as it was not declared on or before the end of the financial year.
Franking credits
The balance of franking credits available as at 31 December 2022 is $458.8 million (2021: $406.6 million). This
balance is based on a tax rate of 30% (2021: 30%).
19 EARNINGS PER SHARE
Basic earnings per share
From continuing operations
From discontinued operations
Total basic earnings per share
Diluted earnings per share
From continuing operations
From discontinued operations
Total diluted earnings per share
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
2022
Cents
116.9
22.4
139.3
2021
Cents
83.9
2.8
86.7
115.9
22.2
138.1
83.2
2.8
86.0
Total earnings per share (EPS) is the amount of post-tax earnings attributable to each share. Total basic and
diluted EPS comprises EPS from continuing operations and discontinued operations. Discontinued operations
represent Sierra Rutile Limited, which was demerged in the current reporting period - refer to note 23.
Total basic EPS is calculated on the profit for the period of $585.7 million (2021: profit of $365.9 million) divided
by the weighted average number of shares on issue during the year, excluding treasury shares, being 422,342,323
shares (2021: 422,267,055 shares).
Total diluted EPS takes into account the dilutive effect of all outstanding share rights vesting as ordinary shares.
132
133
132
19 EARNINGS PER SHARE
Basic earnings per share
From continuing operations
From discontinued operations
Total basic earnings per share
Diluted earnings per share
From continuing operations
From discontinued operations
Total diluted earnings per share
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
2022
Cents
116.9
22.4
139.3
2021
Cents
83.9
2.8
86.7
115.9
22.2
138.1
83.2
2.8
86.0
Total earnings per share (EPS) is the amount of post-tax earnings attributable to each share. Total basic and
diluted EPS comprises EPS from continuing operations and discontinued operations. Discontinued operations
represent Sierra Rutile Limited, which was demerged in the current reporting period - refer to note 23.
Total basic EPS is calculated on the profit for the period of $585.7 million (2021: profit of $365.9 million) divided
by the weighted average number of shares on issue during the year, excluding treasury shares, being 422,342,323
shares (2021: 422,267,055 shares).
Total diluted EPS takes into account the dilutive effect of all outstanding share rights vesting as ordinary shares.
133
133
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
RISK
20 FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial risks: market risk (including currency risk and interest rate
risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability
of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.
Financial risk management is managed by a central treasury department under policies approved by the Board.
(a) Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect
the Group’s income or value of its holdings of financial instruments.
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising predominantly from the US
dollar, which is the currency the Group’s sales are generally denominated in.
Foreign exchange risk is also managed through entering into forward foreign exchange contracts and collar
contracts detailed in note 21.
The treasury function of the Group manages foreign currency risk centrally. The Group hedges foreign exchange
exposures for firm commitments relating to a portion of sales, where the hedging instrument must be in the
same currency as the hedged item.
The Group's exposure to USD foreign currency risk (by entities which have an Australian dollar functional
currency) at the end of the reporting period, expressed in Australian dollars, was as follows:
Cash and cash equivalents
Receivables
Payables
Derivative financial instruments
2022
$m
35.6
218.8
(63.5)
(4.4)
186.5
2021
$m
6.3
189.3
(51.4)
(11.6)
132.6
The Group's balance sheet exposure to other foreign currency risk is not significant.
The objective of Iluka’s policy on foreign exchange hedging is to protect the Group from adverse currency
fluctuations.
134
134
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(ii) Group sensitivity
The average US dollar exchange rate during the year was 0.6950 (2021: 0.7515). The US dollar spot rate at 31
December 2022 was 0.6766 (31 December 2021: 0.7248). Based on the Group's net financial assets at 31
December 2022, the following table demonstrates the estimated sensitivity to a -/+ 10% movement in the US
dollar spot exchange rate, with all other variables held constant, on the Group's post-tax profit for the year and
equity:
-10%
Strengthen
Profit (loss)
$m
14.8
10.4
Equity
$m
16.8
4.9
+10%
Weaken
Profit (loss)
$m
(12.1)
(8.4)
Equity
$m
(9.9)
(3.3)
31 December 2022
31 December 2021
(iii) Interest rate risk
Interest rate risk arises from the Group’s borrowings and cash deposits. During 2022 and 2021, the Group's
borrowings at variable rates were denominated in Australian dollars and US dollars. At 31 December 2022, if
variable interest rates for the full year were -/+ 1% from the year-end rate with all other variables held constant,
pre-tax profit for the year would have moved as per the table below.
31 December 2022
31 December 2021
-1%
$m
0.1
0.3
+1%
$m
(0.1)
(0.3)
The sensitivity is calculated using the average month end debt position for the year ended 31 December 2022.
The interest charges in note 15(d) of $0.5 million (2021: $0.8 million) reflect interest-bearing liabilities in 2022
that range between $nil and $40.7 million (2021: $nil and $60.5 million).
(b) Credit risk
Credit risk arises from cash and cash equivalents and hedging instruments held with financial institutions, as well
as credit exposure to customers.
The Group's policy is to ensure that cash deposits are held by financial institutions with a minimum A-/A3 credit
rating. Exposure limits are approved by the Board based on credit ratings from external ratings agencies.
Derivative counterparties and cash transactions are limited to high credit quality financial
policies limit the amount of credit exposure to any one financial institution.
institutions and
The Group manages customer credit risk subject to established policies, procedures and controls. Credit limits
are established for all customers. The Group trades primarily with recognised, creditworthy third parties.
Customers who wish to trade on credit terms are subject to credit verification procedures,
including an
assessment of their independent credit rating (if available), financial position, past experience, and industry
reputation.
Credit risk management practices include reviews of trade receivables aging by days past due, the timely
follow-up of past due amounts, and the use of letters of credit.
The expected credit loss on trade receivables is not significant.
135
135
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(c) Liquidity risk
Liquidity risk is the risk the Group will not be able to meet its financial obligations as they fall due. Liquidity risk
management involves maintaining sufficient cash on hand or undrawn credit facilities to meet the operating
requirements of the business. This is managed through committed undrawn facilities under the MOFA facility of
$640.0 million and EFA facility of $1,209.3 million at balance date (refer note 15(b)(i)), cash and cash equivalents
of $521.7 million, and prudent cash flow management.
(d) Maturities of financial liabilities
The tables below analyse the Group's interest-bearing liabilities into maturity groupings based on the remaining
period at the reporting date to the contractual maturity date. For the MOFA facility, the contractual maturity dates
and contractual cash flows are until the next contractual re-pricing dates in 2024 and 2027. For the EFA facility,
the contractual maturity dates and contractual cash flows are until the facility expires in 2038. The amounts
disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances as the impact of discounting is not significant. All other non-derivative financial liabilities are
due within 12 months. Derivative cash flows include the net amounts expected to be paid for foreign exchange
forward contracts and net amounts expected to be received for foreign exchange collar contracts.
Weighted
average
rate
Less than
1 year
$m
Between
1 and 2
years
$m
Between 2
and 5
years
$m
Total
contractual
cash flows
$m
Carrying
amount
liabilities
$m
Over 5
years
$m
%
4.2
6.3
143.7
7.9
-
151.6
-
7.9
-
7.9
-
12.8
-
12.8
-
0.9
33.0
33.9
143.7
29.5
40.7
213.9
143.7
29.5
33.0
206.2
At 31 December 2022
Non-derivatives
Payables
Lease liabilities
Interest-bearing variable rate
Total non-derivatives
Derivatives
Foreign exchange collar contracts
4.4
-
-
-
4.4
4.4
136
136
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Weighted
average
rate
Less than
1 year
Between
1 and 2
years
Between
2 and 5
years
Total
contractual
cash flows
Carrying
amount
liabilities
Over 5
years
$m
$m
$m
$m
$m
At 31 December 2021
Non-derivatives
Payables
Lease liabilities
Interest-bearing variable rate
Total non-derivatives
3.1
1.5
Derivatives
Foreign exchange collar contracts
Put option
Total derivatives
174.8
8.7
-
183.5
0.5
11.0
11.5
-
8.1
-
8.1
-
-
-
-
14.1
-
14.1
-
-
-
-
5.0
-
5.0
-
-
-
174.8
35.9
-
210.7
174.8
35.9
-
210.7
0.5
11.0
11.5
0.5
11.0
11.5
Refer to note 21 for detail on derivative instruments.
21 HEDGING
Current liabilities
Foreign exchange collar hedges
2022
$m
2021
$m
4.4
0.5
The Group is exposed to risk from movements in foreign exchange in relation to its forecast US dollar
denominated sales and as part of the risk management strategy has entered into foreign exchange forward
contracts and foreign exchange collar contracts.
(a) Recognition
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently re-measured to their fair value at the end of each reporting period. The accounting for subsequent
changes in fair value depends on whether the derivative is designated as a hedging instrument and, if so, the
nature of the item being hedged and the type of hedge relationship designated.
(b) Fair value of derivatives
The fair value of hedging instruments is determined using valuation techniques with inputs that are observable
market data (a level 2 measurement). The valuation of the options making up the collars is determined using
forward foreign exchange rates, volatilities and interest rates at the balance date. The only unobservable input
used in the calculations is the credit default rate, movements in which would not have a material effect on the
valuation.
137
137
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(c) Hedge accounting
At the start of a hedge relationship, the Group formally designates and documents the hedge relationship,
including the risk management strategy for undertaking the hedge. This includes identification of the hedging
instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the
hedging instrument’s effectiveness. Hedge accounting is only applied where effective tests are met on a
prospective basis.
Iluka will discontinue hedge accounting prospectively only when the hedging relationship, or part of the hedging
relationship, no longer qualifies for hedge accounting. This includes where there has been a change to the risk
management objective and strategy for undertaking the hedge and instances when the hedging instrument
expires or is sold, terminated or exercised. The replacement or rollover of a hedging instrument into another
hedging instrument is not treated as an expiration or termination if such a replacement or rollover is consistent
with our documented risk management objective.
The foreign exchange collars Iluka holds are classified as cash flow hedges. Hedges are classified as cash flow
hedges when they hedge a particular risk associated with the cash flows of recognised assets and liabilities and
highly probable forecast transactions.
Cash flow hedges
For cash flow hedges, the portion of the gain or loss on the hedging instrument that is effective is recognised
directly in equity, while the ineffective portion is recognised in profit or loss. The ineffective portion was
immaterial in the current and prior periods. The maturity profile of these hedges is shown in note 20(d). The
recognition of the future gain or loss is expected to be consistent with this timing.
Foreign exchange collar contracts in relation to expected USD revenue, predominantly from contracted sales to
31 December 2023, remain open at the reporting date. The foreign exchange collar hedges cover US$151.6
million of expected USD revenue to 31 December 2023 and comprise US$151.6 million worth of purchased AUD
call options with a weighted average strike price of 75.5 cents and US$151.6 million of AUD put options with a
weighted average strike price of 66.7 cents.
US$270.3 million in foreign exchange collar contracts consisting of US$270.3 million of bought AUD call options
with weighted average strike prices of 79.1 cents and US$270.3 million of sold AUD put options with weighted
average strike prices of 64.8 cents matured during the year. Additionally, US$47.1 million of foreign exchange
forward contracts with a weighted average rate of 73.1 cents matured during the year.
Amounts recognised in equity are transferred to the income statement when the hedged sale occurs or when the
hedging instrument is exercised.
If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are
transferred to the income statement. If the hedging instrument expires or is sold, terminated or exercised without
replacement or roll over, or if its designation as a hedge is revoked, amounts previously recognised in equity
remain in equity until the forecast transaction occurs.
GROUP STRUCTURE
22 CONTROLLED ENTITIES AND DEED OF CROSS GUARANTEE
(a) Subsidiaries
The consolidated financial statements incorporate the following subsidiaries:
Iluka Resources Limited (Parent Company)
Associated Minerals Consolidated Ltd
Basin Minerals Holdings Pty Ltd
Basin Minerals Limited
Basin Properties Pty Ltd
Glendell Coal Ltd
Gold Fields Asia Ltd
Ilmenite Proprietary Limited
Iluka (Eucla Basin) Pty Ltd
Iluka Consolidated Pty Limited
Iluka Corporation Limited
Iluka Eneabba Pty Ltd
Iluka Exploration Pty Limited
Iluka Finance Limited
Iluka International (Brazil) Pty Ltd
Iluka International (China) Pty Ltd
Iluka International (ERO) Pty Ltd
Iluka International (Lanka) Pty Ltd
Sierra Rutile Holdings Limited
Iluka International Limited
Iluka Midwest Limited
Iluka Rare Earths Pty Ltd
Iluka RE Investments Pty Ltd
Iluka Royalties (Australia) Pty Ltd
Iluka Share Plan Holdings Pty Ltd
Iluka WA Investments Pty Ltd
Lion Properties Pty Limited
NGG Holdings Ltd
Renison Limited
Southwest Properties Pty Ltd
Swansands Pty Ltd
Iluka International (Netherlands) Pty Ltd
Iluka International (South Africa) Pty Ltd
Place of business/
country of
Ownership interest
Note
incorporation
held by the group
2022
%
2021
%
(vi)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(x)
(i),(viii)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Brazil
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
96
-
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
96
100
90
The Mount Lyell Mining and Railway Company Limited
The Nardell Colliery Pty Ltd
Western Mineral Sands Proprietary Limited
Western Titanium Limited
Westlime (WA) Limited
Yoganup Pty Ltd
Ashton Coal Interests Pty Limited
Iluka Brasil Mineração Ltda
Sierra Rutile Investments (BVI) Limited
(iv),(vii)
British Virgin Islands
138
139
138
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
GROUP STRUCTURE
22 CONTROLLED ENTITIES AND DEED OF CROSS GUARANTEE
(a) Subsidiaries
The consolidated financial statements incorporate the following subsidiaries:
Iluka Resources Limited (Parent Company)
Associated Minerals Consolidated Ltd
Basin Minerals Holdings Pty Ltd
Basin Minerals Limited
Basin Properties Pty Ltd
Glendell Coal Ltd
Gold Fields Asia Ltd
Ilmenite Proprietary Limited
Iluka (Eucla Basin) Pty Ltd
Iluka Consolidated Pty Limited
Iluka Corporation Limited
Iluka Eneabba Pty Ltd
Iluka Exploration Pty Limited
Iluka Finance Limited
Iluka International (Brazil) Pty Ltd
Iluka International (China) Pty Ltd
Iluka International (ERO) Pty Ltd
Iluka International (Lanka) Pty Ltd
Iluka International (Netherlands) Pty Ltd
Iluka International (South Africa) Pty Ltd
Sierra Rutile Holdings Limited
Iluka International Limited
Iluka Midwest Limited
Iluka Rare Earths Pty Ltd
Iluka RE Investments Pty Ltd
Iluka Royalties (Australia) Pty Ltd
Iluka Share Plan Holdings Pty Ltd
Iluka WA Investments Pty Ltd
Lion Properties Pty Limited
NGG Holdings Ltd
Renison Limited
Southwest Properties Pty Ltd
Swansands Pty Ltd
The Mount Lyell Mining and Railway Company Limited
The Nardell Colliery Pty Ltd
Western Mineral Sands Proprietary Limited
Western Titanium Limited
Westlime (WA) Limited
Yoganup Pty Ltd
Ashton Coal Interests Pty Limited
Iluka Brasil Mineração Ltda
Sierra Rutile Investments (BVI) Limited
Place of business/
country of
incorporation
Note
Ownership interest
held by the group
2022
%
2021
%
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(vi)
(i)
(i)
(i)
(i)
(i),(viii)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(i)
(x)
(iv),(vii)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Brazil
British Virgin Islands
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
96
-
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
96
100
90
139
139
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Place of business/
country of
incorporation
Note
Ownership interest
held by the group
2022
%
2021
%
(v),(vii)
(vii)
(vii)
(ii),(vii)
(ix)
(iii),(vii)
(vii)
British Virgin Islands
British Virgin Islands
Canada
China
Sierra Leone
Singapore
South Africa
Sri Lanka
Sri Lanka
Tanzania
The Netherlands
The Netherlands
The Netherlands
United Kingdom
United Kingdom
United Kingdom
United Kingdom
USA
USA
USA
USA
USA
USA
USA
-
-
100
100
-
100
-
100
100
100
100
100
-
100
-
100
-
100
100
100
100
100
100
100
90
90
100
100
90
100
100
100
100
100
100
100
100
100
100
100
90
100
100
100
100
100
100
100
Sierra Rutile Investments 1 Limited
SRL Acquisition No. 3 Limited
Iluka Exploration (Canada) Limited
Iluka Trading (Shanghai) Co., Ltd
Sierra Rutile Limited
Iluka International (Eurasia) Pte. Ltd
Sierra Rutile International South Africa (Pty) Limited
Iluka Lanka P.Q. (Private) Limited
Iluka Lanka Resources (Private) Limited
ERO (Tanzania) Limited
Iluka International Coöperatief U.A.
Iluka Investments 1 B.V.
Iluka Trading (Europe) B.V.
Iluka (UK) Ltd
Sierra Rutile International UK Limited
Iluka Technology (UK) Ltd
Sierra Rutile (UK) Limited
Associated Minerals Consolidated Investments
Iluka (USA) Investments Inc.
Iluka Atlantic LLC
Iluka Resources (NC) LLC
Iluka Resources (TN) LLC
Iluka Resources Inc.
IR RE Holdings LLC
(i) Deed of cross guarantee
These companies are parties to a Deed of Cross Guarantee (the Deed) under which each company guarantees the
debts of the others. By entering into the Deed, the wholly-owned entities represent a closed group and have been
relieved from the requirements to prepare a Financial Report and Directors’ Report under ASIC Corporations
(Wholly-owned Companies) Instrument 2016/785. The closed group is also the extended closed group.
(ii) Formerly Iluka South Africa (Pty) Ltd
(iii) Formerly Iluka International (UK) Limited
(iv) Formerly Iluka Investments (BVI) Limited
(v) Formerly Sierra Rutile Holdings Limited
(vi) Formerly Iluka International (West Africa) Pty Ltd
Converted to a public company in March 2022, removed from the Deed, was demerged from the Iluka group and
was admitted to the Australian Securities Exchange (ASX: SRX) on 25 July 2022.
(vii) Demerged from the Iluka group as part of the Sierra Rutile Holdings Limited demerger.
(viii)Incorporated in September 2022
(ix) Deregistered in January 2022.
(x) Deregistered in August 2022.
140
140
(b) Condensed financial statements of the extended closed group
Condensed statement of profit or loss and other comprehensive income
2022
$m
2021
$m
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
CONTINUING OPERATIONS
Revenue from ordinary activities
Expenses from ordinary activities
Finance costs
Equity accounted share of profit - Deterra
Income tax expense
Profit for the period
DISCONTINUED OPERATIONS
Profit after tax from discontinued operations
Net profit after tax for the period
Other comprehensive income
Changes in the fair value of cash flow hedges
Total comprehensive income for the period
Summary of movements in consolidated retained earnings
Retained earnings at the beginning of the financial year
Net profit after tax for the year
Dividends provided for or paid
Retained earnings at the end of the financial year
Condensed balance sheet
Current assets
Cash and cash equivalents
Receivables
Inventories
Financial assets at fair value through profit or loss
Total current assets
Non-current assets
Property, plant and equipment
Deferred tax assets
Inventories
Other financial assets - investments in non-closed group entities
Investments accounted for using the equity method
Right of use assets
Total non-current assets
1,609.7
(889.4)
(13.0)
29.6
(214.0)
522.9
(23.6)
499.3
2.6
501.9
571.7
499.3
(261.6)
809.4
2022
$m
463.8
274.2
543.3
20.0
1,301.3
1,005.7
34.1
18.3
120.5
449.5
22.9
1,651.0
1,313.1
(863.1)
(13.5)
18.1
(134.8)
319.8
-
319.8
1.9
321.7
311.1
319.8
(59.2)
571.7
2021
$m
243.9
279.3
432.0
-
955.2
947.7
36.5
65.0
124.8
455.5
28.6
1,658.1
Total assets
2,952.3
2,613.3
141
141
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 Condensed balance sheet
Current liabilities
Payables
Derivative financial instruments
Current tax payable
Provisions
Lease liabilities
Total current liabilities
Non-current liabilities
Provisions
Lease liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
2022
$m
2021
$m
132.4
4.4
135.3
46.6
8.9
327.6
636.1
20.6
656.7
220.4
0.5
27.6
50.0
7.5
306.0
549.2
28.3
577.5
984.3
883.5
1,968.0
1,729.8
1,129.6
29.0
809.4
1,968.0
1,148.3
9.8
571.7
1,729.8
Amounts in the comparative period have been restated to reflect changes to the entities in the extended closed
group.
23 DEMERGER OF SIERRA RUTILE LIMITED
On 13 April 2022, the Group announced its intention to demerge Sierra Rutile Limited (SRL) subject to certain
prerequisites, including shareholder approval, which were met on 22 July 2022. SRL was demerged on 4 August
2022 in accordance with the details outlined in the demerger booklet released on the ASX on 19 June 2022.
In preparation for SRL’s demerger, Iluka renamed Iluka International West Africa to Sierra Rutile Holdings (SRX),
which became the listed parent company of the subsidiaries that form the SRL group. SRX listed on the ASX as
part of the demerger, and the shares held by the Group in this company were declared as a dividend distribution
to existing Iluka shareholders as outlined in (c), below.
Profit after tax from discontinued operation comprises:
2022
$m
94.8
(23.6)
71.2
2021
$m
11.6
-
11.6
Profit from discontinued operation
Net loss on distribution
Profit after tax from discontinued operations
[.]
[.]
142
142
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(a) International Finance Corporation (IFC) - put option settlement and non-controlling interest
The Group entered a strategic partnership with the IFC in 2019. The partnership arrangement resulted in the
Group reflecting a non-controlling interest (NCI comprising the IFC’s 10% interest in SRL), and a put option liability
(reflecting the Group’s obligation to acquire the IFC’s interest under certain circumstances) at 31 December
2021.
The IFC exercised their put option on 13 May 2022 in anticipation of SRL's demerger, and accordingly the Group
paid $11.5 million in cash and derecognised the NCI balance of $5.4 million as a gain against other reserves in
equity.
During the current reporting period up until the date the IFC exercised their put option, $4.0 million of SRL’s
profits were attributed to the NCI and a foreign exchange loss of $0.5 million was recognised in relation to the
put option. The carrying amounts of the NCI and put option immediately before settlement were $5.4 million and
$11.5 million, respectively.
Related cumulative losses of $16.7 million were reclassified to retained earnings from other equity reserves on
the same date.
(b) Profit after tax from discontinued operation
Profit or loss associated with SRL in the current (up to demerger) and the comparative reporting periods are
shown as profit after tax from discontinued operations, comprising:
Revenue
[.]
Impairment reversal¹
Expenses
[.]
Interest and finance charges
Rehabilitation and mine closure provision discount unwind
Total finance costs
Profit before tax
Income tax expense
[.]
Profit from discontinued operation
2022
$m
2021
$m
203.9
242.9
33.3
(146.4)
1.0
(225.7)
(1.1)
5.1
4.0
94.8
-
94.8
(1.2)
(0.9)
(2.1)
16.1
(4.5)
11.6
143
143
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ¹Impairment reversal - 2019 write-down of Sierra Rutile Limited (SRL)
(d) Net loss on distribution
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
The Group recognises impairment reversals when the conditions that led to previous impairments or write downs
have changed to the extent that an impairment reversal may be necessary. Impairment reversals are recognised
to the extent that previously impaired assets (or CGUs) are reflected at the lower of their recoverable amount or
what their carrying amount would have been had no impairment been recognised.
In 2019, the Group recognised an impairment loss against assets in the SRL CGU due to the operational
performance at Mining Area 1 being below expectations and uncertainty surrounding the future of the Sembehun
project. Prior to demerger, management withdrew the notice of intention to suspend Mining Area 1 operations
and completed a pre-feasibility study (PFS) for Sembehun indicating an increasing level of confidence in the
project.
As the conditions that resulted in the 2019 write-down of SRL had changed, the Group estimated the recoverable
amount of the SRL CGU based on valuations prepared in anticipation of demerger. The recoverable amount
exceeded the net carrying value of SRL assets at the time, and accordingly the Group recognised an impairment
reversal of $33.3 million (US$23.4 million) related to previously impaired Sembehun property, plant and
equipment that was not subject to depreciation.
(c) Cash flow information
Cash flows associated with SRL in the current (up to demerger) and the comparative reporting periods are as
follows:
Net cash inflow from operating activities
Net cash (outflow) from financing activities
Net increase in cash and cash equivalents
Cash at the beginning of the period
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the period
2022
$m
16.5
(11.5)
5.0
35.6
(0.4)
40.2
2021
$m
14.4
-
14.4
21.5
(0.3)
35.6
Total cash and cash equivalents derecognised on demerger of $105.6 million comprised $40.2 million in cash
and $65.4 million in restricted cash. Iluka contributed the latter amount to a rehabilitation trust for Sierra Rutile
prior to demerger.
The Group lost control of SRL on the demerger date, and accordingly derecognised the carrying amounts of SRL's
assets and liabilities, which were as follows:
Demerger
date
$m
40.2
65.4
57.8
67.9
26.8
20.5
278.6
35.3
81.1
1.0
0.3
117.7
2022
$m
160.9
(145.8)
(15.1)
(8.5)
(23.6)
Cash and cash equivalents
Restricted cash - rehabilitation provision trust
Inventories
Receivables
Mine Reserves & Development
Property, plant and equipment
Total assets
Payables
Provisions
Current tax payable
Royalties
Total liabilities
Net asset value of SRX on demerger
Less: fair value of distribution
Fair value loss on distribution
Transaction costs
Net loss on distribution
[.]
[.]
The Group subsequently distributed all of its shares held in SRX to Iluka shareholders, which is reflected as a
distribution dividend in the statement of changes in equity. The distribution was effected by a capital redemption
of $41 million, with the balance distributed in the form of SRX shares.
The net loss on distribution is included in profit after tax from discontinued operations, and comprises:
The fair value of SRX on demerger, being $145.8 million, was calculated using the volume weighted average price
(VWAP) of SRX shares as traded on the ASX over the first five trading days after demerger (34.36 cents per
share) multiplied by the number of SRX shares (424,236,447 shares). Determining the fair value of SRX on this
basis was deemed as the most appropriate and practical way of reliably estimating the fair value of SRX since it
maximises the use of observable, externally available information.
None of SRL's assets or liabilities were classified as held for distribution at 31 December 2021, as the conditions
to be classified as such were only met during the reporting period.
144
145
144
(d) Net loss on distribution
The Group lost control of SRL on the demerger date, and accordingly derecognised the carrying amounts of SRL's
assets and liabilities, which were as follows:
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Cash and cash equivalents
Restricted cash - rehabilitation provision trust
Inventories
Receivables
Mine Reserves & Development
Property, plant and equipment
Total assets
Payables
Provisions
Current tax payable
Royalties
Total liabilities
Demerger
date
$m
40.2
65.4
57.8
67.9
26.8
20.5
278.6
35.3
81.1
1.0
0.3
117.7
The Group subsequently distributed all of its shares held in SRX to Iluka shareholders, which is reflected as a
distribution dividend in the statement of changes in equity. The distribution was effected by a capital redemption
of $41 million, with the balance distributed in the form of SRX shares.
The net loss on distribution is included in profit after tax from discontinued operations, and comprises:
Net asset value of SRX on demerger
Less: fair value of distribution
Fair value loss on distribution
Transaction costs
[.]
Net loss on distribution
2022
$m
160.9
(145.8)
(15.1)
(8.5)
(23.6)
[.]
The fair value of SRX on demerger, being $145.8 million, was calculated using the volume weighted average price
(VWAP) of SRX shares as traded on the ASX over the first five trading days after demerger (34.36 cents per
share) multiplied by the number of SRX shares (424,236,447 shares). Determining the fair value of SRX on this
basis was deemed as the most appropriate and practical way of reliably estimating the fair value of SRX since it
maximises the use of observable, externally available information.
None of SRL's assets or liabilities were classified as held for distribution at 31 December 2021, as the conditions
to be classified as such were only met during the reporting period.
145
145
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
24 EQUITY ACCOUNTED ASSOCIATE - DETERRA ROYALTIES LIMITED (DETERRA)
Deterra Royalties Limited was formed on 2 November 2020 when it was demerged from the Group. Deterra is the
largest resource-focused royalty company listed on the ASX. Since demerger, the Group has held a 20% equity
ownership interest in Deterra. Refer to note 23 to the 2020 Annual Report for further details of demerger
transactions. The Group accounts for its investment in Deterra as an equity accounted associate.
(a) Investment carrying amount
Movements in the carrying value of the Group's investment in Deterra are as follows:
Balance at the beginning of the year
Gross equity accounted profit
Depreciation
Dividends received
Balance at the end of the year
2022
$'m
455.7
35.9
(6.4)
(35.7)
449.5
2021
$'m
452.1
24.6
(6.2)
(14.8)
455.7
The Group recognises its share of the profits of Deterra, being 20% of its net profit after tax, as income in each
reporting period. The Group adjusts its share of the profit of Deterra by depreciating the value attributed to the
Mining Area C (MAC) Royalty right (materially all of its initial value) over a period of 50 years on a straight-line
basis, which aligns with the estimated life of mine of the mining operations in the MAC Royalty area. At the
reporting date, the expected remaining life of mine was 48 years.
The Group initially recognised its investment at its cost to the Group, which was equal to the carrying value of the
net assets of Deterra immediately prior to demerger in 2020. The retained interest was immediately remeasured
to its fair value on the demerger date. This fair value was allocated to the assets acquired on a notional basis,
with the value uplift attributed to MAC Royalty rights held by Deterra.
(b) Summarised financial information of Deterra
The following is a summary of the financial
amended to include adjustments made by the Group in applying the equity method:
information presented in the financial statements of Deterra,
Summarised balance sheet of Deterra Royalties Limited at 31 December
Current assets
Cash and cash equivalents
Trade and other receivables
Income tax receivable
Prepayments
Total current assets
Non-current assets
Royalty and other intangible assets
Property, plant and equipment
Right of use assets
Prepayments
Total non-current assets
2022
$'000
2021
$'000
21,485
45,883
698
1,322
69,388
8,445
24
204
1,408
10,081
29,431
33,229
-
1,445
64,105
8,753
33
261
33
9,080
146
146
(b) Summarised financial information of Deterra (continued)
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
Current liabilities
Trade and other payables
Provisions
Lease liability
Income tax payable
Total current liabilities
Non-current liabilities
Lease liability
Deferred tax
Total non-current liabilities
Net assets
The Group's share of Deterra's net assets is reconciled to its carrying value as follows:
Opening net assets
Profit for the period
Movements in other reserves
Dividends
Dividend paid prior to demerger
Closing net assets
Group's share percentage
Group's share percentage
Group's share of net assets
Iluka's gain on demerger, net of accumulated depreciation
Carrying value of investment in Deterra
2022
$'000
2021
$'000
368
175
70
-
613
154
12,814
12,968
590
69
68
104
831
211
9,039
9,250
65,888
63,104
2022
$'000
63,104
179,339
1,759
(178,430)
-
65,772
20%
0.2
13,154
436,346
449,500
2021
$'000
13,063
122,621
1,251
(73,831)
-
63,104
20%
0.2
12,621
443,106
455,727
Deterra is a listed ASX royalty company. The market value of Iluka's interest at 31 December 2022 was $484.1
million (2021: $455.5 million).
147
147
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
25 ACQUISITION OF INTEREST IN NORTHERN MINERALS LIMITED
Iluka entered into a strategic partnership with Northern Minerals to secure possible future rare earths
concentrate supply feedstock, as outlined in the ASX Notice released on 26 October 2022.
Amongst other aspects, the agreements that underpin the strategic partnership resulted in the Group making an
initial cash contribution to Northern Minerals, and simultaneously becoming a party to option contracts.
(a) Investment in Northern Minerals
The Group made an initial investment of $20 million in Northern Minerals via a convertible note ($15 million) and
a share placement ($5 million). The investment is carried at fair value with changes in the fair value of the
investment recognised in other income in profit or loss.
The fair value of the investment is determined with reference to the closing share price of Northern Minerals on
each reporting date (a level 1 input). Since the value of the investment on the reporting date is the same as it was
on initial investment, no fair value remeasurements have been recognised.
The $15 million 7% convertible note matures on 31 December 2024, with a conversion price at a 20% premium to
the share placement, being $0.048 per share, subject to customary adjustments.
(b) Option contracts
Simultaneously to its initial cash contribution, the Group became a party to option contracts with Northern
Minerals resulting in a call option in favour of the Group and a put option in favour of Northern Minerals, which
becomes exercisable by either party depending on the completion status of Northern Minerals’ Browns Range
project:
•
•
Iluka may elect to exercise its call option at any stage of completion, allowing it to purchase additional equity
in Northern Minerals at a strike price of $0.06 per share, such that the total equity held by Iluka does not
exceed 19.9%.
After completion, Northern Minerals may exercise its put option which will obligate that Iluka purchase
additional Northern Mineral shares, subject to satisfactory due diligence.
The option contracts are financial instruments which have been classified as at fair value through profit or loss,
initially recognised at $nil, with fair values determined with reference to the closing share price of Northern
Minerals on each reporting date (a level 1 input). As at the reporting date, the option contracts have a fair value of
$nil, as the strike price exceeds the closing share price. The value of the option contracts on the reporting date is
the same as they were on initial recognition, therefore no fair value remeasurements have been recognised.
148
148
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
OTHER NOTES
26 CONTINGENT LIABILITIES
(a) Bank guarantees
The Group has a number of bank guarantees in favour of various government authorities and service providers to
meet its obligations under exploration and mining tenements. At 31 December 2022, the total value of
performance commitments and guarantees was $153.7 million (2021: $153.4 million).
(b) Native title
There is some risk that native title, as established by the High Court of Australia's decision in the Mabo case,
exists over some of the land over which the Group holds tenements or over land required for access purposes. It
is impossible at this stage to quantify the impact, if any, which these developments may have on the operations
of the Group.
(c) Other claims
In the course of its normal business, the Group occasionally receives claims arising from its operating or historic
activities. In the opinion of the directors, all such matters are covered by insurance or, if not covered, are without
merit or are of such a kind or involve such amounts that would not have a material adverse effect on the
operating results or financial position of the Group if settled unfavourably.
27 COMMITMENTS
(a) Exploration and mining lease commitments
Commitments in relation to leases contracted for at reporting date but not
recognised as liabilities payable:
Within one year
Later than one year but not later than five years
Later than five years
2022
$m
2021
$m
10.7
47.3
22.1
80.1
11.0
25.9
44.9
81.8
These costs are discretionary. If the expenditure commitments are not met then the associated exploration and
mining leases may be relinquished.
(b) Capital commitments
Capital expenditure contracted for and payable, but not recognised as liabilities is $174.6 million (2021: $21.4
million). All of the commitments relate to the purchase of property, plant and equipment of which $122.2 million
is payable within one year and $52.4 million is payable between one to five years of the reporting date.
149
149
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
28 REMUNERATION OF AUDITORS
29 SHARE-BASED PAYMENTS
During the year the following fees were paid or payable for services provided by PricewaterhouseCoopers
Australia (PwC) as the auditor of the parent entity, Iluka Resources Limited, by PwC’s related network firms and
by non-related audit firms:
(a) Auditors of the Group - PwC and related network firms
Audit and review of financial reports
Group
Controlled entities
Other assurance services
Investigating Accountants' report for demerger of Sierra Rutile
Other assurance services
Other services
Tax compliance and advisory services
Other advisory services
2022
$000
650
-
650
352
149
501
52
67
119
2021
$000
587
114
701
-
67
67
10
30
40
Total services provided by PwC
1,270
808
(b) Other auditors and their related network firms
Audit and review of financial statements
Other compliance and advisory services
294
16
310
377
5
382
Share-based compensation benefits are provided to employees via the Equity Incentive Plan (specifically, the
Executive Incentive Plan, Long Term Incentive Plan and Short Term Incentive Plan). Information relating to this
scheme is set out in the Remuneration Report.
The fair value of shares granted is determined based on market prices at grant date, taking into account the
terms and conditions upon which those shares were granted. The fair value is recognised as an expense through
profit or loss on a straight-line basis over the vesting period for each respective plan.
The fair value of share rights is independently determined using a Monte Carlo simulation that takes into account
the exercise price, the term of the share right, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk free interest rate of the term of the
share right. The fair value of the Long Term Incentive Plan (LTIP - TSR tranche) and Executive Incentive Plan also
take into account the Company's predicted share prices against the comparator group performance at vesting
A credit to the share-based payments expense arises where unvested entitlements lapse on resignation or the
non-fulfilment of the vesting conditions that do not relate to market performance. Payroll tax payable on the grant
of restricted shares or share rights is recognised as a component of the share-based payments expense when
The share-based payment expense recognised in profit or loss of $15.7 million (2021: $11.1 million) results from
several schemes summarised below.
Grant date
Vesting date
Fair
value
$
Shares /
rights at
31 Dec 22
Expense
2022
$m
Shares /
rights at
31 Dec 21
Expense
2021
$m
Mar-23
Mar-22
Mar-21
Mar-20
Mar-19
Mar-24/25
Mar-23/24
Mar-22/23
Mar-21/22/23
Mar-20/21
9.53
10.10
6.62
9.30
7.62
7.62
-
-
-
-
-
2.2
1.8
0.2
-
-
6.0
5.5
15.7
-
-
-
-
-
-
-
2.0
0.7
0.4
0.1
5.2
2.7
11.1
EIP (ii)
Mar-18/19/20/21/22 Mar-23/24/25/26
2,563,333
3,212,070
Restricted Share Plan (iii)
(i) Short Term Incentive Plan (STIP)
The fair value of the STIP is determined as the volume weighted average price of ordinary shares over the five
trading days following the release of the Company’s annual results.
date.
paid.
Schemes
STIP (i)
2022
2021
2020
2019
2018
150
151
150
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
29 SHARE-BASED PAYMENTS
Share-based compensation benefits are provided to employees via the Equity Incentive Plan (specifically, the
Executive Incentive Plan, Long Term Incentive Plan and Short Term Incentive Plan). Information relating to this
scheme is set out in the Remuneration Report.
The fair value of shares granted is determined based on market prices at grant date, taking into account the
terms and conditions upon which those shares were granted. The fair value is recognised as an expense through
profit or loss on a straight-line basis over the vesting period for each respective plan.
The fair value of share rights is independently determined using a Monte Carlo simulation that takes into account
the exercise price, the term of the share right, the impact of dilution, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk free interest rate of the term of the
share right. The fair value of the Long Term Incentive Plan (LTIP - TSR tranche) and Executive Incentive Plan also
take into account the Company's predicted share prices against the comparator group performance at vesting
date.
A credit to the share-based payments expense arises where unvested entitlements lapse on resignation or the
non-fulfilment of the vesting conditions that do not relate to market performance. Payroll tax payable on the grant
of restricted shares or share rights is recognised as a component of the share-based payments expense when
paid.
The share-based payment expense recognised in profit or loss of $15.7 million (2021: $11.1 million) results from
several schemes summarised below.
Schemes
STIP (i)
2022
2021
2020
2019
2018
Grant date
Vesting date
Mar-23
Mar-22
Mar-21
Mar-20
Mar-19
Mar-24/25
Mar-23/24
Mar-22/23
Mar-21/22/23
Mar-20/21
EIP (ii)
Mar-18/19/20/21/22 Mar-23/24/25/26
Restricted Share Plan (iii)
Fair
value
$
Shares /
rights at
31 Dec 22
Expense
2022
$m
Shares /
rights at
31 Dec 21
Expense
2021
$m
9.53
10.10
6.62
9.30
7.62
7.62
-
-
-
-
-
2,563,333
-
-
-
-
-
3,212,070
-
2.2
1.8
0.2
-
-
6.0
5.5
15.7
-
2.0
0.7
0.4
0.1
5.2
2.7
11.1
(i) Short Term Incentive Plan (STIP)
The fair value of the STIP is determined as the volume weighted average price of ordinary shares over the five
trading days following the release of the Company’s annual results.
151
151
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(ii) Executive Incentive Plan (EIP)
Equity awarded under the Executive Incentive Plan is granted on 1 March each year. The number of restricted
shares and performance rights to be awarded is determined based on a volume weighted average market price
of Iluka shares for the five days following the release of the full year results.
The fair value at grant date for the Executive Incentive Plan (EIP) with market vesting conditions takes into
account the exercise price of $nil (2021: $nil), the share price at grant date of $10.76 for KMP other than T
O’Leary and $12.28 for T O’Leary (2021: $7.77), the expected share price volatility (based on historical volatility)
of 38% (2021: 38%), the expected dividend yield of 0% (2021: 0%) the risk free rate of return of 1.89% for KMP
other than T O’Leary and 2.64% for T O’Leary (2021: 0.6%), and vesting dates for a period of four years
commencing one year after the grant date. The fair value of the TSR tranche also takes into account the
Company’s predicted share prices against the comparator group performance at vesting date. The fair value at
grant date for the Executive Incentive Plan (EIP) with non-market vesting conditions is calculated as volume
weighted average market price of Iluka shares for the five days following the end of performance year.
No expense has been recognised in respect of additional rights granted as part of the demerger of Sierra Rutile,
because they did not increase the total fair value of the share-based payment arrangement and were not
otherwise beneficial to recipients.
(iii) Restricted share plan
No restricted shares were issued to eligible employees (2021: no restricted shares issued to eligible employees)
who participated in the plan.
30 POST-EMPLOYMENT BENEFIT OBLIGATIONS
(a) Superannuation plans
(i) USA
All employees of the United States (US) operations are entitled to benefits from the US operations' pension plans
on retirement, disability or death. The US operations have one defined benefit plan and one defined contribution
plan. The defined benefit plan provides a monthly benefit based on average salary and years of service. The
defined contribution plan receives an employee's elected contribution and an employer's match-up to a fixed
percentage. The entity's legal or constructive obligation is limited to these contributions.
(ii) Sierra Rutile Limited - demerged
Superannuation plans associated with SRL have been derecognised in the current reporting period as a result of
the demerger of Sierra Rutile. Comparative post-employment benefit amounts in relation to the statement of
financial position have not been restated, however profit or loss items have been reclassified to discontinued
operations outlined in note 23.
(b) Financial position
A $7.6 million deficit (2021: $26.6 million deficit) for the Group's defined post employment benefit obligation,
based on information supplied from the plans' actuarial advisors, is included in non-current provisions in note 8.
The table below provides a summary of the net financial position at 31 December for the past five years:
Defined benefit plan obligation
Plan assets
Deficit
2022
$m
(33.8)
26.2
(7.6)
2021
$m
(57.5)
30.9
(26.6)
2020
$m
(51.8)
25.0
(26.8)
2019
$m
(46.7)
24.3
(22.4)
2018
$m
(39.4)
21.5
(17.9)
(c) Defined benefits superannuation expense
In 2022, $1.1 million (2021: $1.1 million) was recognised in expenses for the year in respect of the defined benefit
plans.
Other disclosures in respect of retirement benefit obligations required by AASB 119 are not included in the
financial report as the directors do not consider them to be material to an understanding of the financial position
and performance of the Group.
31 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
Profit for the year
Depreciation and amortisation
Amortisation of right-of-use-assets
Doubtful debts/(reversed)
Net exchange differences and other
Net loss (gain) on disposal of property, plant and equipment
Rehabilitation and mine closure provision discount unwind
Non-cash share-based payments expense
Amortisation of deferred borrowing costs
Equity accounted share of profit
Impairment - exploration asset
Inventory NRV write-down
Changes in rehabilitation provisions for closed sites
Borrowing costs on leases
Demerger loss
Impairment reversal
Put option revaluation gain/(loss)
Change in operating assets and liabilities
Decrease/(increase) in receivables
(Increase)/decrease in inventories
Increase/(decrease) in net current tax liability
(Increase) in net deferred tax
(Decrease) in payables
(Decrease) in provisions
Net cash inflow from operating activities
Notes
9
10
8
29
15
24
7
14
8
22
2022
$m
588.5
136.2
7.3
-
-
-
-
-
(6.6)
(5.0)
15.7
(29.6)
0.9
9.5
1.0
23.6
(33.3)
13.5
(5.0)
106.7
(100.8)
(69.3)
(51.8)
601.5
2021
$m
365.9
165.4
6.2
(1.6)
(1.5)
(1.8)
8.9
11.1
0.7
(18.4)
6.3
11.4
(60.8)
-
-
-
3.9
(153.9)
49.3
(0.8)
(9.9)
(19.7)
(5.8)
354.9
152
153
152
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(c) Defined benefits superannuation expense
In 2022, $1.1 million (2021: $1.1 million) was recognised in expenses for the year in respect of the defined benefit
plans.
Other disclosures in respect of retirement benefit obligations required by AASB 119 are not included in the
financial report as the directors do not consider them to be material to an understanding of the financial position
and performance of the Group.
31 RECONCILIATION OF PROFIT AFTER INCOME TAX TO NET CASH INFLOW FROM
OPERATING ACTIVITIES
Profit for the year
Depreciation and amortisation
Amortisation of right-of-use-assets
Net loss (gain) on disposal of property, plant and equipment
Doubtful debts/(reversed)
Net exchange differences and other
Rehabilitation and mine closure provision discount unwind
Non-cash share-based payments expense
Amortisation of deferred borrowing costs
Equity accounted share of profit
Impairment - exploration asset
Inventory NRV write-down
Changes in rehabilitation provisions for closed sites
Borrowing costs on leases
Demerger loss
Impairment reversal
Put option revaluation gain/(loss)
Change in operating assets and liabilities
Decrease/(increase) in receivables
(Increase)/decrease in inventories
Increase/(decrease) in net current tax liability
(Increase) in net deferred tax
(Decrease) in payables
(Decrease) in provisions
Net cash inflow from operating activities
Notes
9
10
8
29
15
24
7
14
8
22
2022
$m
588.5
136.2
7.3
-
-
(6.6)
(5.0)
15.7
-
(29.6)
-
0.9
9.5
1.0
23.6
(33.3)
-
13.5
(5.0)
106.7
(100.8)
(69.3)
(51.8)
601.5
2021
$m
365.9
165.4
6.2
(1.6)
(1.5)
(1.8)
8.9
11.1
0.7
(18.4)
6.3
11.4
(60.8)
-
-
-
3.9
(153.9)
49.3
(0.8)
(9.9)
(19.7)
(5.8)
354.9
153
153
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
32 KEY MANAGEMENT PERSONNEL
(a) Key Management Personnel
Key Management Personnel of the Group comprise directors of Iluka Resources Limited as well as other specific
employees of the Group who met the following criteria: "personnel who have authority and responsibility for
planning, directing and controlling the activities of the Group, either directly or indirectly."
(i) Key Management Personnel compensation
Detailed information about the remuneration received by each Key Management Person is provided in the
Remuneration Report on pages 72 to 97.
The below provides a summary:
-
Short-term benefits
Post-employment benefits
Termination benefits
Share-based payments
Total
2022
$000
5,295
195
-
3,262
8,752
2021
$000
4,962
199
49
590
5,800
(b) Transactions with Key Management Personnel
There were no transactions between the Group and Key Management Personnel that were outside of the nature
described below:
(i)
(ii)
(iii)
occurrence was within a normal employee, customer or supplier relationship on terms and conditions no
more favourable than those it is reasonable to expect the Group would have adopted if dealing at arms
length with an unrelated individual;
information about these transactions does not have the potential to adversely affect the decisions about
the allocation of scarce resources made by users of the financial report, or the discharge of
accountability by the Key Management Personnel; and
the transactions are trivial or domestic in nature.
33 PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information for Iluka Resources Limited
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Contributed equity
Other reserves
Profit reserve¹
Accumulated loss
space
Profit/(loss) for the year
2022
$m
2021
$m
821.1
1,529.3
2,350.4
221.8
1,043.2
1,265.0
461.4
1,495.0
1,956.4
-
814.0
814.0
1,085.4
1,142.4
1,132.5
21.4
594.9
(663.4)
1,085.4
1,155.5
23.4
626.9
(663.4)
1,142.4
184.5
(469.2)
2.5
187.0
2.4
(466.8)
Other comprehensive income
Changes in the fair value of cash flow hedges, net of tax
Total comprehensive income
¹Profits have been appropriated to a profits reserve for future dividend payments.
(b) Contingent liabilities of the parent entity
The parent had contingent liabilities for performance commitments and guarantees of $12.2 million as at 31
December 2022 (2021: $12.2 million).
(c) Contractual commitments for the acquisition of property, plant or equipment
As at 31 December 2022, the parent entity had contractual commitments for the acquisition of property, plant or
The financial information for the parent entity has been prepared on the same basis as the consolidated financial
equipment totalling $24.3 million (2021: $3.1 million).
(d) Parent entity financial information
statements, except as set out below.
(i)
Investments in subsidiaries
Investments in subsidiaries are accounted for at cost.
(ii) Tax consolidation legislation
Iluka Resources Limited and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation as of 1 January 2004. On adoption of the tax consolidation legislation, the entities in the
tax consolidation group entered into a tax sharing agreement which limits the joint and several liability of the
wholly-owned entities in the case of a default by the head entity, Iluka Resources Limited.
154
155
154
33 PARENT ENTITY FINANCIAL INFORMATION
(a) Summary financial information for Iluka Resources Limited
Balance sheet
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders' equity
Contributed equity
Other reserves
Profit reserve¹
Accumulated loss
space
Profit/(loss) for the year
Other comprehensive income
Changes in the fair value of cash flow hedges, net of tax
Total comprehensive income
¹Profits have been appropriated to a profits reserve for future dividend payments.
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
2022
$m
2021
$m
821.1
1,529.3
2,350.4
221.8
1,043.2
1,265.0
461.4
1,495.0
1,956.4
-
814.0
814.0
1,085.4
1,142.4
1,132.5
21.4
594.9
(663.4)
1,085.4
1,155.5
23.4
626.9
(663.4)
1,142.4
184.5
(469.2)
2.5
187.0
2.4
(466.8)
(b) Contingent liabilities of the parent entity
The parent had contingent liabilities for performance commitments and guarantees of $12.2 million as at 31
December 2022 (2021: $12.2 million).
(c) Contractual commitments for the acquisition of property, plant or equipment
As at 31 December 2022, the parent entity had contractual commitments for the acquisition of property, plant or
equipment totalling $24.3 million (2021: $3.1 million).
(d) Parent entity financial information
The financial information for the parent entity has been prepared on the same basis as the consolidated financial
statements, except as set out below.
Investments in subsidiaries
(i)
Investments in subsidiaries are accounted for at cost.
(ii) Tax consolidation legislation
Iluka Resources Limited and its wholly-owned Australian controlled entities have implemented the tax
consolidation legislation as of 1 January 2004. On adoption of the tax consolidation legislation, the entities in the
tax consolidation group entered into a tax sharing agreement which limits the joint and several liability of the
wholly-owned entities in the case of a default by the head entity, Iluka Resources Limited.
155
155
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 ILUKA RESOURCES LIMITED
31 DECEMBER 2022
34 RELATED PARTY TRANSACTIONS
The only related party transactions are with Directors and Key Management Personnel (refer note 32). Details of
material controlled entities are set out in note 22, and details of the Group's equity accounted associate are set
out in note 24. The ultimate Australian controlling entity and the ultimate parent entity is Iluka Resources Limited.
35 NEW AND AMENDED STANDARDS
New standards and amendments adopted
The Group has applied AASB 2020-3 Amendments to Australian Accounting Standards - Annual Improvements
2018- 2020 and Other Amendments (which amends AASB 1, AASB 3, AASB 9, AASB 116, AASB 137 and AASB
141) for the first time for the current reporting period commencing 1 January 2022. The amendments did not
have any impact on the amounts recognised in prior periods and are not expected to significantly affect the
current or future periods
Forthcoming standards and amendments not yet adopted
There are no forthcoming standards and amendments that are expected to have a material impact on the entity
in the current or future reporting periods, or on foreseeable future transactions.
156
156
DIRECTORS' DECLARATION
In the directors' opinion:
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
ILUKA RESOURCES LIMITED
31 DECEMBER 2022
(a)
DIRECTORS' DECLARATION
the financial statements and notes set out on pages 99 to 156 are in accordance with the Corporations
Act 2001, including:
ILUKA RESOURCES LIMITED
complying with Accounting Standards and other mandatory professional reporting requirements as
31 DECEMBER 2022
detailed above, and the Corporations Regulations 2001; and
In the directors' opinion:
(i)
(b)
(a)
(c)
(b)
In the directors' opinion:
(a)
DIRECTORS' DECLARATION
the financial statements and notes set out on pages 99 to 156 are in accordance with the Corporations
(ii)
Act 2001, including:
giving a true and fair view of the Group's financial position as at 31 December 2022 and of its
performance for the financial year ended on that date, and
giving a true and fair view of the Group's financial position as at 31 December 2022 and of its
performance for the financial year ended on that date, and
complying with Accounting Standards and other mandatory professional reporting requirements as
(i)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
detailed above, and the Corporations Regulations 2001; and
become due and payable, and
the financial statements and notes set out on pages 99 to 156 are in accordance with the Corporations
giving a true and fair view of the Group's financial position as at 31 December 2022 and of its
(ii)
at the date of this declaration, there are reasonable grounds to believe that the members of the extended
Act 2001, including:
performance for the financial year ended on that date, and
closed group identified in note 24 will be able to meet any obligations or liabilities to which they are, or
complying with Accounting Standards and other mandatory professional reporting requirements as
(i)
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
may become, subject by virtue of the deed of cross guarantee described in note 24.
detailed above, and the Corporations Regulations 2001; and
become due and payable, and
Note 2 confirms that the financial statements also comply with International Financial Reporting Standards as
(ii)
at the date of this declaration, there are reasonable grounds to believe that the members of the extended
(c)
issued by the International Accounting Standards Board.
closed group identified in note 24 will be able to meet any obligations or liabilities to which they are, or
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they
(b)
may become, subject by virtue of the deed of cross guarantee described in note 24.
by section 295A of the Corporations Act 2001.
become due and payable, and
Note 2 confirms that the financial statements also comply with International Financial Reporting Standards as
This declaration is made in accordance with a resolution of the directors.
at the date of this declaration, there are reasonable grounds to believe that the members of the extended
(c)
issued by the International Accounting Standards Board.
closed group identified in note 24 will be able to meet any obligations or liabilities to which they are, or
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required
may become, subject by virtue of the deed of cross guarantee described in note 24.
by section 295A of the Corporations Act 2001.
Note 2 confirms that the financial statements also comply with International Financial Reporting Standards as
This declaration is made in accordance with a resolution of the directors.
issued by the International Accounting Standards Board.
R Cole
Chairman
The directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required
by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
R Cole
Chairman
T O'Leary
Managing Director
21 February 2023
R Cole
Chairman
T O'Leary
Managing Director
21 February 2023
T O'Leary
Managing Director
21 February 2023
157
157
157
157
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 Independent auditor’s report
To the members of Iluka Resources Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Iluka Resources Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 31 December 2022 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
●
●
●
●
●
●
●
the consolidated balance sheet as at 31 December 2022
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of profit or loss for the year then ended
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the financial statements, which include significant accounting policies and other
explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
Brookfield Place, 125 St Georges Terrace, PERTH WA 6000, GPO Box D198, PERTH WA 6840
T: +61 8 9238 3000, F: +61 8 9238 3999
Liability limited by a scheme approved under Professional Standards Legislation.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
● For the purpose of our audit we used overall Group materiality of $35 million, which represents
approximately 5% of the Group’s profit before tax from continuing operations.
● We applied this threshold, together with qualitative considerations, to determine the scope of our
audit and the nature, timing and extent of our audit procedures and to evaluate the effect of
misstatements on the financial report as a whole.
● We chose Group profit before tax from continuing operations because, in our view, it is the
benchmark against which the performance of the Group is most commonly measured.
● We utilised a 5% threshold based on our professional judgement, noting it is within the range of
commonly acceptable thresholds.
Audit Scope
● Our audit focused on where the Group made subjective judgements; for example, significant
accounting estimates involving assumptions and inherently uncertain future events.
● The Group's operational and financial processes are managed by a corporate function in Perth,
where substantially all of our audit procedures were performed.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the Audit
and Risk Committee.
Key audit matter
How our audit addressed the key audit matter
Mine Closure and Rehabilitation Provisions
(Refer to note 8 to the financial statements)
As a result of its mining and processing
operations, the Group is obliged to restore and
rehabilitate the environment disturbed by these
operations and remove related infrastructure.
Rehabilitation activities are governed by a
combination of legislative requirements and
Group policies. The Group recognised provisions
for rehabilitation and closure obligations of
$735.4 million as at 31 December 2022.
This was a key audit matter given the
determination of these provisions required
judgement by the Group in the assessment of the
nature and extent of the work to be performed,
the future cost and timing of performing the work
and economic assumptions such as the discount
rate applied to future liabilities.
We performed the following procedures over the
Group’s closure and rehabilitation provision,
amongst others:
Developed an understanding of how the
Group identified the relevant methods,
assumptions or sources of data, and the
need for changes in them, that are
appropriate for developing the rehabilitation
provision in the context of the Australian
Accounting Standards.
Evaluated the competency and
independence of the experts retained by the
Group to assist with the assessment of its
rehabilitation obligations.
We assessed provision movements in the
year relating to closure and rehabilitation
obligations to determine whether they were
consistent with our understanding of the
Group’s operations and associated
rehabilitation plans.
Compared the estimated future rehabilitation
costs to actual costs being incurred at a
sample of the Group’s sites for similar
activities to assess the extent to which
rehabilitation estimates take into account
current experience, and tested on a sample
basis the costs to comparable data from
external parties and management’s experts.
Assessed the ability of the Group to make
reliable estimates of the extent of future
rehabilitation expenditure by comparing
actual cash outflows in 2022, where
applicable, to those forecast as part of the
provision in previous years.
Assessed the appropriateness of the
discount rates utilised in calculating the
provision by comparing them to current
market information.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 31 December 2022, but does not include
the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our
auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 72 to 97 of the directors’ report for the
year ended 31 December 2022.
In our opinion, the remuneration report of Iluka Resources Limited for the year ended 31 December
2022 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Helen Bathurst
Partner
Perth
21 February 2023
PHYSICAL,
FINANCIAL AND
CORPORATE
INFORMATION
In this section:
»
5 year summary
»
»
»
»
Operating mines physical
data
Ore reserves & mineral
resources statement
Shareholder and investor
information
Corporate information
163
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
PHYSICAL, FINANCIAL
AND CORPORATE
INFORMATION
5 Year Summary
Production volumes (kt)
- Zircon
- Rutile
- Synthetic rutile
Total Z/R/SR
- Ilmenite
- Monazite concentrate
Sales volumes (kt)
- Zircon
- Rutile
- Synthetic rutile
Total Z/R/SR
- Ilmenite
- Monazite concentrate
Weighted average annual prices (US$/t)
- Zircon (premium and standard)
- Zircon (all products)
- Rutile (excluding HYTI and TIC)
- Synthetic rutile
2022
2021
2020
2019
2018
302.7
139.1
237.6
679.4
590.9
0
302.7
139.1
237.6
679.4
590.9
0
1,943
1,850
1,550
324.2
196.6
198.7
719.5
563.7
57.7
324.2
196.6
198.7
719.5
563.7
57.7
1,414
1,330
1,264
185.2
172.6
227.4
585.2
455.9
44.4
185.2
172.6
227.4
585.2
455.9
44.4
1,319
1,217
1,220
322.1
184.1
196.2
702.4
318.6
0
322.1
184.1
196.2
702.4
318.6
0
1,487
1,380
1,142
348.6
163.2
219.9
731.7
395.1
0
348.6
163.2
219.9
731.7
395.1
0
1,351
1,321
952
Not
disclosed
Not
disclosed
Not
disclosed
Not
disclosed
Not
disclosed
Average AUD:USD spot exchange rate (cents)
69.5
75.2
69.1
69.5
74.8
Unit revenue and cash cost ($/t)
Revenue per tonne Z/R/SR sold (A$/t)
Unit cash costs of production per tonne Z/R/SR produced
excluding by-products
Unit cost of goods sold per tonne of Z/R/SR
2022
2,215
938
1,031
2021
2020
2019
2018
1,593
1,625
1,654
1,415
777
916
918
1,032
753
889
606
750
164
Depreciation and amortisation
(145.4)
(171.2)
(184.8)
(163.2)
Inventory movement – non-cash production costs
9.3
(12.6)
39.9
Summary financials ($m)
Z/R/SR revenue
Ilmenite and other revenue
Revenue from operations
Cash costs of production
Inventory movement – cash costs of production
Restructure and idle capacity charges
Government royalties
Marketing and selling costs
Asset sales and other income
Corporate and other costs
Major projects, exploration and innovation
Mineral sands EBITDA
Mining Area C EBITDA
Underlying Group EBITDA1
Rehabilitation and holding costs for closed sites
Demerger loss and transaction costs
Gain on demerger of Deterra Royalties
Significant non-cash items
Net interest and finance charges
Income tax (expense) benefit
Net profit (loss) after tax for the period (NPAT)
Operating cash flow
Capital expenditure (capex)
Free cash (outflow) inflow2 ($m)
Net (debt) cash
Capital and dividends
Ordinary shares on issue (millions)
Dividends per share in respect of the year (cents)
Franking level %
Opening year share price ($)3
Closing year share price ($)3
2022
2021
2020
2019
2018
1,594.5
1,381.9
841.0
1,128.7
1,179.0
132.9
103.9
106.0
64.4
65.1
1,727.4
1,485.8
947.0
1,193.1
1,244.1
(650.1)
(579.2)
(558.7)
(539.6)
(455.1)
27.0
(14.9)
(48.2)
(31.5)
0.9
(71.2)
(37.0)
916.8
-
946.4
(11.2)
(23.6)
(67.0)
(33.4)
(38.0)
(34.4)
2.0
(64.3)
(45.2)
633.9
-
142.3
(20.9)
(22.3)
(27.7)
(1.5)
(54.6)
(62.3)
342.0
81.1
652.3
423.1
60.8
7.2
-
(13.3)
63.4
(19.7)
(39.4)
(35.0)
(3.5)
(64.5)
(25.7)
530.9
85.1
616.0
(3.2)
-
-
-
-
-
2,260.1
-
(414.3)
15.5
-
0.6
(5.7)
(7.1)
(51.8)
(30.8)
(213.9)
(139.1)
(95.5)
(298.7)
(148.1)
365.7
2,410.0
(275.8)
183.8
408.1
(68.5)
(24.7)
(38.1)
(38.1)
1.8
(48.1)
(30.1)
544.5
55.6
600.1
4.6
-
(93.6)
(28.3)
-
-
303.9
594.2
588.5
711.1
(152.6)
444.3
488.6
2022
424.5
45
100
9.76
9.53
527.7
(53.6)
299.5
294.8
2021
422.0
24
100
6.58
9.73
(71.2)
(197.5)
(311.5)
36.3
50.2
2020
422.8
2
100
4.7
6.49
139.7
304.4
43.3
1.8
2019
422.6
13
100
3.8
4.73
2018
422.4
29
100
5.09
3.87
165
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 Financial ratios
2022
2021
2020
2019
2018
Underlying Group EBITDA/revenue margin %
Mineral sands EBITDA/revenue margin %
Basic earnings (loss) per share (cents)
Free cash flow per share (cents)
Return on shareholders’ equity4 %
Return on capital5 %
Gearing (net debt/net debt + equity) %
54.8
53.1
138.6
104.7
32.8
88.8
n/a
43.9
42.7
86.7
71
25.9
69.1
n/a
41.2
36.1
570.4
9
283.7
311.3
n/a
51.6
44.5
-71
33
-24.5
6.8
n/a
48.2
43.8
72.2
72
31.8
54.0
n/a
Financial position as at 31 December ($m)
2022
2021
2020
2019
2018
Total assets
Total liabilities
Net assets
3,001.8
2,636.2
2,361.7
1,894.5
2,211.9
(1,107.0)
(1,041.6)
(1,069.4)
(1,182.8)
(1,101.9)
1,894.8
1,594.6
1,292.3
711.6
1,110.0
Shareholders’ equity
1,894.6
1,594.6
1,292.3
711.6
1,110.0
Net tangible asset backing per share ($)
3.27
2.60
3.00
1.60
2.10
Employees, as at 31 December
Full-time equivalent employees
2022
950
2021
3,252
2020
3,354
2019
3,427
2018
3,421
Iluka Ore Reserves and Mineral Resources
2022
2021
2020
2019
2018
Mineral Resources In Situ HM million tonnes
Ore Reserves In Situ HM million tonnes
HM Grade (%) Ore Reserves
Assemblage6 (%)
Zircon
Rutile
Ilmenite
Monazite + xenotime
Notes:
176
9.0
5.6
17
3
53
2
185
10.6
5.8
17
3
55
2
119
11.2
5.7
17
3
55
-
165
13
5.6
18
3
56
-
168
15.7
5.8
17
4
54
-
(1) Underlying Group EBITDA excludes non-recurring adjustments including write-downs, Sierra Rutile Limited transaction costs, the gain on the
demerger of Deterra Royalties, and changes to rehabilitation provisions for closed sites. Underlying EBITDA also excludes Iluka’s share of Metalysis
Ltd’s losses, which are non-cash in nature.
(2)
Free cash flow is determined as cash flow before any debt refinance costs, proceeds/repayment of borrowings and dividends paid in the year.
(3) Share prices prior to November 2020 have been adjusted by a factor of 0.51 for the capital reduction from the Deterra Royalties demerger.
(4) Calculated as NPAT for the year as a percentage of the average monthly shareholders’ equity over the year.
(5) Calculated as EBIT for the year as a percentage of average monthly capital employed for the year.
(6) Mineral assemblage is reported as a percentage of the in situ heavy mineral content of the Ore Reserve.
166
Operating mines and data
12 MONTHS TO 31 DECEMBER 2022
Jacinth-
Ambrosia/
Mid-west
Cataby /
South west
Australia Total
Sierra
Leone
Idle
Operations
Group
Total 2022
Group Total
2021
Mining
Overburden moved kbcm
2,946
9,543
12,489
860
-
13,349
11,103
Ore mined kt
10,614
7,890
18,504
6,016
-
24,520
27,676
Ore fed/treated kt
9,193
9,533
18,726
5,683
-
24,409
29,662
Ore treated grade HM %
VHM treated grade %
Concentrating
4.2%
3.9%
HMC produced kt
351
5.3%
4.6%
501
415
4.8%
4.3%
852
734
3.1%
2.5%
-
-
4.4%
3.9%
3.8%
3.4%
197
-
1,049
1,106
138
-
872
920
VHM produced kt
VHM in HMC assemblage %
Zircon
Rutile
Ilmenite
320
91.0%
52.7%
8.5%
82.8%
86.2%
69.8%
9.9%
6.5%
27.5%
4.2%
7.3%
45.2%
29.8%
66.4%
51.3%
20.5%
-
-
-
-
83.1%
23.1%
14.4%
45.6%
83.2%
16.0%
17.5%
49.8%
HMC processed kt
458
566
1,024
200
-
1,224
1,235
Finished product¹ kt
Zircon
Rutile
Ilmenite (saleable/
upgradeable)
244
55
299
4
-
303
21
34
55
84
-
139
137
419
556
35
-
591
Synthetic rutile produced
-
238
238
Monazite Concentrate
-
-
-
-
-
Notes:
-
238
-
-
58
324
197
564
199
(1)
Finished product includes material from heavy mineral concentrate (HMC) initially processed in prior periods.
EXPLANATORY COMMENTS ON TERMINOLOGY
Overburden moved (bank cubic metres) refers to material moved to enable mining of an ore body.
Ore mined (thousands of tonnes) refers to material moved containing heavy mineral ore.
Ore treated grade HM % refers to percentage of heavy mineral (HM) in the ore processed through the mining unit.
VHM treated grade % refers to percentage of valuable heavy mineral (VHM) - titanium dioxide (rutile and ilmenite), and zircon in the ore processed through
the mining unit.
Concentrating refers to the production of heavy mineral concentrate (HMC) through a wet concentrating process at the mine site, which is then transported
for final processing into finished product at a mineral processing plant.
HMC produced refers to HMC, which includes the valuable heavy mineral concentrate (zircon, rutile, ilmenite) as well as other non-valuable heavy minerals
(gangue).
VHM produced refers to an estimate of valuable heavy mineral in heavy mineral concentrate expected to be processed.
VHM produced and the VHM assemblage - provided to enable an indication of the valuable heavy mineral component in HMC.
HMC processed provides an indication of material emanating from each mining operation to be processed. Finished product is provided as an indication of
the finished production (zircon, rutile, ilmenite – both saleable and upgradeable) attributable to the VHM in HMC production streams from the various mining
operations. Finished product levels are subject to recovery factors which can vary. The difference between the VHM produced and finished product reflects
the recovery level by operation, as well as processing of finished material/ concentrate in inventory. Ultimate finished product production (rutile, ilmenite, and
zircon) is subject to recovery loss at the processing stage – this may be in the order of 10%.
Ilmenite is produced for sale or as a feedstock for synthetic rutile production. Typically, 1 tonne of upgradeable ilmenite will produce between 0.56 to 0.60
tonnes of synthetic rutile. Iluka also purchases external ilmenite for its synthetic rutile production process.
167
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 Ore reserves and Mineral resources statement
Rutile Ore Reserves & Resources (Sierra Leone)
The Ore Reserves and Mineral Resources for Sierra Leone have been removed from Iluka’s Mineral Resource and Ore Reserve Statement
following the demerger of Sierra Rutile Limited. Iluka has no remaining interest in the Sierra Leone Mineral Resources and Ore Reserves
which are now wholly owned by the Sierra Rutile Holdings Limited (SRX) entity. The Sierra Rutile Limited demerger resulted in a reduction
in Iluka’s rutile Ore Reserves of 3.1 million tonnes (1.5% rutile grade) and Mineral Resources of 8.1 million tonnes (1.1% rutile grade)
compared to Iluka’s Ore Reserve and Mineral Resource holdings for the previous period (31 December 2021).
HM Ore Reserves
ILUKA HM ORE RESERVE BREAKDOWN BY COUNTRY, REGION AND JORC CATEGORY
AT 31 DECEMBER 2022
Summary of Ore Reserves for Iluka(1,2,3,6)
HM Assemblage(4)
Ore
In Situ HM
HM
Ilmenite
Zircon
Rutile
(M+X)(7)
Change
HM
Tonnes
Tonnes
Grade
Grade
Grade
Grade
Grade
Tonnes
Millions
Millions
(%)
(%)
(%)
(%)
(%)
Millions
49
2
51
75
36
111
124
38
162
1.4
0.0
1.5
5.0
2.5
7.6
6.4
2.6
9.0
2.9
2.3
2.9
6.7
7.0
6.8
5.2
6.8
5.6
23
18
23
57
63
59
50
62
53
51
56
51
11
11
11
20
12
17
5
3
5
4
2
3
4
2
3
0.4
0.6
0.4
3.0
1.9
2.6
2.5
1.8
2.3
(0.2)
(1.3)
(1.6)
Country
Region
Australia Eucla Basin
Total
Eucla Basin
Ore
Reserve
Category
Proved
Probable
Perth Basin
Proved
Probable
Total
Total
Total
Perth
Basin(5)
Proved
Probable
Grand Total
Notes:
(1) Competent Persons - Ore Reserves: A Walkenhorst (MAusIMM). The Ore Reserves were prepared in accordance with the JORC Code (2012 Edition),
other than the Ore Reserves for the Perth Basin South West deposits, which have not materially changed and were estimated in accordance with the JORC
Code (2004 Edition). Iluka Resources is undertaking further work in order to report these estimates in accordance with the JORC Code (2012 Edition).
(2) Ore Reserves are a sub-set of Mineral Resources.
(3) Rounding may generate differences in last decimal place.
(4) Mineral assemblage is reported as a percentage of in situ HM content.
(5) Rutile component in Perth Basin South West operations is sold as a leucoxene product.
(6) The quoted figures are stated as at 31 December 2022 and have been depleted for all production conducted to this date.
(7) M+X comprise rare earth element bearing minerals monazite + xenotime.
168
Ore Reserves are estimated using all available geological and relevant drill hole and assay data, including mineralogical sampling and test
work on mineral recoveries and final product qualities. Reserve estimates are determined by the consideration of all of the “Modifying
Factors” in accordance with the JORC Code 2012 guidelines, and for example, may include but are not limited to, product prices, mining
costs, metallurgical recoveries, environmental consideration, access and approvals. These factors may vary significantly between
deposits.
For the year ending 2022, HM Ore Reserves decreased by 1.6Mt HM associated with mining depletion and adjustments, down from
10.6Mt HM to 9.0Mt HM.
The main factors contributing to the movement in Iluka’s HM Ore Reserves during 2022 (excluding the demerger of Sierra Rutile Limited)
include the following:
»
»
The Eucla Basin Ore Reserves decreased by 0.2Mt HM associated with mining depletion, pit optimisation and re-design at Jacinth
(-0.2Mt) and Ambrosia (-0.1Mt).
The Perth Basin Ore Reserves decreased by 1.3Mt HM as a result of mine depletion, pit optimisation and adjustment at Cataby
(-0.5Mt) and MSP By-Product Stockpile (+0.05Mt) and the removal of Yarloop (-0.8Mt).
HM Ore Reserves Mined and Adjusted
Summary of Ore Reserve Depletion(1)
Country
Region
Category
Tonnes
Grade
Tonnes
Tonnes(2)
Tonnes
Grade
Tonnes(3)
In Situ HM In Situ HM In Situ HM In Situ HM In Situ HM In Situ HM In Situ HM
Millions
(%)
Millions
Millions
Millions
(%)
Millions
2021
2021
Mined 2022
Adjusted
2022
2022
2022
Net
Change
Australia
Eucla Basin
Total
Eucla Basin
Active
Mines
Active
Mines
Perth Basin
Non-Active
Sites
Total
Perth Basin
Total
Active Mines
Total
Non-Active
Sites
1.7
1.7
7.0
1.9
8.9
8.7
1.9
Total
Ore Reserves
10.6
3.2
3.2
6.3
11.4
6.9
5.2
11.4
5.8
(0.4)
(0.4)
(0.5)
0.1
0.1
(0.8)
-
(0.0)
(0.5)
(0.9)
-
(0.9)
(0.8)
(0.7)
(0.0)
(0.7)
1.5
1.5
5.7
1.9
7.6
7.2
1.9
9.0
2.9
2.9
5.7
(0.2)
(0.2)
(1.3)
17.8
(0.0)
6.8
4.7
17.8
5.6
(1.3)
(1.5)
(0.0)
(1.6)
Notes:
(1) Rounding may generate differences in last decimal place.
(2) Adjusted figure includes write-downs and modifications in mine design.
(3) Net change includes depletion by mining and adjustments.
169
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
HM Mineral Resources
ILUKA MINERAL RESOURCE BREAKDOWN BY COUNTRY, REGION AND JORC CATEGORY AT 31 DECEMBER 2022
Summary of Mineral Resources for
Iluka(1,2,3)
HM Assemblage(4)
Country
Region
Mineral
Resource
Material
Tonnes
In Situ HM
Tonnes
In Situ HM
Grade
Ilmenite
Zircon
Rutile
(M+X)(8)
Grade
Grade
Grade
Grade
Change
HM
Tonnes
Category
Millions
Millions
(%)
(%)
(%)
(%)
(%)
Millions
33
68
61
57
62
44
35
39
58
53
55
56
67
64
60
64
-
-
55
50
38
46
41
18
19
25
12
14
14
14
11
10
9
10
9
11
11
10
-
-
14
13
14
14
3
2
2
3
11
10
7
8
5
5
5
5
-
-
-
-
-
-
5
7
6
6
0.3
0.4
0.3
0.3
1.1
1.7
2.0
1.9
1.1
0.9
0.8
1.0
-
-
-
-
-
-
1.0
1.3
1.8
1.4
(0.4)
1.5
(0.1)
-
(9.5)
(8.6)
Australia Eucla Basin Measured
Total
Eucla Basin
Murray
Basin
Indicated
Inferred
Measured
Indicated
184
93
48
325
10
476
Inferred
1,090
5
9
2
16
3
38
61
Total
Murray
Basin
1,576
102
Perth Basin Measured
Total
USA
Perth
Basin(5)
Atlantic
Seaboard
Indicated
Inferred
Measured
Indicated
Inferred
Total
Atlantic
Seaboard(6)
Sri Lanka
Sri Lanka
Inferred
Total
Sri Lanka(7)
Total
Measured
Total
Indicated
Total
Inferred
Grand
Total
469
306
192
966
27
47
16
91
-
-
690
922
1,346
2,958
28
16
9
54
1
3
1
4
-
-
37
66
73
176
2.6
9.5
5.1
4.9
32.1
8.0
5.6
6.5
5.9
5.4
4.9
5.5
4.9
5.3
3.1
4.8
-
-
5.4
7.1
5.5
6.0
Notes:
(1) Competent Persons - Mineral Resources: B Gibson (MAIG).
(2) Mineral Resources are inclusive of Ore Reserves.
(3) Rounding may generate differences in last decimal place.
(4) Mineral assemblage is reported as a percentage of the in situ HM component.
(5) Rutile component in Perth Basin South West operations is sold as a leucoxene product.
(6) Rutile is included in Ilmenite for the Atlantic Seaboard region.
(7) Coco Deposit removed due to inability to secure continuity of tenure.
(8) M+X comprise the rare earth element bearing minerals monazite + xenotime.
170
Mineral Resources are estimated using all available and relevant geological, drill hole and assay data, including mineralogical sampling
and test work on mineral and final product qualities. Resource estimates are determined by consideration of geology, HM cut-off grades,
mineralisation thickness vs. overburden ratios and consideration of the potential mining and extraction methodology and are prepared in
accordance with the guidelines of the 2012 JORC Code. These factors may vary significantly between deposits.
For the year ended 31 December 2022, HM Mineral Resources (excluding the demerger of Sierra Rutile) decreased by 8.6Mt HM net of
mining depletion and adjustments (exploration discovery, development and write-down) down from 185Mt HM to 176Mt HM. The change
in Mineral Resources for 2022 was driven by the following:
»
»
»
»
Eucla Basin Mineral Resources decreased by 0.4Mt HM as a result of mining depletion and adjustment at Ambrosia (-0.2Mt HM)
and Jacinth (-0.4Mt HM) and remodelling and re-estimation at Atacama (+0.1Mt HM).
Murray Basin Mineral Resources increased by 1.5Mt HM as a result of remodelling and re-estimation at West Balranald (+0.4Mt
HM), Ki Downs (-0.2Mt HM) and WIM100 (+1.3Mt HM).
Perth Basin Mineral Resources decreased by 0.1Mt HM as a result of re-estimation, mining depletion and write-down at Cataby
and Cataby ROM (-0.2Mt HM) and additional tailings stockpiled at Eneabba (+0.05Mt HM).
Sri Lanka Mineral Resources decreased by 9.5Mt HM resulting from write-off of the Coco Deposit due to the inability to secure
tenement continuity.
171
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022
HM Mineral Resources Mined and Adjusted
ILUKA MINERAL RESOURCES MINED AND ADJUSTED BY COUNTRY AND REGION AT 31 DECEMBER 2022
Summary of Mineral Resource
Depletion(1)
In Situ
Country
Region
Category
Millions
(%)
Millions
Millions
Millions
(%)
Millions
In Situ
HM
Tonnes
In Situ
HM
Grade
In Situ
HM
Tonnes
In Situ
HM
Tonnes(2)
In Situ
HM
Tonnes(4)
In Situ
HM
Grade
In Situ
HM
Tonnes(3)
2021
2021
Mined
2022
Adjusted
2022
2022
2022
Net Change
Australia
Eucla Basin
Total
Eucla Basin
Murray Basin
Total
Murray
Basin
Perth Basin
Active
Mines
Non-Active
Sites
Active
Mines
Non-Active
Sites
Active
Mines
Non-Active
Sites
Total
Perth Basin
USA
Atlantic Sea-
board
Active
Mines
Non-Active
Sites
Active
Mines
Non-Active
Sites
Total
Atlantic
Seaboard
Sri Lanka
Sri Lanka
Total
Sri Lanka(4)
Active
Mines
Non-Active
Sites
Mineral
Resources
Total
Total
Total
Notes:
4
13
16
-
101
101
13
40
53
-
4
4
-
10
10
17
168
185
2.1
7.3
4.8
-
6.4
6.4
4.6
5.9
5.5
-
4.8
4.8
-
7.0
7.0
3.7
6.3
5.9
(0)
-
(0)
-
-
-
(0)
-
(0)
-
-
-
-
-
-
(1)
-
(1)
(0)
0
(0)
-
1
1
(0)
1
0
-
-
-
-
(10)
(10)
(1)
(7)
(8)
3
13
16
-
102
102
12
41
54
-
4
4
-
-
-
15
161
176
2.0
7.3
4.9
-
6.5
6.5
4.3
6.1
5.5
-
4.8
4.8
-
-
-
3.5
6.4
6.0
(1)
0
(0)
-
1
1
(1)
1
(0)
-
-
-
-
(10)
(10)
(2)
(7)
(9)
(1) Rounding may generate differences in last decimal place.
(2) Adjusted figure includes write-downs and modifications in mine design.
(3) Net difference includes depletion by mining and adjustments.
(4) Coco Deposit removed due to inability to secure continuity of tenure.
172
Annual Statement of Mineral Resources and Ore Reserves
The Annual Statement of Mineral Resources and Ore Reserves as at 31 December 2022 and presented in this Report has been prepared
in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2012 Edition (the
JORC Code 2012) and ASX listing Rules and as disclosed in various public announcements released through the ASX. Information
prepared and disclosed under the JORC Code 2004 Edition and which has not materially changed since last reported has not been
updated. Iluka is not aware of any new information or data that materially affects the information included in this Annual Statement and
confirms that the material assumptions and technical parameters underpinning the estimates in the relevant market announcement
continue to apply and have not materially changed.
Competent Persons Statement
The information in this report that relates to Mineral Resources is based on information compiled by Mr Brett Gibson who is a Member
of the Australian Institute of Geoscientists (MAIG). The information in this report that relates to Ore Reserves is based on information
compiled by Mr Andrew Walkenhorst who is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM). Mr Gibson and
Mr Walkenhorst are full time employees of Iluka Resources.
Mr Gibson and Mr Walkenhorst each have sufficient experience that is relevant to the styles of mineralisation and types of deposits
under consideration and to the activity which is being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the
‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’, the JORC Code 2012 Edition. Mr Gibson
and Mr Walkenhorst consent to the inclusion in this report of the matters based on this information in the form and context in which it
appears.
The information in this report that relates to specific Mineral Resources and Ore Reserves is based on and accurately reflects reports
compiled by Competent Persons as defined in the JORC Code 2012 for each of the company regional business units. Each of these
persons is a full-time employee of Iluka Resources Limited or its relevant subsidiaries, holds equity securities in Iluka Resources Limited
and is entitled to participate in Iluka’s executive equity incentive plan, details of which are included in Iluka’s 2022 Remuneration report.
All the Competent Persons named are Members of The Australasian Institute of Mining and Metallurgy and/or The Australian Institute of
Geoscientists and/or the relevant jurisdiction ROPO (Recognised Overseas Professional Organisation) and have sufficient experience
which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity they are undertaking to
qualify as a Competent Person as defined in the JORC Code 2012. At the reporting date, each Competent Person listed in this report is
a full-time employee of Iluka Resources Limited or one of its subsidiaries. Each Competent Person consents to the inclusion of material
in the form and context in which it appears.
All of the Mineral Resource and Ore Reserve figures reported represent estimates as at 31 December 2022. All tonnes and grade
information has been rounded, hence small differences may be present in the totals. All of the Mineral Resource information is inclusive
of Ore Reserves (i.e. Mineral Resources are not additional to Ore Reserves).
Mineral Resources and Ore Reserves Corporate Governance
Iluka has an established governance process supporting the preparation and publication of Mineral Resources and Ore Reserves which
includes a series of structures and processes independent of the operational reporting through business units and product groups.
The Audit and Risk Committee has in its remit the governance of resources and reserves. This includes an annual review of Mineral
Resources and Ore Reserves at a group level, as well as review of findings and progress from the Group Resources and Reserves internal
audit programme within the regular meeting schedule.
Mineral Resources and Ore Reserves are estimated by Iluka Personnel or suitably qualified independent personnel using industry
standard techniques and supported by internal guidelines for the estimation and reporting of Mineral Resources and Ore Reserves.
All Mineral Resource and Ore Reserve estimates and supporting documentation are reviewed by Competent Persons employed by
Iluka. If there is a material change in the estimate of a Mineral Resource, the Modifying Factors for the preparation of Ore Reserves, or
reporting an inaugural Mineral Resource or Ore Reserve and if it is considered prudent to have an external review, then the estimate and
supporting documentation in question is reviewed by a suitably qualified independent Competent Person.
The Iluka Mineral Resource and Ore Reserve position is reviewed annually by a suitably qualified independent Competent Person prior to
publication and the governance process is also audited by an independent body (PricewaterhouseCoopers).
Iluka has continued the development of internal systems and controls in order to meet JORC (2012) guidelines in all external reporting,
including the preparation of all reported data by Competent Persons as members of The Australasian Institute of Mining and Metallurgy
(The AusIMM), The Australian Institute of Geoscientists (AIG) or Recognised Overseas Professional Organisations (ROPOs).
The establishment of an enhanced governance process has also been supported by a number of process improvements and training
initiatives over recent years, including a Web based group reporting and sign-off database, annual internal Competent Person reports
and Competent Person development and training.
173
ILUKA RESOURCES LIMITED - ANNUAL REPORT 2022 SHAREHOLDER AND
INVESTOR INFORMATION
As at 31 January 2023
Australian Securities Exchange Listing
Iluka’s shares are listed on the Australian Securities Exchange (ASX) Limited. The company is listed as Iluka Resources Limited with an
ASX code of ILU.
Shares On Issue
The company had 424,932,151 shares on issue as at 31 January 2023. A total of 411,993 ordinary shares are restricted pursuant to the
Directors, Executives and employees share acquisition plan, equity incentive plan and employee share plan.
Shareholdings
There were 22,509 shareholders. Voting rights, on a show of hands, are one vote for every registered holder and on a poll, are one vote
for each share held by registered holders.
Distribution of Shareholdings
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - 1,000,000
1,000,001 Over
Rounding
Total
Unmarketable Parcels
Total holders
13,589
7,088
1,093
693
34
12
Units
5,106,441
16,502,273
7,923,514
14,898,963
11,159,425
369,341,535
22,509
424,932,151
Minimum $ 500.00 parcel at $ 10.8000 per unit
47
Minimum Parcel Size
Holders
1,280
% Units
1.20
3.88
1.86
3.51
2.63
86.92
0.00
100.00
Units
19,923
Top 20 Shareholders (Nominee Company Holdings)
174
Rank
Name
Units
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
167,585,874
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
97,812,318
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMS PTY LTD
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