Iluka Resources Limited

Thank you, and good morning, and welcome, everyone. With me today are Adele Stratton, CFO; Matt Blackwell, Head of Marketing; and Melissa Roberts, General Manager, Investor Relations and Commercial.

Today, I'll cover the highlights of our 2018 financial results and provide an overview of our operations, our projects and the market conditions. I'll then hand over to Adele to provide more detail on the financials before finishing with our outlook for 2019.

But before I do that, on health and safety of the environment and sustainability, generally, while we had some positive achievements in 2018, including 2 South Australian premier awards for work by the team at Jacinth-Ambrosia, our total recordable injury frequency rate increased from 2.8 to 3.5 in 2018, with 8 additional injuries recorded for the year. While we regard any increase as unacceptable, many of our recordable injuries in 2018 were minor in nature and there has, in fact, been a material reduction in the number of incidents classified as having serious potential.

Our lost time injury frequency rate remains steady at 1 per million hours worked. Further on safety, there's been much focus in the industry in recent times with good reason on tailing dams safety.

We've included a slide on our approach to the tailings storage facilities to address any potential questions. The key points are that across our operations in Australia and Sierra Leone and even to former operations in the U.S., we have no upstream raised dams whatsoever.

And second, we follow ANCOLD guidelines as to monitoring and maintenance of our tailings dams. Turning to our financial results and as you'll have seen, Iluka has delivered a sound financial performance.

The company has achieved a 22% increase in mineral sands revenues to $1.2 billion and a 67% increase to underlying group EBITDA to $600 million. Free cash flow generated during the year was strong at $304 million, allowing the business to eliminate its debt and return to a net cash position of $2 million.

Overall, I'd characterize this as a pleasing result, particularly given debt levels peaked to the $506 million post the acquisition of Sierra Rutile just over 2 years ago. From an operations and projects perspective, it's been a year of intense activity across the portfolio.

Our flagship zircon mine, Jacinth-Ambrosia in South Australia continue to operate at full capacity throughout the year producing 289,000 tonnes of zircon. Ore grades encountered at the mine and plants' availability were higher than anticipated, allowing a build of concentrate inventory.

And this, coupled with the planned move to Ambrosia in 2019, will assist in smoothing our zircon production profile in the years ahead. In Western Australia, our synthetic rutile number 2 kiln produced a record 220,000 tonnes of synthetic rutile.

The kiln is currently offline for the planned major maintenance outage and during what's scheduled as a 51-day shut, the outage will be relined ahead of the next 4-year campaign. Once back online, the kiln will be set by ilmenite sourced from Cataby.

Operational performance in Sierra Leone was unacceptable in 2018. A number of issues affected production over the course of the year, though most concerning were the unlawful strike actions in October and November.

As we've outlined in the December quarterly, the government of Sierra Leone formed a task force, which found the strikes were illegal and that Iluka had taken appropriate measures to ensure the safety of our people and assets. We regard the findings of the task force as an important step towards achieving long-term stability in Sierra Rutile's operating environment.

We continue to work closely with the government, which has expressed strong support for the company's investment in Sierra Rutile, recognizing that foreign direct investment is crucial to the development of Sierra Leone's economy. In relation to Sierra Rutile's expansion projects, pleasingly, works at both Lanti dry and Gangama continue on time and budget with commissioning expected in the second half of 2019.

I'm also pleased to advise that Iluka and the IFC, a member of the World Bank Group, have been in discussions to commence a strategic partnership in Sierra Leone. The IFC has today commenced a 60-day disclosure period in relation to its potential investment, which would see IFC acquiring an equity stake of up to 10% in Sierra Rutile for US$60 million.

Investment remains subject to due diligence, finalization of documentation on commercially acceptable terms and board approvals by both Iluka and IFC. The rationale for potentially partnering with the IFC is that it should, it would provide benefits to Iluka, IFC and the people of Sierra Leone by promoting the continued sustainable development of the Sierra Rutile operation.

The World Bank Group has a large and long-standing presence in Sierra Leone and it has unparalleled expertise in community and stakeholder engagement, which would complement our own activities in these areas. Turning to markets, sales of zircon over the past 2 years of around 380,000 tonnes per annum are reflective of the solid underlying demand conditions across the company's major markets.

Iluka successfully implemented 2 increases to its Zircon Reference Price over the course of the year achieving an average 41% increase on 2017. The company's approach to the zircon market remains focused on supplying to satisfy genuine underlying consumption-based demand and on maintaining a pricing cadence, which is directed at lessening the prospect of a repeat of historic volatility.

Through 2018, we maintained 6-monthly pricing periods for our Zircon Reference Price and that's enabled us to better monitor market dynamics and price our products appropriately. We've recently communicated to customers that we'll hold the Zircon Reference Price at its current level of US$1,580 a tonne over the next 6-monthly pricing period commencing 1 April this year.

Customers feedback has been positive, given it provides stability to customers and is consistent with Iluka's sustainable approach to pricing. Turning now to high-grade titanium feedstocks, Iluka's sales in 2019 were production-constrained and demand was strong throughout the year as had been expected.

The year also saw production outages across the feedstock industry including at Sierra Rutile, and that resulted in a challenging set of circumstances for pigment producers who'd been running at high levels of capacity utilization. Tight market conditions prevailed throughout 2018 and Iluka's weighted average rutile price increased 21% on the 2017 average, and we've announced a further 8% to 11% price increase for contracted rutile and synthetic rutile volumes in the first half of 2019.

I'll now hand over to Adele to take you through the financials in more detail.

Thanks, Tom, and good morning, everyone. As outlined, 2018 has delivered a strong financial results.

Net profit after tax was $304 million, a stark turnaround to the loss of $172 million reported last year. As Tom's already mentioned, product prices were a strong driver for this turnaround, adding $186 million post-tax earnings to the results.

The prior year was also impacted by the impairment charge of $185 million pretax for the Hamilton MSP and the write-down in the Metalysis investment combined of $127 million increase in the U.S. rehabilitation provisions.

In 2018, idle costs have reduced by $49 million to $25 million following the restart of mining and concentrating activities at Jacinth-Ambrosia in December 2017, combined with no restructure costs associated with the idling of the Hamilton mineral separation plant last October 2017. Sales volumes of our core products of zircon, rutile and synthetic rutile decreased 7% to 827,000 tonnes, reflecting a production-constrained environment.

Inventories returned to normalized levels of $392 million at December 2018. The average Australian dollar exchange rate weakened to $0.748 from $0.767 from 2017.

This had a favorable impact on revenue of $26 million, with the majority of sales contracted being U.S. dollar denominated.

Iluka continue to utilize foreign exchange derivatives to manage this FX risk associated with contracted sales, which have fixed or floor prices, which is simple financial risk management. Mining Area C continued its positive contribution to the group's results, with an EBITDA of $56 million.

As previously noted, BHP's south side expansion sit through in the Mining Area C royalty. And this expansion is expected to come online in 2021.

Turning to the operations performance. Australia had a very strong year, with an EBITDA margin of 60% compared to 43% in 2017.

Cash cost of production increased reflecting the restart of mining and concentrating at Jacinth-Ambrosia with prior year sales drawn from inventory. Unit cost of goods sold increased marginally by 2% to $602 per tonne.

Sierra Rutile on the other hand had a disappointing performance. EBITDA margin reduced to 15% from 21% in 2017 with sales volume constrained by production.

Production was impacted by maintenance and operational issues at both the Lanti dredge and dry mines, combined with the illegal strike actions, as mentioned by Tom. This resulted in an increase in cash cost of production with unit cost of goods sold increasing 30% from prior year.

The focus in 2019 will be ensuring consistent performance from the operation and also managing the cost performance. What has been pleasing is the cash generated by operations of $594 million, some of which has been generated by the $87 million reduction in inventory.

Free cash flow of $304 million is after investing $312 million in capital expenditure, including $189 million on Cataby and $104 million at Sierra Rutile. Just to highlight, Iluka had minimal tax payments in 2018 with a large balance in tax payment due to the Australian Tax Office in June this year.

We continue to focus on maintaining a strong balance sheet and January has been another positive month with net cash increasing to $12 million along a further $28 million of capital investment. And finally, in relation to the dividend.

As you know, our dividend framework is to pay a minimum of 40% of free cash flow not required for balance sheet or investing purposes, and that is exactly what we've delivered with the $0.19 final dividend fully franked, which will be paid in April. And with that, I'll hand back to Tom.

Thanks, Adele. And turning to our outlook, which in 2019 will, again, be characterized by high levels of activity.

At Cataby, we're commissioning at the moment and expect soon to begin operational ramp-up. As noted, the major maintenance outage at our SR2 kiln is underway, and so it will be ready to receive the Cataby ilmenite for its next 4-year campaign.

In South Australia, mining at Jacinth north will continue before the planned move to the Ambrosia deposit towards the end of the year. Expansion projects at Lanti and Gangama at Sierra Rutile are expected to commission from the middle of the year.

There are also a number of other opportunities we continue to work on to deliver longer-term growth, including Sembehun in Sierra Leone, Balranald in New South Wales and Fine Minerals Project in the Wimmera region of Victoria to name a few. Our guidance is the back of the presentation slides, but in terms of production, 2019 is expected to be broadly in line with 2018 and shows a fairly balanced mix across our portfolio of high-value products.

2019 zircon, rutile, synthetic rutile production is expected to be around 720,000 tonnes. And while we don't guide on sales, our current expectation is for sales to be broadly in line with production.

Our synthetic rutile production is fully contracted for the year and first half rutile is fully committed. Due to the nature of our contracts, we also have good visibility on much of our high-grade feedstock pricing over the year.

On zircon, you'll recall that we flagged in the quarterly that sales will be slower in the first quarter. We expect a pick-up over the first half.

And thus far, in the quarter, we're seeing consistent inquiries from customers and sales are in line with expectations. We're cognizant that there are risks to the outlook around China and global trade tensions.

There's a high level of uncertainty generally. But based on the feedback from our customers, we continue to plan for pretty stable demand for zircon in 2019.

We've guided rutile production from Sierra Rutile of 150,000 tonnes. That may be lower than expected by some, so I'd just like to step through production settings for the year and what implications they have for production.

First, by the end of this quarter, we'll have decommissioned the dredge, so we'll lose that contribution to our production. At the remaining Lanti and Gangama sites, we're focused on delivering production stability.

As I noted earlier, the expansions at Lanti and Gangama are expected to be commissioned from the middle of the year and to be specific, we're planning to move on Gangama first and then Lanti. While we're confident we've learned from last year's issues, there is an inherent risk in delivery of any new project and the same is true of these.

We've sought to provide prudent ramp-up assumptions with the full benefit to come in 2020. On balance, we've guided what should be an achievable level of production, and I look forward to updating you on the progress we're making.

Unit cost of production was guided $740 per tonne, slightly up on previous year's, reflecting the commencement of operations at Cataby. As a result, unit cost of goods sold are slightly higher than 2018, expected to be around $765 a tonne.

Finally, capital expenditure was guided at $330 million for the year, which includes final capital to deliver Cataby and the kiln major maintenance outage, the Lanti and Gangama expansions, the Ambrosia mine move and the early works at Sembehun, which while not yet approved, we're contemplating could occur late this year. So you'll see a continuing emphasis on delivery and execution across the portfolio in 2019.

So with that, I'd open up the line to questions.

Yeah good morning Tom, Adele and Matt. So first question is on zircon market and your view that the market's effectively balanced this year.

Just curious about what demand assumptions you're making on a global basis to China in percentage terms this year? And also, on supply side, there are a few new mines started up, one in WA and one in Mozambique recently.

Just curious about what supply additions in thousands of tonnes you're assuming? And then turning to Sierra Leone and the investment by IFC, this certainly interests me that the 10% of the $60 million.

Can you just maybe let us know how that price is determined? And should we read through that your valuation on this asset is $600 million?

Thanks.

I'll hand it over to Matt for your -- to answer your question on zircon, Paul, and come back to the investment by IFC.

Yes. Very good morning Paul, so on demand, we anticipate, which is probably consistent with some other external industry commentators as well, that demand will be stable going into 2019, fairly consistent with 2018.

As we alluded to in the -- articulated in the quarterly -- in the reports where there's not much inventory in the supply chain and although buying was lower in the fourth quarter as we anticipated and predicted a slower start to 2019, we are not seeing any reduction in requests for zircon from our customers over the year at this time. To your point on the 2 new mines starting, obviously, there's [Indiscernible] obviously in WA, pretty small contribution to global supply.

It sells concentrate. So it can only sell to China and in Mozambique, it is concentrate as well.

And I'm pretty sure it's a very small amount. What I would say is that counter that too, what you're also seeing is continuing drop off in production for many other assets.

For example, you have the crystal mine in Brazil ceasing to operate this year. You have the rundown of the operation at our old CRL operations, operation, Sibelco's operation on Stradbroke Island.

So in balance when you add the puts and the takes, the estimate is that demand should be broadly in balance with supply, with supply continuing to decrease over the course of the year.

And that said, just further to that, just to put a number on it. So you're basically saying zero percent demand growth, zero supply additions in effect?

In effect zero supply additions compared to last year. The balance of the zircon supply just like it was last year will be our zircon in concentrate.

And so supply down, absent that and potentially demand slightly up. It'll be either flat or slightly up.

Okay. Now on demand, what gives you that confidence that you're going to see that recovery come through during the first half of this year?

Well, look it's early days, but what I would point to is that China's, Chinese New Year has just ended. What we have seen from our customers is that a number of the I think 75% of our customers in China have already restarted their operations.

And we expect that 100% of our customers will be operating by the end of this week. We, and to the point I made before, none of our customers are seeking any material change in allocation over the course of this year compared to what they purchased last year.

Okay. Thanks, Matt.

And Tom, on Sierra Rutile?

Yes, sure. Look, first, I'd say just as with any potential transaction, Paul, the price here has been struck as an outcome of a long negotiation with the IFC.

But what I would point out is that the IFC can potentially be of significant help and value in Sierra Leone. The rationale for us having the IFC invest in Sierra Rutile is clear, it is, The World Bank have a significant and active presence in Sierra Leone.

And they bring as I've said, unparalleled expertise and experience in community and stakeholder relations in developing countries generally in Sierra Leone, in particular. And at this is a perfect time, I think, to engage closely with them as we approach the point later in the year where the Sembehun investment will be considered.

And if that development goes ahead, then collaboration with the IFC on capacity building, on skills enhancements, infrastructure and community development are all going to be very welcomed. But the, going back to the price for a moment, I would not, I'd certainly not say that we would be open to selling our stake to others at that price.

Okay. And then just on the CapEx, well, on Sierra Rutile, Tom, the 40% to 60% increase in capital overall budget versus the US$300 million, which is, I think, a 2015 real number, any updates to that end?

And also, when can you give us an update on tightening up that range?

Yes, I don't have an update now, Paul. But later in the year when the feasibility studies for Sembehun and associated works begin to finalize, we'll certainly be updating the market as soon as practical.

The first one on the tile market consolidation that you mentioned in the presentation today. Just wanted to understand the sort of smaller players in the tile market in China, so to speak.

Is there a view in-house in terms of the zircon use in the tiles they've been producing whether that's in line with the bigger guys, lower or perhaps more because of inefficiencies?

Rahul, our view or certainly Iluka's view, and that's formulated from our discussions on the ground in China is that the smaller tile manufacturers are ones that produce the lower quality of tile. And so the lower quality of tile has a lower zircon content.

There were a number of closures over the course of last year, there have been closures occurring since 2012 as the industry has consolidated. That accelerated over the course of last year because of the more stringent application of environmental restrictions.

Right. Okay.

And just moving on to the next one in terms of that IFC deal, just wanted to understand, so if this does go ahead you get $60 million in the bank. And then in terms of any future investments related to obviously the efficiency gains, and also, the layup for the Sembehun development, that's all going to be funded in, the 10% of the CapEx would be made up by the IFC.

Is that right?

Yes. Look, we'll announce this precise terms of the deal as and when it closes.

But the, but broadly, your conclusion is accurate that to the extent that funding is required beyond the company's own resources that are self-generated, then that would be funded equally by the company's shareholders. That's pro rata their holdings.

And just, got you. Okay.

And just finally, following on from Paul's question on CapEx. So 2019, we obviously have the several projects underway.

There's Cataby, there's the reline of the mill, there's also some spend on earthworks. How does 2020 look in terms of some of these projects?

I mean, I know you can't give us exact ranges for next year yet. But in terms of stuff that's going to be underway, how should we think about the CapEx number going into perhaps the next year?

Well, look, you're right in saying that we're not going to give guidance beyond '19, but I think, you really need to think about Sembehun, for example, if that's to go ahead then that will be a significant piece of 2020. And I've also touched on a few of our other projects we're developing internally, and so we'll be updating over the course of the year on progress we make with those organic projects.

Tom, just a question on the rutile market. I mean, you sort of talked about a stable zircon sort of price outlook and the customers are happy with that.

I mean, with this declining supply outlook that you've got through rutile. I mean, how do you think about managing pricing in that environment to sort of not encourage too much new supply or demand destruction or that sort of thing?

I mean, is it more stable, more, is it a market that can absorb higher prices do you think unlike sort of zircon?

Look, I'll hand that over to Matt, Hayden.

Yes. Hayden, there's some differences between the rutile and the zircon market that drive different pricing approaches.

One would be the substitution of the products. In rutile, there's a significant portion which goes into welding and rutile is the best product for most of the welding applications.

It makes it less substitutable in that sector. In pigment, the rutile competes with other TiO2 feedstocks and it competes on a relative economic basis or a relative economic value basis.

So we are always mindful of what might be charged for competitive products, like slag. That said, if you wanted -- most chlorinators run at a TiO2 head grade of between 88% and 92%.

Most chloride slags are in the 86% to 88% range. So you need a high-grade feedstock to bring that head grade up.

And particularly where you're running hard like many of the pigments plants were last year, you want to get closer to 92%, the only thing that can do that for you is either Rio's UGS product, which has limited production capacity or synthetic or rutile. And so there's certainly a market there and a need for that product as people run their plants hard.

We're -- look, we're mindful of our customers' position in rutile as well. We'll continue to do that, and I would point out that over the last 2 years, pigment prices were up 55% from the base of the market and now rutile prices are not yet up that same amount.

Hayden, the only other thing I'd add is that as you look around the world at the potential development of rutile deposits, it's a pretty short list and that's why Sierra Rutile was an attractive addition to Iluka's portfolio, and again, that's why the further development of that company's deposits remains an attractive proposition.

Okay. And just on the inventories, I mean, I noticed your work in progress has mostly been flat 18 months.

So do I assume that's just normalized levels? And given your guidance on rutile that sales and production are pretty similar that there's not really any sort of surface inventory left that you could push into the market, if that was something that you could do given -- if demand was a bit better?

Hayden, it's Adele. Yes.

Look, I'd agree. We've noted that our inventory is back to those normalized levels at 392.

We always say, it's sort of in the range of 350 to 400 is what we expect to be normalized. In terms of the ability to put more product into market, as Matt has already referred, zircon in concentrate is an option for us.

But -- like, in terms of where we've come from over that inventory drawdown, we don't have as much capacity as we have previously.

Look, it's a bit of a Dorothy Dixer from me, given that we've had the highest of stock average for a little while. But I just wanted to understand the rationale for -- behind bringing forward the move from J to A, because as I understand it Ambrosia has got lower zircon grades.

And yet when I look at quarterly, you're saying that bringing forward the shift, the move was assessed as the best option to smooth production and offset the impact to declining grades. So how does that work, because I would have thought you're bringing forward the low-grade material?

Yes. Look, before we decided that, that was the best course for us, we evaluated a number of different options.

One was to expand capacity at Jacinth-Ambrosia by having a couple of mining units and approaching the Ambrosia deposits as well as the depleting the remainder of Jacinth's deposit at the same time at a reasonably significant capital outlay. Ultimately, we decided that moving over to the higher-grade area of Ambrosia and immediately setting about processing that ore and then in -- when Ambrosia is exhausted, coming back to Jacinth and mining out the reminder, was the most appropriate from a value perspective and it would also -- will also see us be able to maintain our zircon production capacity at broadly the rates we're seeing now out to the end of 2021.

So I think it was regarded as being the best option.

Okay. Maybe, I'll come back to you.

Thanks.

Thank you.

Good morning. I just wanted to circle back to the Sierra Rutile sell-down.

It sounds like you've claimed the IFC can be of help. Sort of just, is this an admission that you're finding it difficult to operate in Sierra Leone?

And in particular, just want to try to understand more fully exactly where you're finding difficulty in? And then what happens if the IFC did do due diligence and don't play?

Should I be concerned a little bit about you wanting to sell down, bring someone in and they don't want to play. What -- just trying to make sure I understand exactly what it is we're trying to mitigate here?

Thanks.

Yes, sure. Look, yes, I think it'd be wrong to see the potential transaction with the IFC as a -- as any sort of admission as you outlined.

The engagement that we've had with IFC goes a long way back. Iluka has long recognized that with the depletion of quality deposits in Australia and the U.S., we'd likely need to engage in the world's developing regions.

And so the dialogue with the IFC actually predates the Sierra Rutile acquisition. I first met with representatives of the IFC in late 2016 and then with senior people in the IFC in 2017.

So it's been a long time coming. So it's not at all a reaction to the events of late last year.

As I've said, the IFC is very active in Sierra Leone, they're very -- they have a lot of expertise and experience in community stakeholder relations. And I think they're going to be of value to us and be a lot of help to us to work in collaboration with them, particularly as and when the Sembehun development goes ahead.

So that's the driver of the potential investment. In terms of your other question about due diligence and the like, I guess, it's a similar answer.

We've been engaged with the IFC for, in a more active way on this potential investment really for a couple of years now. So there's been quite a bit of due diligence already.

But there's always a potential that it won't complete, but I think, that's a risk that we've, we can manage.

But Tom, I guess, the acquisition of SRL predates you. It was done by your predecessor, and you came in and inherited the deal somewhat.

So I guess, I'm still a little confused, like, IFC coming in now after the previous CEO engaged in this transaction, it sounds like. And I'm just trying to make sure, I would have thought they can provide funding.

But what is it specifically on the ground that you'd think they can do other? Because it's not for funding issue, I wouldn't have thought.

No, no, it's not. No, it's the, the reasons I've said, the IFC and the World Bank are very active in those countries.

They have significant programs and quite obviously have a lot of expertise and influence in the country. And so that partnership with them, we believe, will add a lot of value.

Okay. And can I just change tack for a second just switch back to rutile and just, so I just trying to make sure I understand, small parcels of rutile are greater than 1,300 and the vast quantity at greater than 1,100.

Just how should I think about that delta in the small quantities at 1,300? Is that a good lead indicator?

Or is that just the welding market and a very niche outlook and I shouldn't sort of think of that as the lead indicator?

I think that's probably right where you're going with that, Glyn. I'll hand over to Matt here.

No, look, that's, you know the industry well, Glyn. Welding market buys smaller parcels and the pricing is adjusted accordingly.

You'll also have seen that's a delivered basis. So there's some freight and packaging in there as opposed to the 1,100, which is an FOB ex works.

But that's quite a big delta, is it not, Matt, historically?

It's, I wouldn't say it's a big delta historically. Traditionally, when welding gets, sorry, when market's tight, rutile is in short supply, the gap between what pigment plays and what the smaller parcels pay increases.

And so as I said, you've got to put in there shipping and packaging, so the gap might be not, it's not $200 a tonne.

Okay. And the feedback has been quite good.

No one, you haven't lost anyone, everyone?

I can't make our inquiries, look, I can't satisfy all the inquiries we're getting through rutile at the moment.

Yes, back again. The first question is on just on the cash outflows, excluding production cost and CapEx, so just on your rehab.

So rehab stepping up to $70 million this year. Now the first question is, does that go through the operating cash flow as the payments to suppliers' line?

And then also, how long do you think you'll be running at that level that $70 million mark going forward?

Yes. Look, so in terms of where that flows through, you're exactly right, it goes through payments to suppliers and operators in the cash flow line.

In terms of you think of our provision on the balance sheet, it's still very large for rehabilitation. And we're looking, as Tom mentioned, to ensure that we approach that in a sustainable manner and return land to its former use.

So in terms of, certainly with the U.S. rehab, I'd be saying, rehab spend will be around that level.

It fluctuate a little bit year-on-year, but from a couple of years, we'll be up at that sort of $70 million mark.

Okay. And then the other one is that is idling charges, Adele, at $25 million.

I mean, pretty steady going forward. How many years do you think you'll have to spend $25 million on Murray Basin and U.S.

going forward?

Yes, look, that's always under assessment. The U.S., obviously, until we have completed the rehab, those charges will remain.

The U.S., you can sort of see, is around that $7 million mark. There's idle costs that occurred this year for some of the other plants like Tut South, for example, came off in 2018.

So it's always a mix in terms of when we're moving through operations. Again, in terms of an outlook, certainly for whilst the U.S.

is online and we consider options around Hamilton, it will be consistent sort of say for a couple of years.

Okay. And then a few other questions about projects, et cetera.

First of all, just on the scoping study on the SR1 restart, just curious about within that scoping study, what are you assuming on the ilmenite feed source? We're talking from the Fines project from a Balranald?

Are we talking about third-party purchases? How are we thinking about the ilmenite feed source?

Yes. Look, thanks, Paul.

We have several deposits in our own portfolio, and we're also considering others' deposits as well, but I wouldn't want to be drawn more than that at this stage.

Okay. Well, just last one from me, maybe pulling Matt into this one.

Just on the economics around the ZIC, the zircon in concentrate. If I recall, your MSP costs, and will that be lower?

Risk caps are only maybe 20% of your total cost. So are we, is it the right way to think about your ZIC cost that they're about AUD 150 a tonne?

So, Glyn Paul, sorry, it's Adele. Look, one thing to mention is on zircon in concentrate, it comes from a number of deposits across the group.

We highlighted that the U.S. also had some remnant stockpiles, which is zircon in concentrate.

So it really fluctuates and depends on where that material is coming from. But for some operations, it is a relatively low cost.

Yes, okay. So on the JA side because you spoke about Narngulu having a lot of tailings that can be reprocessed and potentially producing up, I think, 60,000 tonne or ZIC.

Is that the main source? What would your operating cost be, your cash cost?

I don't, yes, Paul, we never disclose the operating cost on the ZIC. But what I would say in addition to Adele is that, we're blending with these remnants stockpiles.

So given the price of the concentrate in the market currently, it's translating into attractive margins.

Sorry, for the last minute change in my mind or my heart behalf. Sorry.

Just wanted to perhaps get you to touch a bit on in terms of the zircon markets, our channel checks have been telling us that India has been emerging as a strong market now. In your portfolio and your sort of presentation today in terms of EMEA, still seems like a relatively small proportion, albeit hasn't been split out.

Any sort of visibility, views, comments around how the market is developing there?

Rahul, it's Matt here. We're very -- well, I'm more positive on India than I certainly have been in the past as it gets organized.

The ceramics market in India has always been important or a large producer of tiles, but it is moving rapidly up the cost credit -- curve. And that's been led through digital printing, which has basically democratized the ability to produce a good quality tile.

It is moving into export markets as well. So our view, I think, is consistent by the sounds of it, with your house view that it is an emerging market, it'll continue to be an important market.

Our sales to India grew strongly last year in zircon. India itself as a country's imports of zircon grew as well.

We've grown our market share, and we've taken steps over the course of last year to improve our and strengthen our presence in India as well.

Thank you and thanks for that Matt. I’ll pass it on.

Thanks.

Okay. Thanks very much.

Look, and thank you for taking the time this morning. In closing, I'd just like to reiterate that I think we delivered a strong financial result, and I feel we're well positioned to address what we expect will be a very busy year again in 2019.

So thank you, and have a good day.