Iluka Resources : Demerger Booklet - Sierra Rutile

Demerger of Sierra Rutile Holdings

Limited by Iluka Resources Limited

onlyDemerger Booklet

VOTE IN FAVOUR

useEach Iluka Director recommends that Iluka Shareholders vote in favour of the Demerger Resolution to give effect to the Demerger of Sierra Rutile.

The Independent Expert has concluded that the Demerger is in the best interests of Iluka Shareholders.

This is an important document and requires your immediate attention. You

personalFor
should read this document in its entirety prior to deciding whether or not to
vote in favour of the resolution to effect the Demerger. If you are in any doubt as
to what you should do, you should seek independent legal, financial, taxation or
other professional advice before voting on the Demerger Resolution.
Fi ancial adviser	Legal advisers
Joint ECM adviser	Joint ECM adviser

IMPORTANT INFORMATION

GENERAL

This Demerger Booklet is important. Iluka Shareholders should carefully read this Demerger Booklet in its entirety before making a decision as to how to vote on the Demerger Resolution to be considered at the Extraordinary General Meeting.

INVESTMENT DECISIONS

	This Demerger Booklet does not take into account the
	individual investment objectives, financial situation or
onlyneeds of any particular Iluka Shareholder or any other
	person. The information in this Demerger Booklet should
	not be relied upon as the sole basis for any investment
	decision. Iluka Shareholders should seek independent
	legal, financial, taxation and other professional advice
	before making any investment decision.
	RISK FACTORS
	There are risk factors associated with the Demerger itself,
useand with an investment in Sierra Rutile Shares or Iluka
personal	Shares, which are discussed in this Demerger Booklet and
which Iluka Shareholders should consider carefully.
PURPOSE OF THIS DEMERGER BOOKLET
	This Demerger Booklet sets out all information known
	to the Iluka Directors which is material to the decision
	of Iluka Shareholders in deciding how to vote on the
	Demerger Resolution as required by section 256C(4) of
	the Corporations Act, other than information Iluka has
	previously disclosed to Iluka Shareholders and, as such, it
	would be unreasonable for Iluka to disclose.
	PREPARATION OF AND RESPONSIBILITY FOR
	THIS DEMERGER BOOKLET
	• This Demerger Booklet (other than the Independent
	Expert's Report and the Independent Limited
	Assurance Report) has been prepared by Iluka as at the
	date of this Demerger Booklet and Iluka is responsible
For	for the content of this Demerger Booklet.
• Greenwoods & Herbert Smith Freehills Pty Limited

has reviewed and agrees with Section 6 relating to the description given of the income tax and goods and services tax implications of the Demerger for Iluka Shareholders who, amongst other things, are residents of Australia for Australian tax purposes.

• PricewaterhouseCoopers Securities Ltd has prepared the Independent Limited Assurance Report and takes responsibility for that report. A copy of that report is set out in Section 7.

• Deloitte Corporate Finance Pty Limited has prepared the Independent Expert's Report, which is contained in Section 8. Deloitte Corporate Finance Pty Limited takes responsibility for that report.

ROLE OF ASIC AND ASX

A copy of this Demerger Booklet has been lodged with ASIC. Neither ASIC nor any of its officers takes any responsibility for the contents of this Demerger Booklet.

Sierra Rutile will apply for admission to the Official List and for official quotation of Sierra Rutile Shares on the ASX shortly after the date of this Demerger Booklet, conditional on approval of the Demerger. Neither ASX nor any of its officers takes any responsibility for the contents of this Demerger Booklet. The fact that ASX may admit Sierra Rutile to the Official List does not make any statement regarding, and should not be taken in any way as an indication of, the merits of an investment in Sierra Rutile.

NOTICE OF EXTRAORDINARY GENERAL MEETING

The Notice of Extraordinary General Meeting is set out in Section 11.

STATUS OF THIS DEMERGER BOOKLET

This Demerger Booklet is not a prospectus lodged under Chapter 6D of the Corporations Act.

FOREIGN JURISDICTIONS AND SHAREHOLDERS

Iluka Shareholders who are Ineligible Overseas Shareholders will not receive Sierra Rutile Shares under the Demerger. Sierra Rutile Shares that would otherwise be transferred to these shareholders under the Demerger will be transferred to the Sale Agent to be sold, with the proceeds of such sale to be paid to Ineligible Overseas Shareholders. Refer to Section 5.8.2 for further information.

Iluka Shareholders resident outside Australia for tax purposes should seek specific tax advice in relation to the Australian and overseas tax implications of the Demerger.

This Demerger Booklet does not in any way constitute an offer of securities in any place in which, or to any person to whom, it would be unlawful to make such an offer. No action has been taken to register or qualify the Sierra Rutile Shares or otherwise permit a public offering of Sierra Rutile Shares in any jurisdiction outside Australia.

Demerger of Sierra Rutile Holdings Limited 1

Australia, New Zealand, Hong Kong, Singapore, the United Kingdom or the United States; or

any other jurisdiction in respect of which Iluka reasonably believes it is not prohibited or unduly onerous or impractical to implement the Demerger and to transfer Sierra Rutile Shares to the Iluka Shareholder.

Based on the information available to Iluka as at the date of this Demerger Booklet, Iluka Shareholders whose addresses are shown in the register on the Record Date as being in the following jurisdictions will be entitled to have Sierra Rutile Shares transferred to them under the Demerger:

•

only•

N minees, custodians and other Iluka Shareholders who h ld Iluka Shares on behalf of a beneficial owner resident outside Australia, New Zealand, Hong Kong, Singapore, the United Kingdom or the United States may not forward this

useD merger Booklet (or any accompanying document) to anyone outside these countries.

FORWARD LOOKING STATEMENTS

Forward looking statements may generally be identified by the use of forward looking words such as "believe", "aim", "expect", "anticipate", "intend", "foresee", "likely", "should", "planned", "may", "might", "is confident", "estimate", "potential" or other similar words or phrases.

personalThese statements discuss future expectations concerning the results of operations or financial condition of the Iluka Group or the Sierra Rutile Group, or provide other forward looking statements.

These forward looking statements are not guarantees r predictions of future performance, and involve known

and unknown risks, uncertainties and other factors, many of which may be beyond Iluka's or Sierra Rutile's control, and which may cause the actual results, performance or achievements of Iluka or Sierra Rutile to be materially different from future results, performance or achievements

xpressed or implied by such statements.

Other than as required by law, none of Iluka, Sierra Rutile, their officers, advisers nor any other person gives any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward looking statements in this Demerger Booklet will actually occur.

ForAdditionally, statements of the intentions of the Iluka Board r the Sierra Rutile Board reflect the present intentions of

the Iluka Directors and Sierra Rutile Directors respectively as at the date of this Demerger Booklet and may be subject to change as the composition of the Iluka Board and Sierra Rutile Board alters, or as circumstances require.

Except as required by law, Iluka and Sierra Rutile disclaim any obligation or undertaking to update or revise any forward looking statement in this Demerger Booklet.

ORE RESERVE AND MINERAL RESOURCE ESTIMATES AND PRODUCTION TARGET

The information in this Demerger Booklet that relates to Mineral Resource estimates for Area 1 is based on information compiled by Mr Brett Gibson, who is a member of the Australian Institute of Geoscientists. The information in this report that relates to Ore Reserve estimates for Area 1 is based on information compiled by Mr Andrew Walkenhorst who is a member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Gibson and Mr Walkenhorst are full time employees of Iluka Resources Limited. Mr Gibson and Mr Walkenhorst 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' (JORC Code). Mr Gibson and Mr Walkenhorst consent to the inclusion

in this Demerger Booklet of the matters based on their information in the form and context in which it appears.

The Ore Reserve and Mineral Resource estimates for Sembehun were presented in an announcement released by Iluka on the ASX on 24 February 2022 "Sembehun Ore Reserve and Mineral Resource Update, Sierra Leone" and is available to view at www.iluka.com/investors-media/asx-releases. Iluka confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement for Sembehun and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement for Sembehun continue to apply and have not materially changed.

The Production Target and forecast financial information derived from the Production Target for Sembehun referred to in this Demerger Booklet are based on 36% Probable Ore Reserves and 64% Proved Ore Reserves. The material assumptions used in the estimation of the Production Target and associated forecast financial information are set out in Section 3.12 of this Demerger Booklet. The Ore Reserve estimates underpinning the Production Target for Sembehun were prepared by Competent Persons in accordance with the JORC Code.

The Mineral Resource estimates for the Gambia, Jagbahun, Nyandahun and Taninahun Boka deposits separate to Area 1 and Sembehun were presented in an announcement released by Iluka on the ASX on 20 February 2017 "Updated Mineral Resource and Ore Reserve Statement" and is available to view at www.iluka. com/investors-media/asx-releases. Iluka confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement for Gambia, Jagbahun, Nyandahun and Taninahun Boka and that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement for Gambia, Jagbahun, Nyandahun and Taninahun Boka continue to apply and have not materially changed.

2 Demerger of Sierra Rutile Holdings Limited

For personal use only

PRESENTATION OF FINANCIAL INFORMATION

The Iluka Historical Financial Information within this Demerger Booklet has been derived from the financial reports of Iluka for the years ended 31 December 2019,

31 December 2020 and 31 December 2021, which were audited by PricewaterhouseCoopers in accordance with Australian Auditing Standards. PricewaterhouseCoopers issued unqualified audit opinions on these financial statements. The financial statements for these periods are available from Iluka's website (www.iluka.com) or the ASX website (www.asx.com.au).

The Sierra Rutile Pro Forma Historical Financial Information has been derived from the Sierra Rutile Investments (BVI) Limited's (Sierra Rutile BVI) financial statements, audited by PricewaterhouseCoopers, and adjusted for the effects of the pro forma adjustments described below. PricewaterhouseCoopers issued unqualified audit opinions with an emphasis of matter on going concern and on

the basis of accounting and restriction on distribution and use on the 2019 and 2020 financial statements and an unqualified opinion with an emphasis of matter on basis of accounting and restriction on use on the 2021 financial statements. The emphasis of matter on the basis of accounting and restriction on distribution and use relates to the Sierra Rutile BVI financial statements having been prepared to satisfy the requirements of the IFC Shareholders Agreement (which terminated on

13 May 2022). The accounting records behind these financial statements were also used to generate Iluka's financial statements for the years ended 31 December 2019, 31 December 2020 and 31 December 2021.

Sierra Rutile BVI is a direct subsidiary of Sierra Rutile. Sierra Rutile is a holding entity, therefore the results of the Sierra Rutile BVI consolidated group materially reflect the historical financial information of Sierra Rutile.

The Iluka Historical Financial Information has been prepared in accordance with the recognition and measurement principles contained in Australian Accounting Standards (AAS), which are consistent with International Financial Reporting Standards (IFRS).

The Iluka (post Demerger) Pro Forma Historical Financial Information and the Sierra Rutile Pro Forma Historical Financial Information within this Demerger Booklet has been prepared consistent with the recognition and measurement principles contained in AAS, which are consistent to IFRS, other than that it includes adjustments which have been prepared in a manner consistent with AAS, that reflects:

• the recognition of certain items in periods different from the applicable period under AAS;
• the exclusion of certain transactions that occurred in the relevant periods; and
• the impact of certain transactions as if they occurred as at 31 December 2021 in the pro forma historical balance sheets and immediately prior to 1 January
  2019 in the pro forma historical income statements and free cash flow statements.

The Iluka (post Demerger) Pro Forma Historical Financial Information and the Sierra Rutile Pro Forma Historical Financial Information has been prepared on a consistent basis to the accounting policies set out in Iluka's financial statements for the year ended 31 December 2021.

The Sierra Rutile Pro Forma Historical Financial Information has been prepared on a consistent basis to the accounting policies set out in Sierra Rutile BVI's audited financial statements for the year ended 31 December 2021.

In preparing the Iluka (post Demerger) Pro Forma Historical Financial Information and the Sierra Rutile Pro Forma Historical Financial Information, certain adjustments were made to the historical financial information of Iluka and Sierra Rutile that Iluka and Sierra Rutile considered appropriate to reflect the effect of the Demerger, as described in this Demerger Booklet. The financial information contained in this Demerger Booklet is historical only. Past financial performance is not necessarily a guide to future financial performance.

PRIVACY AND PERSONAL INFORMATION

Iluka, Sierra Rutile and their respective share registries (each an Organisation), may collect personal information in the process of implementing the Demerger. The personal information may include the names, addresses, other contact details and details of the shareholdings of Iluka Shareholders, and the names of individuals appointed by Iluka Shareholders as proxies, corporate representatives or attorneys at the Extraordinary General Meeting.

Iluka Shareholders who are individuals, and individuals appointed as proxies, corporate representatives or attorneys in respect of whom personal information is collected as outlined in this Section have certain rights to access their personal information. They should call the Shareholder Information Line on 1300 733 043 (within Australia) or [phone] (international) on weekdays between 8.30am and 5.00pm (AEST) if they wish to request access to the personal information held by any of the Organisations. Iluka Shareholders who appoint an individual as their proxy, corporate representative or attorney to vote on the Demerger Resolution should inform those individuals of the matters outlined in this Section.

Demerger of Sierra Rutile Holdings Limited 3

The personal information will be collected for the purpose of implementing and administering the shareholdings arising from the Demerger. An Organisation may, to the extent permitted by law, disclose personal information collected by it to another Organisation, to securities brokers, to print and mail service providers and any other

onlyservice providers and advisers engaged by an Organisation in relation to the implementation and administration of the shareholdings arising from the Demerger. The personal

i formation of Ineligible Overseas Shareholders and Selling Shareholders may also be disclosed to the Sale Agent for the purposes of operating the Sale Facility.

The main consequence of not collecting the personal inf rmation outlined in this Section would be that Iluka may be hindered in, or prevented from, conducting the

useExtraordinary General Meeting and implementing the D merger.

INTERPRETATION

Capitalised terms and certain abbreviations used in this Demerger Booklet are defined in the Glossary in Section 10.

In this Demerger Booklet, the term "Iluka (post Demerger)" is used to describe Iluka as it will exist after the Demerger personalhas been implemented. The term "Iluka (post Demerger)" is used in this Demerger Booklet for simplicity of explanation

only, to distinguish between that entity during the period prior to, and the period after, the Demerger. However, Iluka a d Iluka (post Demerger) are and will remain the same legal entity and corporate group, which is Iluka Resources Limited and, where the context requires, its Subsidiaries fr m time to time.

The term "Sierra Rutile" used in this Demerger Booklet reflects the separation principles outlined in Section 5.2, with references to Sierra Rutile in the historic period as it will exist after the Demerger has been implemented. The t rm "standalone" is used to describe Sierra Rutile as it will exist after the Demerger, with a separate board and management team from Iluka (post Demerger).

For

References in this Demerger Booklet to the "Sierra Rutile Board" or to "Sierra Rutile Directors" means the board or directors of Sierra Rutile immediately prior to implementation of the Demerger (or from the time following the implementation of the Demerger). It is intended that the board of Sierra Rutile will be reconstituted prior to Implementation to reflect the board composition set out in Section 3.23.1. References in this Demerger Booklet

to strategies or policies to be applied by Sierra Rutile following the Demerger reflect the views and intentions of the intended directors of Sierra Rutile immediately prior to implementation of the Demerger and Sierra Rutile senior executives.

Unless otherwise stated, all times and dates referred to in this Demerger Booklet are times and dates in Australian Western Standard Time (AWST). All dates and times following the date of the Extraordinary General Meeting are indicative only and, among other things, are subject to all necessary approvals from regulatory authorities. Any changes to the timetable will be announced through ASX and will be notified on Iluka's website at www.iluka.com.

In this Demerger Booklet, unless otherwise specified or the context otherwise requires, references to $ or A$ are to Australian dollars.

All references to years are references to Iluka's financial years, ending 31 December, unless otherwise indicated.

Any discrepancies between totals in tables and sums of components contained in this Demerger Booklet and between those figures and figures referred to in other parts of this Demerger Booklet are due to rounding.

DATE

This Demerger Booklet is dated 20 June 2022.

SUPPLEMENTARY INFORMATION

Refer to Section 9.10 for information about the steps that Iluka will take if information about the Demerger needs to be updated.

4 Demerger of Sierra Rutile Holdings Limited