Iluka Resources Limited (ILU) Earnings Call Transcript & Summary

Well, good morning, ladies and gentlemen. I'm your Chairman, Greg Martin. And on behalf of the Board, I'd like to welcome you to the 66th Annual General Meeting of Iluka Resources Limited. In light of the ongoing COVID-19 pandemic, today's meeting is being held with online participation by shareholders via the Lumi platform. The Board's decision to run this meeting online was not an easy decision to make, but paramount to our decision was not to take any unnecessary health and safety risks to our shareholders, proxy holders, employees and other attendees in a COVID-19 environment; and secondly, to provide our shareholders globally the ability to participate in the meeting. While every effort has been made to ensure that this meeting runs smoothly for our shareholders, if technology issues do arise, you'll be able to access the Chairman's and Managing Director's addresses and the results of voting on the ASX platform and on our website. We very much appreciate your understanding during this challenging and ever-changing time. Before we commence formal proceedings, I'd like to acknowledge the traditional custodians of the land here on the East Coast-based directors are broadcasting from today in Sydney, to the Gadigal People. I'd also like to acknowledge the traditional custodians of the land on where our Perth-based directors are broadcasting from, the Whadjuk People. We wish to acknowledge and respect their continuing cultures and the contributions they make to the life of their respective cities and regions. As I've mentioned, shareholder participation at this meeting will be supported through the Lumi platform. Shareholders and proxy holders will have the opportunity to ask questions, make comments and vote at the meeting using the online platform. Please ensure that you've been registered as a shareholder or proxy holder and not as a guest as guests are not entitled to ask questions, make comments or vote at this meeting. [Operator Instructions] Your question will be sent immediately for review. If you have a question already prepared, please submit it now so that we can answer as many questions as possible when it comes to the formal item of business. [Operator Instructions] All questions this morning will come to me as Chair of the meeting via Sue Wilson, our Company Secretary. If there is duplication of questions, we will group them together. And if questions are particularly lengthy, we may need to summarize them in the interest of time. I will either answer the question or pass it to the most appropriate person to answer. [Operator Instructions] We have also received questions from shareholders in advance of today's meeting, which will be covered at the appropriate time. Voting today will be conducted by way of a poll on all items of business. Once the poll is open, and if you are eligible to vote at this meeting, a voting icon will appear in your browser. Selecting this icon will bring up the resolution and present you with voting options. To cast your vote, simply select one of the options. The selected option will then change color. There is no need to hit the submit or enter button as the vote is automatically recorded. Any appointed proxy who has been given discretion on how to vote should vote in the same manner. Any appointed proxy that has been directed to vote in a certain manner and has no discretionary votes to cast does not need to vote on those votes because they'll automatically be counted in accordance with those instructions. If you experience any difficulties with the online platform, the help line number is displayed at the bottom of the page and is 03 94154024 if you're observing and participating here in Australia or +61 (394) 154024 if from outside Australia. I'm advised that a quorum is present, and therefore, I have pleasure in formally declaring the meeting open. To ensure everyone the best opportunity to vote, I now also declare the poll open. You can vote throughout the meeting using your browser. You can also change your vote up until the time I declare voting closed, and I'll give you a warning before closing voting. I'd now like to introduce my fellow directors. Except for Andrea Sutton, each director's experience and qualifications are outlined on pages 53 to 57 of the Iluka 2020 Annual Report. Andrea's experience and qualifications are outlined in the Notice of Meeting, as Andrea is up for election today. First is Rob Cole, who joined the Board in March 2018. Rob is a member of the People and Performance Committee and will take on the role as the Committee's Chair upon Hutch Ranck's retirement at the end of this meeting. Rob is standing for reelection today. I'll introduce Rob before the resolution for his election so that Rob has the opportunity to address the meeting. Next is Sussie Corlett, who joined the Board in June 2019. Susie is a member of the Audit and Risk Committee. Next is Hutch Ranck, who joined the Board in January 2013. Hutch is Chair of the People and Performance Committee. Hutch will be stepping down from the Iluka Board at the end of this meeting, and I'll say more about Hutch and his significant contributions to the Board during my Chairman's address a little later on. Next is Marcelo Bastos, who joined the Board in February 2014. Marcelo is a member of the Audit and Risk Committee. Next is Lynne Saint, who joined the Board in October 2019. Lynne is Chair of the Audit and Risk Committee. And next is Andrea Sutton, our newest Board member, who joined the Board in March 2021. Andrea is a member of the People and Performance Committee. As mentioned earlier, this is Andrea's first AGM with Iluka and is standing for election today. In addition to the committee memberships just mentioned, I note that all nonexecutive directors are also members of the Nominations and Governance Committee. Next, I'd like to introduce Tom O'Leary, Iluka's Managing Director, who joined the company in September 2016. Also in attendance at Iluka's office in Perth is our company Secretary, Sue Wilson, who joined Iluka in December 2016. Also participating today are members of Iluka's executive management team who are currently being shown on the screen now. And the final introduction is for Helen Bathurst, a partner of PricewaterhouseCoopers and the company's external auditor. Helen is in attendance at our Iluka's Perth office and will be available to answer any questions shareholders may have on the conduct and content of the 2020 audit and the auditor's report. Moving now to the formal part of the meeting. The Notice of Meeting for this year's Annual General Meeting was distributed to shareholders in March, and I propose that it will be taken as read. As in previous years, formal business will commence with my address. Well, ladies and gentlemen, since becoming Iluka's Chairman, April is a month I have come to look forward to, not least because our AGM provides the opportunity to catch up with shareholders, many of whom have been owners of the company for many years. The anticipation typically begins to build a few weeks beforehand when, in mulling over my address, a customer remind me back to what I said 12 months ago at last year's AGM. And I have to confess that these have been -- there have been times when that process has served as a very good reminder that we are not fortunetellers. Thankfully, in reflecting on my remarks last year and the year that subsequently unfolded, I was struck by the statement of the somewhat obvious I made at the commencement of our 2020 Annual General Meeting, that we will be meeting in unprecedented circumstances. And of course, we were, both historically and logistically. In the intervening period since making that observation, like you, I've been struck by the extent of the global impacts of the pandemic and the mix of emotions it's about: fear, sadness, frustration, relief, especially from the vantage point of those of us fortunate enough to live in Australia and, more recently, cautious optimism that vaccines developed in record time may prove to be the key to a return to something akin to our pre-COVID way of life. Notwithstanding this latter sentiment, one of the things that still doesn't feel quite right this April and where the crystal ball failed me badly last year is that we are yet again meeting virtually and not in person. A number of factors guided us in reaching this decision. And we acknowledge that in the current climate there is no perfect solution. While a physical attendance meeting could have been possible in the planning stage, we opted for a virtual meeting as a means to mitigate the impact of snap lockdowns as we've seen imposed in recent days in Western Australia. Just as importantly, we felt it vital to provide the opportunity for the vast majority of our shareholders who reside outside Western Australia to meaningfully participate at a time where unfettered freedom of movement cannot yet be assured, and we thank shareholders with their understanding and consideration. Turning now to business performance. 12 months ago, Iluka, like virtually every other company, faced substantial uncertainty on a good many fronts. This included operational and supply chain continuity, the level of demand for our products and the efficacy of timetables for planning to corporate and major project developments. So what did we do? And how did we fare in response? Thanks to the rapid implementation of extensive crisis management plans and risk mitigation actions by Tom and the team, we did maintain all of our operations and supply chains. In Australia, Iluka recorded 0 cases of COVID-19. In Sierra Leone, which has had a very different experience of the pandemic, the company has recorded a cumulative total of 31 cases. Tellingly, we achieved the operational continuity while recording a 20% reduction in serious potential safety incidents, rehabilitating 584 hectares of disturbed land and increasing indigenous employment at our Jacinth-Ambrosia operation to almost 30% of the workforce. By once again demonstrating our deep understanding of our markets and by employing operational discipline, we did sustain prices for our products. As the Managing Director and I outlined in our letter to shareholders in February, Iluka adjusted production settings in the second quarter of last year, following a significant drop in demand for zircon at the onset of the pandemic. This, combined with other measures, reduced global zircon supply by around 10%, preserving margins and adding a gradual market recovery over the second half of the year. By focusing on prudent elements of our Australian operations and our Australian development pipeline, we did make important progress across Iluka's major project portfolio and, by extension, investment in the company's future. This was particularly the case for our key mineral sands technology projects and for Iluka's well-signaled reentry to the rare earths market through our strategic stockpile at Eneabba, a development which Tom will expand upon shortly in his remarks. And perhaps, most significantly, against the backdrop of uncertainty we were seeing everywhere, we did carry through with our plans announced pre-COVID to demerge our Mining Area C royalty business and, in doing so, create Australia's largest list of royalty company, Deterra Royalties, in which Iluka retained a 20% stake. The results associated with all of these and many more actions are documented in Iluka's 2020 Annual Report released on the 25th of February and in the company's sustainability report released just recently on the 23rd of April. While it certainly was not the year that we had hoped for or planned, at the beginning of 2020, we still managed, in the midst of a once-in-a-century pandemic, to end the year in a net cash position, having delivered tangible and quantifiable value for shareholders through the demerger and through the payment of a modest dividend while also advancing strategic plans and initiatives that hold the prospect of substantial future value creation. Also nestled within these results are a couple of important insights regarding Iluka's commitment to its core objective of delivering sustainable value. We've spoken at some length over the past 18 months or so about the demerger of the royalty business, and so I'm not going to trawl over that ground yet again today. I would just like to note, however, that if ever there was a convenient excuse to step back from taking a company-changing decision such as this, surely, COVID-19 was it. After careful and contemplated consideration, your Board determined to press on, guided by a considered view that the demerger was in the best interest of shareholders and that Iluka and Deterra could each look forward to promising futures in their own right. While still early days since the demerger, your Board is pleased to see how businesses -- how both businesses have focused on those matters and issues appropriate to each of them. The objective we have set ourselves at Iluka is to deliver sustainable value. And while we pursue that objective diligently and talk about it at every opportunity, it's often observed that actions speak louder than words. And if you'll indulge me for a moment, we believe that's been borne out by the actions taken by your Board and management late last year on executing the demerger. Similarly, Iluka's stance in relation to the Australian government's JobKeeper program has been the source of some external commentary over the past few months. To recap, maintaining our strong balance sheet has been a core component of our approach to addressing the impacts of the pandemic. When COVID-19 struck, the impact on Iluka's zircon revenue was significant and the path to recovery far from clear. We qualified for JobKeeper on that basis, receiving payments totaling $13.6 million. Given our subsequent much-improved financial performance as compared to what we feared it might be, we considered returning the JobKeeper payments received to simply be the right thing to do. We also judged it in keeping with the intent with which such payments were made by the Commonwealth in the first place. It was, in fact, a very easy decision for the Board to make and entirely consistent with Iluka's values, which guided informed decision-making right across the business. The repayment of the JobKeeper, in fact, occurred just yesterday, and the moneys are back with the ATO. Now briefly to other matters of note. Today marks the first Iluka AGM for our newest Director, Andrea Sutton, who joined the Board in March. Andrea brings to the Board over 25 years of expertise and hands-on experience that will both complement and strengthen the Board's existing collective skills and capability. As it is with all life cycles, as we welcome Andrea, we also are bidding farewell from the Board to Hutch Ranck. I now like to speak on behalf of my fellow directors in observing that Hutch has made an exceptional contribution to the Board since joining in January 2013, including as Chair of the People and Performance Committee and as a member of the Nominations and Governance Committee. He has been a source of invaluable counsel to me personally, for which, as he and I both know, I'm in his debt. On behalf of everyone at Iluka, we say a very big thank you to Hutch for his wisdom and for his insights but also for the genuine care and interest he has for Iluka's people and in their personal growth and development. And we wish Hutch all the very best for his future endeavors. Ladies and gentlemen, I'm sure that I'm not stretching fragility when I say 2020 was an eventful year like none other, both inside and outside of Iluka. This morning, I've attempted to provide a small slither of insight into some of those key events over the last 12 months. What lies behind each of them and what should not be overlooked is the unrelenting commitment of Iluka's people whom I thank for their dedication and professionalism. I also extend my thanks to our shareholders for their continued interest and support of the company. Fundamentally, Iluka's disciplined performance in the face of external uncertainty reflects the resilience we've talked about for some time by which, on any objective measure, was on display and well demonstrated last year in dealing with a good number of curveballs. This is a vital organizational capability as we look to meet the continuing challenges in the many parts of the global economy where COVID-19 remains a very large and present threat to lives and to livelihoods. While this will have some bearing on how Iluka goes about conducting business in some parts of the world, we are also fortunate to be living in an almost COVID-free environment that affords us the ability of getting on with pursuing some of the interesting and exciting opportunities that will underpin the company's future. And speaking of which, Tom is now going to address the meeting on these opportunities and on our approach to successfully pursuing them. Thanks very much, Tom. Tom, you're on mute.

Thank you, Greg, and welcome all. It has, indeed, been an eventful year, and I think we can expect similar levels of activity over the coming period. Iluka commenced 2021 with a healthy balance sheet, signs of demand recovery evident in our key markets and the operational flexibility to respond to this demand as and when it eventuated. Pleasingly, the strength of that position has been reinforced by a very positive performance in the first quarter, which is typically a seasonally slower part of the calendar year. Sales of our core products were up almost 30% on Q4 2020, and we continue to look to the months ahead with the cautious optimism the Chairman mentioned earlier. In the zircon market, we're seeing solid demand across all sectors and geographies, translating to both volume and price growth. In February, Iluka announced a $70-per-tonne price increase effective 1 April, which has been well accepted by our customers. Consistent with the company's approach for some years now, we're focused on supplying into genuine underlying demand only, mindful of the volatility that characterized this market at the turn of the last decade in particular. For titanium dioxide feedstocks, conditions remain robust with pigment producers having announced a series of price increases since the second half of 2020. This is the part of Iluka's business that is characterized by longer-term contractual arrangements for our retail and synthetic retail products. And the company has a minimum of 295,000 tonnes under take-or-pay contracts with a range of customers for 2021. An additional 30,000 tonnes have also been contracted for the year so far. I've spoken in the past about the revenue certainty provided by our take-or-pay contracts. That certainty was challenged substantially last year with one of our major customers, Chemours, electing not to comply with its obligations. Confronted with these circumstances, we regarded it as an imperative to defend our contractual rights and protect the interest of our shareholders whose capital we deployed at Cataby on the basis of the contract. The dispute is currently the subject of litigation before the New York State Supreme Court. In a positive development, Chemours recommenced taking products in line with the contract for 2021. From an operational perspective, our Australian processing assets have returned to full production, reflecting market conditions. At the Narngulu mineral separation plant, this occurred in January. synthetic rutile kiln 2 at Capel was idled during February and March as a result of inventories being at elevated levels due to the Chemours dispute in 2020. The recommencement of sales to Chemours, combined with demand for high-grade feedstocks generally, enabled the resumption of production in April earlier than anticipated. Eneabba, once a multi-decade mineral sands province, returned to operational status in 2020 and is now the world's highest-grade rare earths operation with Phase 1 production activities progressing as planned. The Chairman highlighted our indigenous employment at Jacinth-Ambrosia, which is both a source of pride for the company and an example in terms of future operations. The bedrock of this performance is Iluka's strong working relationship with the Far West Coast people of South Australia, which has several touch points, including in Board and Executive level. I mentioned this because it has obviously been a tumultuous year for the resources industry in relation to cultural and heritage matters. While Iluka makes no claims to perfection, like others, we have much to learn. I do think fostering these touch points build strength in the relationship, and this will continue to be a central part of our approach to sustainable development. While our operational performance in Australia has been impressive, this has not been the case in Sierra Leone. What was already a challenging situation at Sierra Rutile has, in recent times, become increasingly acute, including as a result of the impact of COVID-19. This has led to poor production outcomes and a financial performance that is unacceptable. The Sembehun development is the investment opportunity that lies ahead for Sierra Rutile as one of the world's best undeveloped rutile deposits. I've outlined previously that further investment by Iluka in Sierra Rutile, namely the Sembehun development, is contingent on our current operations in the country, demonstrating improvement and consistency. In January, we announced an external process to identify third parties willing to invest in the next phase of Synthetic Rutile's growth. That process continues. And finally, on Sierra Rutile and Sembehun, our plan to trial a new mining method, hydraulic mining, remains in place, and the trial should proceed in May as scheduled. The trial is targeted at improving the mining approach to Sembehun that will occur within the existing operational area. Returning to Australia. Iluka continues to make important and pleasing progress across the company's development pipeline. In our mineral sands portfolio, this includes major projects such as Balranald in New South Wales, Atacama in South Australia and Wimmera in Victoria, which contains both mineral sands and rare earths. Work on each of these developments is focused on overcoming long-known technical challenges, either from a mining or a processing perspective. It's also significant that both the mining technology we're developing at Balranald and the zircon processing technology we're developing for the Wimmera deposit have potential applications beyond these respective deposits, both within and outside Iluka. As I said at the full year results, this underscores the industry significance of each project in a post-COVID-19 world, where international mobility may be more limited and where overcoming technical challenges in mature jurisdictions may assume greater significance than has been the case over the last decade. Aside from the demerger of Deterra, perhaps the area of greatest external interest in Iluka in the period since our last Annual General Meeting has been the company's reentry into the rare earths market. I thought I might close my remarks today by reiterating a few points on our strategy in this area and its status. Phase 1 operations at Eneabba commenced last April. In 2020, we sold 44,000 tonnes of product, our mixed monocyte and mineral sands concentrate, and we'll sell a similar amount this year. And that is all we plan to sell under Phase 1 in line with our incremental approach. Phase 2 is currently under construction with commissioning scheduled for the first half next year. This will produce 2 separate products: our mineral sands concentrate, which will be further processed at Narngulu; and 90% monazite feedstock concentrate, which is a direct feed to a rare earths refinery. The latter is strategically significant in that it's a much higher-value product relative to Phase 1, and it also widens our potential customer base considerably. With no mining associated with any other stockpile, Phase 2 represents a development that is low cost, both in terms of capital and operating expenditure; low risk and high return with an anticipated life of approximately 10 years. That said, we may choose not to sell a material quantity of our Phase 2 monocyte products, subject to determining our own plans to move downstream. In January, Iluka commenced a feasibility study for Phase 3 of fully integrated rare earths refinery at Eneabba, which, if it existed today, would be the only such refinery in the western world. That decision followed extensive discussions with the Australian government, discussions which are ongoing. The feasibility study is progressing, and the key elements of the study are scheduled to be complete this year. Phase 3 represents an exciting and potentially defining opportunity for Iluka, consistent with our long-standing plans to diversify into rare earths. However, it's not an opportunity without risk, nor one we will pursue at any cost, particularly when considering the projected returns from Phase 2. This is the focus of our discussions with government, along with potential for alignment between commercial objectives and policy objectives regarding supply chain security for critical minerals, modern manufacturing and the essential applications of some rare earths in a future low-carbon economy. I've been impressed with the quality of engagement Iluka is receiving on these matters, and shareholders can be assured we're progressing this part of our business with the same discipline we apply elsewhere. I'll conclude by echoing the thanks expressed by the Chairman to Iluka's people, our shareholders and all of our stakeholders. We look forward to taking -- to come back to the business of the meeting.

Well, thanks very much, Tom. Look, for long-term followers of the company, our shareholders have been with us for many years. You might have detected that this year's addresses by the Managing Director and by myself was somewhat different to prior years. Last year was a very -- last year was a very different and difficult year for us all, as we all know, as we reflected on the years that we respectively had last year and for Iluka was a great opportunity for us to really look and see whether we did have the resilience that we talked about, whether we did have the capabilities that we said we had in the business to deal with challenging times and circumstances. And certainly, from the Board's point of view, we feel that we delivered very well on that. And so you'll forgive us the year that we had. And hopefully, from Tom's remarks, you've got a real sense that there's a direction, there's a future direction for the business now and some very exciting opportunities in front of us, which Tom and the team are pursuing, and I know that you wish them all the well as they do that on our behalf. My announcement is that both my address and that of the Managing Director are available at the company's website, and they'll also be on the ASX company announcement platform shortly. So ladies and gentlemen, we do now come to the agenda items of the meeting. Each of the agenda items will now be considered in turn and, for which, we will answer the questions submitted for that item. We've also received a number of written questions in advance of the meeting, which we will also address as we come to each item relevant to each item of business. As mentioned, in accordance with the Corporations Act and the company's constitution, all voting today will be conducted by way of a poll, and as mentioned earlier, the poll is already open. You may vote through the online platform in your browser. Now let's proceed to the first item of business. The first item on the agenda of the meeting is to receive and consider the annual financial report, the director's report and the auditor's report for the company and its controlled entities for the year ended 31st of December 2020. This item of business also gives shareholders the opportunity to ask questions about Iluka and its operations. Shareholders may also ask questions of the order through the online facility. Such questions must be relevant to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted in preparing the financial statements and as to the auditor's independence. Please note that no resolution or vote is required on the financial report. To give shareholders a final chance to submit their questions, I'll respond to the questions already submitted first. Sue, if you could please read the meeting of the comments and questions that we have received in advance of the meeting.

Thanks, Greg. We have received some comments and questions from Mr. Geoff Reid as a proxy holder on behalf of approximately 50 Australian Shareholders' Association members. I will read out Mr. Reid's comments. "Good morning, Chairman. Thank you to the Board, managers and all employees of Iluka for a solid result under the most difficult circumstances in 2020. Thank you for keeping all the employees safe and for returning the JobKeeper payments to the ATO. Thank you for the successful Deterra demerger, which has created value for shareholders." Mr. Reid's first series of questions relate to the Sierra Rutile operations and read, "Once again, SRL made a loss and fell short of budgets and expectations. Whilst COVID-19 must be a part of the cause, this is becoming an unwelcome recurrence at SRL for some 5 years now. What is the Board's plan to return SRL to profitability? And how long will shareholders have to wait for this? When can shareholders expect to see a bankable development plan for the world-class Sembehun deposit that is the future of SRL? If you are unable to achieve the first 2 points, will you commit to divesting SRL?" So I'll hand back to you, Greg, to deal with that -- those questions.

Well, thank you, Sue, and good morning to you, Geoff. I must say I never thought that when we met in this format this time last year that we would be doing it again this year and unfortunately, but for, I think, very unfortunate timing we may have been together. But for all the reasons we've outlined before, we are meeting this way, and I was very pleased that I was able to meet with you, albeit virtually, just a few weeks ago to discuss the prospects and fortunes for the company as well as reflect on its results for last year. So look, thank you for your continued interest and support of the company and some of the actions that we undertook last year. I'm going to get Tom to make a few more comments on over, but let me just start by saying that Tom, in his address, made some comments regarding the Sierra Rutile operations, which were very accurate. I mean plainly, the financial performance at Sierra Rutile has been unacceptable. And in recent times, as you might have gathered from the remarks I made, we've got a little insight into the challenges that have grown ever increasing, particularly under pandemic circumstances with all sorts of things that we take for granted and developed country like Australia being even more difficult in a very developing and fragile economy such as Sierra Leone. As we noted in our prepared remarks, COVID-19 has really taken a significant toll in Sierra Leone, not just in terms of physical terms on site, but more so on mental terms. You remember, this is the second pandemic that Sierra Leone has experienced since the 2014 outbreak of Ebola. And that is very much on the minds of people in that country who went through a very difficult time not that long ago. I guess if I was to speak really very frankly about those operations, just maintaining them over the last 12 months has been a very significant challenge. And whilst we can't call it an achievement perhaps, if you can just kind of, like, for a moment put yourself into a situation of a country like that just trying to maintain a business and operations under very difficult circumstances, I'd say, on behalf of the Board, I think Tom and the team have done an exceptional job in keeping the wheels on, if you will. And what's made it more difficult, of course, is we do rely upon an expat team of highly skilled specialists that come into country and perform various parts of the -- parts of the operations. And that in itself been a real difficulty over the last sort of period of time with -- for many months, our expat work is actually being locked in-country, unable to rotate out just simply by virtue of the lack of air traffic links in and out of the country. So it has been a very difficult time, and to our expatriate workers who went through that period, we're very grateful for their willingness to sort of stay on and -- for many months. So perhaps, I'll let Tom make a few more comments that might give more granularity and -- to your question, Geoff. Thanks, Tom. You're on mute.

Thanks, Greg. There's not a lot to add to what you've outlined, only to reiterate our position that further investment in Sierra Leone by Iluka is contingent on demonstrating operational improvement and consistency, something that we didn't achieve in 2020. In January, we announced an external process to identify third parties willing to invest in the next phase of Sierra Rutile's growth, and that process continues. Beyond that, there's nothing to add to what you've said, Greg, or what I've said in my opening remarks.

Thanks, Tom. Do we have further questions, Sue?

We do. Mr. Reid's last question relates to the company's dividend, and it reads, "Shareholders were disappointed by the small $0.02 dividend this year. The Board policy is of distributing only 40% of free cash flow, after taking into account balance sheet and CapEx requirements, is not working in shareholders' interests. This policy may have been appropriate when Iluka owned the entire MAC royalty stream, but it should be reconsidered now the royalty stream is owned by Deterra. Our company has had 0 debt since 2017, and the CapEx required to sustain the business has been modest. Interest rates are low at present, which makes debt a low-cost option. By paying dividends at such a low rate, you are accumulating so many franking credits that it is unlikely they will ever be distributed. They increased by 120% in 2020. We would prefer to see a dividend policy, which pays out at least 70% of net profit after tax, or NPAT, each year, unless there are exceptional reasons for a different choice. Will the Board agree to review the dividend policy to one that pays a larger percentage to shareholders?"

I'm smiling, Geoff, because this is a matter that we converse every year. We talk about the dividend policy and as part of our overall capital management and the management of the finances of the business. And this year, I've enjoyed the conversation immensely. And for the benefit of all shareholders, let me just reiterate some of the comments I made to Geoff at the time on this question. First and foremost, delivering value for Iluka's shareholders is at the center and core of what we do as a company. As I mentioned earlier in my address that demerger of the Deterra business and the circumstances of last year is, I think, a concrete example of the -- we really mean what we say in relation to that objective. As you all know, and as Mr. Reid knows well, as part of the demerger process, the Board did review and determine to maintain our long-standing dividend framework to pay out 40% of free cash flow, not required for investing or balance sheet activity. And while that framework is reviewed regularly, at present, we have no plans to change it. I'd also note that as a company, in terms of delivering on our dividend framework, we probably have done more so than most resources companies. We've got a track record of delivering, in fact, above-average returns to shareholders through the cycle compared to alternate resource sector investments in Australia. Our dividend framework is sustainable, and it takes into account the dynamics of the mineral sands industry, which historically has been very cash-generative. We have sufficient capacity and capability to continue to deploy capital in a disciplined manner while also delivering cash returns to shareholders. With respect to our investing activities, as a resources company, [ we've got ] time to have large amounts of capital spend to execute on the development of our options. And sort of it's a nature of the business where we are at the moment. As you know, we have a development pipeline of projects in far west as we look forward to those projects moving through the various stages, various gates to being sanctioned. We need to keep a careful eye on both the level of indebtedness of the company, the capacity of the business to afford and deliver those projects and, of course, at the same time, a view to paying dividends to shareholders. You referenced, I think, Geoff, to using net profit after tax is problematic for us and to the Board because free cash flow is not aligned with net profit after tax since capital expenditure spend is clearly below the line and not within the definition of net profit after tax. So net profit after tax, if you could look at one level, but when you look at the requirement for funding of projects and what have you, we believe as a Board that free cash flow is, in fact, the better measure to be used. And so it's a balance at all times. At the moment, as we move into this investment phase, we're very comfortable with the continuation of that dividend framework. With respect to the balance sheet, we do have a strong balance sheet. We have always maintained a strong balance sheet. We've been accused at times of being conservative in doing so. And I can well recall before the pandemic, many folks traversing Tom's door and sort of part of the time making contact with me suggesting that we carry a core level of debt because in doing so, that gives us a better overall cost of capital and a whole other benefits that flow from gearing the business. Well, I just have to say, I think with what's happened over the last 12 months, with the nature of our products, with a lack of a forward market, we sell into a bilateral market, I actually think that conservative approach has served the interest of Iluka shareholders very well. And we're very pleased, at this stage, with a large pipeline of projects in front of us, to be running with a very strong balance sheet to support the development of those projects as they come forward for sanction. So I guess, Geoff, we're going to continue that discussion and perhaps agree to disagree. But our aim and, I think, our performance has always been if we don't need it, we'll give it back to shareholders. And I think our track record over recent years has borne that out. So thank you very much for the question, and I look forward to the continuing discussion on this issue. So Sue, can I hand back and ask if there are any other questions?

No other questions, Greg.

All right. Well, that being the case, we'll now move on to the next item of business, given, as I've said, that there is no vote on the financial reports. The next item of business is for the reelection -- sorry, for the election of Andrea Sutton, which is Resolution 1 in the notice of meeting. The details of Andrea's qualifications and experience are set out in the Notice of Meeting. Andrea was recently appointed to the Board as an additional director in March of this year and retires in accordance with Article 16.4 of the company's constitution. Being eligible, Andrea offers herself for election at this meeting. Before a new director is appointed, the Board considers the skills and qualities required to complement the existing directors and the requirements of the company as we look forward. A professional search firm was engaged during the process. All members of the Board were involved in the final selection, and thorough background checks were conducted prior to Andrea's appointment. Andrea contributes to the Iluka Board over 25 years' expertise 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. The Board considers Andrea's significant operational and commercial skills and experience in the resources sector to enhance the Board's ability to perform its role and will be valuable to Iluka's long-term and sustainable success. Andrea is a member of the People and Performance Committee and the Nominations and Governance Committee. Andrea is considered by the Board to be an independent director. The Board, with Andrea abstaining, unanimously supports her election. Andrea was originally not able to attend today's meeting due to a preexisting commitment and, therefore, prerecorded her address in light of the recent COVID-19 restrictions in place in Perth. Andrea is now in attendance of today's meeting and will be able to answer any questions from shareholders. But for now, I'll play to the meeting Andrea's prerecorded address.

Good morning. I'm seeking your endorsement for my election as an independent, nonexecutive director to the Board of Iluka Resources, and I appreciate the great opportunity to address you today. From a graduate chemical engineer, my career has spanned more than 25 years within the resources industry with roles across a range of functions, including operational leadership, health, safety and environment and corporate activities. That career has also given me the privilege to live across Australia in different regional and remote areas and appreciate the challenges and opportunities that that provides. From my early days as a process engineer, I've led activities across the operational value chain, including production, asset management, project development and infrastructure. The breadth of experience has provided a strong understanding of the connected risks and benefits the development of a mineral resource may provide. In 4 years as Managing Director and Chief Executive Officer for Energy Resources of Australia, I led a business with a complex environmental and operational context and continue to build on key stakeholder relationships. In a subdued uranium market, I led the focus on material improvement in the critical risk processes and operational performance through health and safety, environment, production output and cost improvement. In addition to my executive career, I'm a board member at Infrastructure WA and the Australian Nuclear Science and Technology Organization, ANSTO. And I'm also a nonexecutive director of the drilling services company, DDH1; and gold producer, Red 5. I'm also a member of the Board of the Australian National Association of Women in Operation, which supports gender diversity at all levels across businesses. My diverse range of experience in the resources industry through leadership, health and safety, environment and corporate activities brings complementary expertise to the Iluka Board in the areas of operational performance and risk management. I look forward to the continued opportunity to contribute to the success of Iluka, and thank you for your support in my election. Thank you.

Thanks very much, Andrea. And hopefully, that prerecorded address has given you a good insight into Andrea's expertise and skills and her experience. I must say that there is one thing that Andrea failed to observe in talking to her election, and that is that Andrea, in joining the Board, will demonstrably average down the average age of the Board, and for that, we're very grateful. I'll now turn to questions on this item. Sue, do we have any questions on this item of the business?

No, Greg. No questions.

Well, that being the case, that concludes our discussions on this item of business. Please cast your vote on this item, and the proxies are now being shown on the screen in front of you. [Voting]

Goodness me. They like you, Andrea, that's very strong support. Thank you to our shareholders who've already voted. To give you a moment to complete your voting for those who are voting online. Hopefully, the color has changed for you, which indicates that your vote has been successfully cast. As the poll is open, if you need to come back, you can do so, but I will now move on with the next item of business, which is the reelection of Rob Cole. It's Resolution 2 in the Notice of Meeting. Details of Rob's qualifications and experience are set out in the Notice of Meeting. [Audio Gap] 2018 and is considered by the Board to be an independent director. He was elected at the 2018 AGM and retires by rotation at this meeting, and in accordance with the Article 17.1 of the company's constitution, being eligible, Rob offers himself for reelection. Having reviewed Rob's performance, the Board considers that he continues to make a valuable contribution to the Board. He brings extensive experience in commerce and business strategy and planning across a range of industries, including the energy and resources sector, which are particularly valued by the Board. Rob is a member of the People and Performance Committee and the Nominations and Governance Committee. And as I mentioned earlier, Rob will take on the position of Chair of the People and Performance Committee when Hutch steps down from the Board at the end of this meeting. The Board, with Rob abstaining, unanimously supports his reelection. And I'd now invite you, Rob, to address the meeting. Thank you.

Apologies. That was a real COVID moment there, on mute.

That's very usual, Rob. You did [ pretty much more ] than me.

I did actually click it, but I double clicked it. Thanks, Greg, and good morning, everyone. Prior to commencing a career as a nonexecutive director 5 years ago, I worked in the energy and resources industries for over 30 years. I'm a former Executive Director of Woodside and a former Managing Director of Beach Energy. In addition to these leadership roles, I've had executive responsibility over time for a wide array of functions such as strategy, marketing, human resources and procurement. Through all those roles, I've acquired a good understanding of the complexities and the challenges of carrying on, growing and sustaining a capital-intensive, extractive industry business through the full life cycle of exploration, development, production and processing in multiple jurisdictions, both in Australia, Africa and elsewhere. Before joining the energy sector, I had an extensive legal career, almost 20 years, with the international law firm, King & Wood Mallesons in Perth, Melbourne and London, advising clients in iron ore, alumina, electricity and gas pipeline industries. In addition to my role at Iluka, I'm a nonexecutive director of Perenti Global Limited. That's a diversified ASX 200 mining services company with operations in Australia, Africa and North America. I'm also chair of 2 government trading enterprises in WA, including Synergy, the state's main generator and retail of electricity. In the first term on the Board, I believe my diverse background experience has enabled me to make valuable contributions to the Board's deliberations. We've certainly navigated our way through numerous challenges and opportunities and made some disciplined decisions over the past 2 years in very turbulent times. I've got a good understanding of my duties as a director, and I'm very focused on the core objective of Iluka of delivering sustainable value. I've greatly enjoyed being on the Board for the past 3 years. It's been a privilege. Looking forward, I'm very excited about future at Iluka as we move forward our projects and take up new opportunities to grow and diversify our company to create value. And if reelected, I look forward to working on behalf of Iluka's shareholders through the next phase of the company's development. Thank you, Greg.

Well, thanks very much for those remarks. Whilst it's true that as a Board, our composition after today in terms of nonexecutive directors will be 3 men and 3 women, so at 50 percentage. I think if you reflect on the remarks that Rob just made about his experience and the contributions that he brings to the Board and those that Andrea have made, hopefully, shareholders have a real sense of the diversity -- the genuine diversity that we do have around the Board table and being able to deal with the issues the business confronts with on an ongoing basis and from which, hopefully, as shareholders, you feel you benefit by that -- by the extent of that diversity we do, in fact, have around the Iluka Board table. So Sue, are there any questions from the shareholders in relation to Rob's reelection?

No questions, Greg.

Well, that being the case, that does conclude the -- no discussion on this item of business. And what we're going to do now is just ask you to cast your votes, and as you do so, the proxies that have been received in relation to the side of the business are on the screen now. [Voting]

Yes. And again, as you'll see, very strong support from those shareholders who have already cast their votes. And again, we thank you for that support for Rob's reelection to the Board. So assuming you have now voted on this item of business, those who are voting at this meeting, the next item of business asks shareholders to adopt the company's remuneration report for the year ended 31 December 2020. It's Resolution 3 in the Notice of Meeting. Whilst it's a nonbinding advisory vote of shareholders, the views and comments of shareholders will certainly be taken into account by directors when further considering all remuneration matters. I note that a voting exclusion applies to this resolution, as set out in the Notice of Meeting. I now invite Hutch Ranck to make this his last address, as Chair of the People and Performance Committee, to the meeting. Over to you, Hutch.

Thank you, Greg. Good morning, good afternoon or good evening, wherever you may be. I am pleased to present the 2020 remuneration report to you from my last time as Chair of the People and Performance Committee. As the Chairman outlined, 2020 was like a year of no other, yet despite the challenges that Iluka faced throughout the year, management were able to deliver many major strategic objectives and maintain a disciplined financial performance. We believe that the remuneration outcomes set out in the report are reflective of the achievements and challenges that management faced throughout the year. As outlined in the Notice of Meeting, under Resolution 4, the Managing Directors' executive incentive plan outcome will be delivered entirely in equity. Additionally, in reflection of the shareholders' experience for the year, the 2020 outcomes for all other key management personnel were also delivered in equity. I am sure that the Chairman or myself would be happy to address any matters from shareholder questions. Thank you for your support.

Yes. Thank you very much, Hutch. And I guess that does bring a chapter to a close. You've certainly been, as I said in my prepared remarks, an excellent Chairman of the Committee, and that's it. This area, ladies and gentlemen, is a very difficult area. As you know, it's subject to lots of commentary in the paper from time-to-time, and it's an area where great judgment needs to be exercised to ensure that we've got retained and motivated executives working in interests as equally as well to ensure that the returns on the rewards that you receive the shareholders, you feel at the line which we are remunerating our executive, there's a real alignment of that process. And Hutch has done a terrific job in his time as People -- as Chair of the People and Performance Committee, I think, in getting that balance right. So Rob, you've got some pretty big shoes to fill, my friend, and we wish you well as you take up that role. I'm now going to ask if there are any questions in relation to this item of business. Sue, do we have any questions?

No questions, Greg.

All right. Well, that being the case, that does conclude that item of business, and I will ask you please to cast your votes on the item. [Voting]

And we will now see behind you, or screen in front of you, you'll see the proxies and votes that have already been cast in relation to this item of business. And as you can all see, the results on the screen show that at least 75% of the votes that have been validly cast on the resolution were cast in favor of adoption of the remuneration report. And again, we thank you for your support of the remuneration report for 2020. I'll assume those who are voting have done so on that item. Now resolution 4, which is the last item of business, asks shareholders to approve the grant of share rights and performance rights to the Managing Director under the company's executive incentive plan on the terms summarized in the Notice of Meeting. The company's executive incentive plan was adopted in 2018 and combines the company's previous short-term and long-term incentive arrangements into a simplified annual incentive award. The plan drives performance against strategic, financial, production and sustainability metrics supporting the delivery of long-term, sustainable value. From 2020, the outcomes from the executive incentive plan for the Managing Director is delivered entirely in equity with 60% to be granted in share rights and 40% to be granted as performance rights. This resolution seeks shareholder approval for the grant of share rights and performance rights to the Managing Director, Tom O'Leary, under the executive incentive plan for the performance year commencing 1 January 2020. That's 1 January last year. The purpose of this grant to Tom is to ensure that his interests are aligned with those of shareholders by providing him the opportunity to be awarded with an equity interest in Iluka, subject to the achievement of challenging financial targets. It's Iluka's practice to satisfy the vesting of executive incentive plan awards with shares purchased on market. However, shareholder approval is being sought in the interest of good governance and to preserve future flexibility if, for any reason, it's considered appropriate to issue shares rather than source them on market. Further information regarding the 2020 performance, scorecard and outcomes is set out in Iluka's remuneration report on pages 72 to 74 of the 2020 annual report. The Board, with Tom abstaining, considers the grant of share rights and performance rights to the Managing Director to be appropriate and recommends that shareholders vote in favor of Resolution 4. I now ask that -- I note that a voting exclusion applies to this resolution, again, as set out in the Notice of Meeting. Sue, do we have any questions in relation to this item of business?

No questions, Greg.

Thank you, Sue. Well, ladies and gentlemen, that concludes this item of business. And again, I would ask you to cast your votes. Those who are voting at the meeting today with the proxies appearing in front of you now. And as you all know, we again have a strong support for that grant, Tom. [Voting]

I'm going to shortly close the poll, but just give you a moment to ensure that you've cast your vote for each item of business. And as we said at the outset, you do have the opportunity before I close the poll to go back and change your vote if that's what you've decided since voting. I'll just give you a moment to do that. [Voting]

And 5-second warning, I'm about to close the poll. Ladies and gentlemen, I now close the poll. Thank you. Well, ladies and gentlemen, I'd like to thank you for your attendance, participation and understanding of the unusual circumstances in which we are meeting once again. And just before I formally declare the meeting closed, just so that's in the record, Geoff, if we can possibly be together again next year, that would be a wonderful thing. But given how the crystal ball fell off me last year, I'm going to make no promises about that at all. But I do hope we'll have the opportunity to continue our interaction as we do with shareholders who pass us on the streets and stop to have a chat. So I'm now going to formally declare the meeting closed, of course, subject to the finalization of the poll later today. Details of the results of the meeting will be posted on the company's website and on the ASX company announcement platform very shortly. Thank you once again for your attendance and interest, and do all please stay safe. Thank you, and good morning.