EXXARO MINERAL SANDS ACQUISITION - Investor Presentation September 26, 2011
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EXXARO MINERAL
SANDS
ACQUISITION
Investor Presentation
September 26, 2011
Forward-Looking Statements
This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are
typically identified by words or phrases such as “may,” “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,” and other words
and terms of similar meaning. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Tronox
Incorporated and Tronox Limited caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ
materially from those contained in the forward-looking statement. Such forward-looking statements include, but are not limited to, statements about the benefits of the
proposed transaction involving Tronox Incorporated, Tronox Limited and Exxaro Resources Limited (“Exxaro”), including future financial and operating results, Tronox
Incorporated’s, Tronox Limited’s or Exxaro’s plans, objectives, expectations and intentions, the expected timing of completion of the transaction, and other statements
that are not historical facts. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include risks
and uncertainties relating to: the ability to obtain the requisite Tronox Incorporated shareholder approvals; the risk that Tronox Incorporated, Tronox Limited and
Exxaro may be unable to obtain governmental and regulatory approvals required for the transaction, or required governmental and regulatory approvals may delay the
transaction or result in the imposition of conditions that could cause the parties to abandon the transaction; the risk that a condition to closing of the transaction may
not be satisfied; the ability of the combined company to obtain necessary financing to refinance existing indebtedness or modifying existing financing arrangements,
and finance the combined business post-closing and the terms on which such financing or modification may be available; the timing to consummate the proposed
transaction; the risk that the businesses will not be integrated successfully; the risk that Tronox Limited will not be able to complete registration of its shares with the
SEC and/or the listing thereof on a securities exchange, and the timing therefore; the risks to shareholders associated with becoming shareholders of an Australian-
domiciled holding company; the risk that the expected cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize
than expected; disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers; the diversion of management
time on transaction-related issues; the market value of Tronox Incorporated’s products; demand for consumer products for which Tronox Incorporated’s businesses
supply raw materials; the financial resources of competitors; the market for debt and/or equity financing; the ability to achieve favorable tax structuring for the benefit of
Tronox Limited and its subsidiaries and shareholders; the ability to respond to challenges in international markets; changes in currency exchange rates; political or
economic conditions in areas where Tronox Limited and its subsidiaries will operate; the risk of changes in laws and regulations applicable to the business and assets
of Tronox Limited and its subsidiaries will operate; trade and regulatory matters; general economic conditions; and other factors and risks identified in the Risk Factors
Section of Tronox Incorporated’s Annual Report on Form 10-K for the year ended December 31, 2007, and subsequent Quarterly Reports on Form 10-Q, as filed with
the U.S. Securities and Exchange Commission (SEC), and other SEC filings. These risks, as well as other risks associated with the transaction, will be more fully
discussed in the proxy statement/prospectus that will be included in the Registration Statement that will be filed with the SEC in connection with the transaction. Each
forward-looking statement speaks only as of the date of the particular statement and neither Tronox Incorporated nor Tronox Limited undertakes any obligation to
update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This document does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale
of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such
jurisdiction. In connection with the proposed transaction involving Tronox Incorporated, Tronox Limited and Exxaro, Tronox Limited will file with the SEC a Registration
Statement that will include a proxy statement of Tronox Incorporated that also constitutes a prospectus of Tronox Limited. Tronox Incorporated will deliver the proxy
statement/prospectus to its shareholders. Tronox Incorporated urges investors and shareholders to read the proxy statement/prospectus regarding the proposed
transaction when it becomes available, as well as other documents filed with the SEC, because they will contain important information. You may obtain copies of all
documents filed with the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov). You may also obtain these documents, free of charge,
from Tronox Incorporated’s website (www.tronox.com) under the heading “Investor Relations”.
2
Transaction Overview
Tronox to acquire Exxaro’s mineral sands operations, creating the world’s largest vertically-integrated
titanium dioxide (TiO2) pigment company
Exxaro to receive approximately 38.5% equity stake in Tronox in exchange for its mineral sands
operations
Combined 6/30/11 LTM revenue of $2.0 billion and EBITDA of $495 million (25% margin)
Combined H1 2011 revenue and EBITDA of $1.1 billion and $334 million, respectively, an
increase of 38% and 124% over H1 2010
Approximately 3,500 employees and 16 locations around the world
Transaction brings together two global leaders in the TiO2 pigment value chain with complementary
businesses and strengths
Tronox: Leading TiO2 pigment player with proprietary chloride technology
Exxaro mineral sands operations: Industry leading mining, mineral separation and smelting sands
operations in South Africa providing key raw materials for TiO2 pigment production
Tronox and Exxaro have worked together for more than 20 years as JV partners in Western
Australia (Tiwest) as well as supply relationship
Combined company to benefit from stability of high grade feedstock supply and have a strong platform
for future growth
5th largest TiO2 pigment producer globally and 3rd largest zircon producer globally
Opportunities for cost savings and operational synergies
Consolidates and streamlines ownership in the Tiwest JV
Company poised to benefit from continued strength of global TiO2 pigment and mineral sands markets
3
Transaction Structure
Tronox issuing shares to Exxaro in exchange for
Pro Forma Corporate Structure
KZN Sands, Namakwa Sands and Exxaro’s 50%
interest in Tiwest
Approximately 38.5% of fully diluted equity 26%
will be owned by Exxaro; 25.9 million fully
Public
diluted pro forma shares outstanding
61.5% 38.5%
Exxaro to retain 26% direct interest in South
African businesses to maintain South African
Black Economic Empowerment (“BEE”)
regulatory compliance
Intention to list on a major exchange, such as
the NYSE, after closing
Continuity of leadership in Board and
Management 100% 74%
New board will consist of 9 directors: 6
elected by Tronox shareholders and 3 by South
Hamilton Botlek Tiwest
Exxaro Africa
Tom Casey to remain Chairman and Dennis
Wanlass to remain CEO and Director
Tronox Mineral Sands to be headed by
current Exxaro mineral sands management Namakwa KZN
Sands Sands
Expected to close H1 2012 subject to SEC
registration timeline, Tronox shareholder vote and
customary regulatory approvals
4
Leading Global Pigment Platform
Tronox Pigment Facilities
Location Capacity (MT)
Hamilton 225,000
Botlek 90,000
Tronox Electrolytic Facilities
Location Capacity (MT)
Botlek, The Netherlands Hamilton (Sodium Chlorate)
Henderson (EMD)
150,000
27,000
Oklahoma City, OK Henderson (Boron Products) 525
Shanghai, China Tiwest Joint Venture Facilities 1
Henderson, NV Hamilton, MS Location Capacity (MT)
Kwinana 150,000
Northern Operations Capacity (MT)
Singapore Zircon 70,000
Synthetic Rutile 220,000
Rutile 36,000
2 Leucoxene 26,000
KZN Sands
Namakwa Sands
Exxaro Mineral Sands Facilities
Headquarters Namakwa Sands Capacity (MT)
Johannesburg Tiwest Zircon 135,000
Slag 160,000
Locations Pig Iron 100,000
Rutile 31,000
KZN Sands 2 Capacity (MT)
Zircon 60,000
Combined company will have 3,500 employees Slag 220,000
in 16 locations around the world Pig Iron / Scrap Iron
Rutile
121,000
30,000
Note: Namkwa Sands, KZN Sands and Tiwest are each made up of 3 locations
1. 100% of capacity and production
2. KZN Sands – gives effect to Fairbreeze mine development project expected to open in 2014 with 190kt of TiO2 ore capacity and 60kt of zircon capacity
5
Tronox Will Benefit from
Strong Earnings Momentum
($US in millions)
Combined EBITDA
$495
$500
%
60
$400 $181
$334
$310
$300
4%
$107 12 $131
$200
$149
$315
$57
$100 $203 $204
$92
$0
2010 LTM 6/30/11 H1 2010 H1 2011
Combined
EBITDA 18% 25% 19% 31%
Margin
Tronox Exxaro
Note: Combined EBITDA does not give effect to synergies or cost savings
6
Compelling Strategic
and Financial Benefits
Brings together two global leaders in the TiO2 pigment value chain with
complementary businesses and strengths
Creates world’s largest vertically-integrated TiO2 pigment company
Approximately 3,500 total employees in 16 locations around the world
Enhanced supply of high-grade ore in tight market conditions
In combination with supply from existing long term contracts with other ore
producers
Assured ore availability provides opportunity to debottleneck and add new
pigment capacity
Consolidates and streamlines ownership interest in Tiwest
Accelerated growth potential and enhanced access to global markets
Continuity of leadership
7
Compelling Strategic
and Financial Benefits (cont’d)
Creates a company with greater scale, higher margins and improved growth
prospects
Integrated platform will benefit from cost savings and synergies estimated to be
approximately $30 million annually
Rationalization of G&A and ore logistics
Ore in-use optimization
Reduced earnings volatility due to ore availability / raw material price
fluctuations
Geographic footprint provides enhanced access to faster growing international
markets
Attractive capital structure provides significant flexibility to fund growth
Exxaro mineral sands businesses acquired on a debt-free cash-free basis
8Tronox Overview
($US in millions)
Company Overview Financial Summary
Global pure play TiO2 producer LTM H1
5th largest TiO2 producer and marketer 2008 2009 2010 6/30/11 2011
with 8%1 share of global capacity Revenue $1,245 $1,070 $1,218 $1,441 $803
Focused primarily on coatings, plastics
Adj.EBITDA $81 $142 $203 $315 $204
and paper laminates
Efficient, low-cost manufacturing footprint Margin 7% 13% 17% 22% 25%
Global operations and international
presence
Production Facilities
Specialty electrolytic chemicals operations (units in MT)
Pigment Facilities Tiwest Joint Venture Facilities 2
Location Capacity Location Capacity
Hamilton 225,000 Kwinana 150,000
Botlek 90,000
Northern Operations Capacity
Electrolytic Facilities Zircon 70,000
Location Capacity Synthetic Rutile 220,000
Hamilton (Sodium Chlorate) 150,000 Rutile 36,000
Henderson (EMD) 27,000 Leucoxene 26,000
Henderson (Boron Products) 525
Source: TZMI
Note: Unaudited financials for 2008 and 2009
1. Includes 100% of Tiwest pigment
2. Shown at 100% of JV capacity and production
9Exxaro Mineral Sands Overview
($US in millions)
Company Overview Financial Summary
3rd largest titanium ore feedstock producer
LTM H1
globally (11% market share) with 3
2008 2009 2010 6/30/11 2011
producing assets
Revenue $334 $419 $636 $772 $420
3rd largest zircon producer globally (18%
market share)
Adj.EBITDA $57 $42 $107 $181 $131
Geographically well-positioned to serve
markets in Asia, the Middle East, Europe, Margin 17% 10% 17% 23% 31%
North and South America
KZN Sands’ development of Fairbreeze mine
(2014) will continue future feedstock supply Production Facilities
Subsidiary of Exxaro Resources (JSE:EXX) (units in MT)
Mineral Sands Facilities Tiwest Joint Venture Facilities 2
Market capitalization of $US7.8bn Namakwa Sands Capacity Location Capacity
Zircon 135,000 Kwinana 150,000
Slag 160,000
Pig Iron 100,000 Northern Operations Capacity
Rutile 31,000 Zircon 70,000
Synthetic Rutile 220,000
KZN Sands 1 Capacity Rutile 36,000
Zircon 60,000 Leucoxene 26,000
Slag 220,000
Pig Iron / Scrap Iron 121,000
Source: TZMI Rutile 30,000
1. KZN Sands – gives effect to Fairbreeze mine development project expected to open in 2014 with 190kt of TiO2 ore capacity and 60kt of zircon capacity
2. Shown at 100% of JV capacity and production
10Strong TiO2
Industry Fundamentals
Global TiO2 pigment market: 5.3 million tonnes Global Average Per Capita Consumption 2010-2020E
valued at $11.9 billion in 2010
(kg per capita)
Current supply dynamics and projected demand
increases should lead to continued improving
1.20 1.11
economics with limited significant capacity 0.99
1.03 1.07
1.00 0.92 0.95
expansions 0.83 0.85
0.88
0.78 0.80
0.80
Multiple price increases in 2010 and 2011 and all
major producers operating near full capacity 0.60
(>95%) 0.40
Capacity expansion continues to be cost 0.20
prohibitive and constrained by raw material 0.00
2010 2012E 2014E 2016E 2018E 2020E
availability
TiO2 ore market has remained very tight, Source: TZMI
resulting in historically high and increasing prices
TiO2 pigment producers, so far, have been able
to offset ore price increases with higher prices
11Tronox Will Benefit from
Vertical Integration
Transaction assures ore supply for Tronox,
and hence revenue and EBITDA growth Global Supply / Demand for Titanium Feedstocks
Pigment production growth will continue to be (‘000 tonnes)
major driver of global demand for ore
9,000
TiO2 producers’ growth will be limited by
availability of feedstock 8,000
Chloride feedstock expected to run into 7,000
increasing deficits without significant new
supply 6,000
Deficits in sulfate grade feedstocks expected
to remain due to the quicker than expected 5,000
recovery in Chinese pigment demand
4,000
Significant new supply, factored into supply 2006 2008 2010 2012E 2014E 2020E
demand Supply Demand
Source: TZMI (excludes supply from unapproved new projects)
Drop in supply due to depletion of
existing ore bodies
New projects take years to secure necessary
approvals – typically 5 years from design to
startup
12Pro Forma Financial Summary
($US in millions)
Combined 6/30/11 LTM revenue of $2.0 billion Combined Financial Summary
and EBITDA of $495 million (25% margin)
LTM
Conservative pro forma capital structure with 2008 2009 2010 6/30/2011 H1 2011
significant financial flexibility to fund growth Revenue $1,454 $1,348 $1,678 $1,972 $1,076
No incremental debt being transferred with EBITDA $138 $184 $310 $495 $334
the acquired assets % Margin 9% 14% 18% 25% 31%
Tronox has obtained $550 million of
Capex $107 $123 $140 $205 $133
committed financing from Goldman Sachs % of Revenue 7% 9% 8% 10% 12%
Bank USA to refinance Tronox's existing
debt at closing
Significant tax assets including historical NOLs Tronox Capitalization (June 2011)
Intention to adopt dividend policy given Amount
expected strong cash flows Cash $87
25.9 million pro forma shares outstanding Total Debt
including Exxaro’s Class B shares $125mm Asset-Based Revolving Credit Facility $39
Tronox shareholders will receive one Class $425mm Senior Secured Term Loan 423
A share and $12.50 in cash Tiwest Finance Lease 8
Total Debt $470
10.0 million shares issued to Exxaro
Net Debt 383
excluding 1.4 million shares subject to
put/call Net Debt / LTM EBITDA 1.2x
LTM EBITDA / Interest Expense 9.9x
Note: Pro forma financials do not include synergies or cost savings
13Tronox Will Become Leading
Vertically Integrated TiO2 Producer
Leading global, vertically-integrated TiO2 pigment
producer
Leading company with access to diverse and
growing global markets
Enhanced ore supply and reduced earnings
+
volatility due to ore availability / raw material price
fluctuations
Assured ore supply creating solid platform for
future growth and enhanced earnings potential
Increased scale and public market profile
Opportunities for cost savings and operational
synergies
Capital structure provides financial flexibility to
pursue growth opportunities
14Appendix
15Transaction Detail
Transaction Structure Detail
Current Tronox shareholders to exchange existing common stock for new Class A
common stock in Australian-domiciled corporation (“New Tronox”) and $12.50 per
share
Option to receive exchangeable shares with right to exchange later into Class A
shares and $12.50 per share, subject to minimum and maximum (with pro
ration) election thresholds
Exchangeable share election is intended to provide certain Tronox shareholders
with a mechanism which may allow them to defer a taxable event until the
exchangeable share is exchanged into stock of New Tronox
Exxaro contributing its mineral sands operations to New Tronox in exchange for
Class B stock in New Tronox
Exxaro to retain 26% direct minority ownership in the South African businesses
to comply with South African BEE ownership requirements
Transaction is taxable to Tronox shareholders
Exxaro Class B Shares
10.0 million shares issued to Exxaro excluding put/call shares
Put/call shares: 1.4 million shares in exchange for Exxaro’s 26% direct interest in the
South African operations in the event that the BEE compliance structure is no longer
required
16Transaction Detail (cont’d)
Pro Forma Shares Outstanding
25.9 million shares outstanding (excluding Exxaro’s put/call shares)
Intention to list on a major exchange, such as the NYSE, after closing
Board of Directors
9 member board comprising: 6 Class A Directors (including the CEO of Tronox) and
3 Class B Directors (nominated by Exxaro)
Tom Casey to remain Chairman of combined company
Dennis Wanlass to remain CEO and Director
Regulatory Approvals
Requires regulatory approvals from South Africa Department of Mineral Resources,
South Africa Reserve Bank and Australian Foreign Investment Review Board
Competition authorities
SEC registration and Tronox shareholder approval
Anticipated Closing
H1 2012
17Additional Tax Asset Information
Tronox should retain much of the deductions for tax purposes it presently has available to
it including historical NOLs
Tax attributes appear to be worth at least $300 million on a Net Present Value basis
These tax attributes (which are subject to audit by IRS) consist of:
Preexisting NOLs
Tax deductions arising from Tronox's bankruptcy emergence
Potential future deductions relating to environmental remediation agreed to as part of
the bankruptcy emergence
Transaction with Exxaro could result in an “ownership change” for purposes of §382,
thereby imposing an annual limitation on Tronox's ability to utilize its NOLs
The amount of such limitation will depend on the value of Tronox's stock at closing
and on long-term tax-exempt interest rate at that time, and thus the annual limitation
cannot be known at this time
18Zircon Market Fundamentals
Applications Zircon Consumption by End Use (2010)
Opacifiers in Ceramics
Floor and wall tiles,
TV Glass 2% Other 2%
sanitary ware and
table ware Foundry 10%
Refractory & Foundry
Refractory
Steel / glass
14%
production and casting Ceramics
of jet turbine engines
55%
Zirconium Metal Zirconia & Zr
Nuclear reactor cores / Chemicals
rods and heat 18%
exchangers
Zirconia & Zirconium Source: TZMI
Based Chemicals
Refractories,
pigments, abrasives,
electronics, catalysts
and fiber optics
19Zircon Market Update
Zircon Industry Update / Fundamentals Zircon Supply/Demand Outlook to 2020
Zircon is a mineral often produced as a co- ('000 tonnes)
product of TiO2 minerals primarily in Australia 2,500
and South Africa
2,000
Consumption growth of ~39% in 2010
following sharp contraction in 2009 1,500
Weighted average price increase of 35- 1,000
40% in 3Q 2011
500
Demand growth primarily driven by
urbanization in industrializing economies, 0
particularly China '00 '02 '04 '06 '08 '10 '12E '14E '16E '18E '20E
2011 growth expected to be constrained by Potential New Projects Existing Production Demand
lack of additional supply
Source: TZMI
No significant new supply sources are
apparent to fill the gap
Industry inventories through the supply chain
at historically low levels
Global ceramics and zirconium chemicals
production capacity not fully utilized
20Financial Reconciliation
($US in millions)
LTM
2008 2009 2010 6/30/2011 1H 2010 1H 2011
Tronox Revenue $1,245 $1,070 $1,218 $1,441 $580 $803
Exxaro Revenue 334 419 636 772 284 420
Less: Pro Forma Intercompany Eliminations 1 (125) (141) (176) (241) (82) (147)
Combined Revenue $1,454 $1,348 $1,678 $1,972 $782 $1,076
Tronox EBITDA $81 $142 $203 $315 $92 $204
Exxaro EBITDA 57 42 107 181 57 131
Combined EBITDA $138 $184 $310 $495 $149 $334
Tronox Capex $38 $24 $45 $133 $17 $105
Exxaro Capex 69 99 95 71 52 28
Combined Capex $107 $123 $140 $205 $69 $133
(Rand in millions)
Exxaro Revenue R 2,776 R 3,508 R 4,640 R 5,399 R 2,130 R 2,889
Exxaro EBITDA 474 355 780 1,251 430 901
Note: Pro forma financials do not include synergies or cost savings; Unaudited Tronox financials for 2008 and 2009
1. Adjustments include Tiwest sales to Tronox, Exxaro TiO2 sales and Exxaro ore sales to Tronox
21Tronox EBITDA Reconciliation
($US in millions)
Unaudited LTM
2008 2009 2010 6/30/2011 1H 2010 1H 2011
Net income (loss) ($328) ($52) $6 $643 $71 $708
Interest and debt expense 54 36 50 41 25 16
Income tax provision (benefit) (2) (2) 2 11 4 13
Depreciation and amortization expense 58 53 50 64 25 38
EBITDA ($218) $35 $108 $759 $125 $775
Reorganization expense associated with bankruptcy 1 - 27 145 171 19 46
Gain on fresh start accounting - - - (659) - (659)
Noncash gain on liquidation of subsidiary - - (5) 4 (9)
2
Provision for environmental remediation and restoration, net of reimbursements 74 - (47) (12) (40) (4)
Fresh start inventory mark-up - - - 36 - 36
(Income) Loss from discontinued operations 189 10 (1) (1) - -
Restructuring costs not associated with the bankruptcy 14 - - - - -
Pension and post retirement settlement/curtailments 26 10 - - - -
Gain on sale of assets (25) (1) - - - -
Impairment charges 3 25 0 - - - -
Unusual or non-recurring items 4 - 24 - - - -
Plant closure costs - 25 1 0 1 0
Stock-based compensation 1 0 1 6 0 6
Foreign currency remeasurement (7) 15 12 14 (1) 1
Other items 5 4 (4) (9) (2) (3) 4
Adjusted EBITDA $81 $142 $203 $315 $92 $204
1. The Company has incurred costs related to the Chapter 11 bankruptcy proceedings. These items include cash and non-cash charges related to contract terminations, prepetition obligations,
debtor-in-possession financing costs, legal and professional fees
2. In 2010, the Company recorded receivables from our insurance carrier related to environmental clean-up obligations at the Henderson facility
3. In 2008, the Company recorded impairment charges of approximately $3.3 million related to the Savannah, Georgia, and approximately $21.6 million related to the Botlek, Netherlands, long-lived
assets
4. The 2009 amount represents the net loss on deconsolidation of the Company’s German subsidiaries. The 2010 amount is related to the liquidation of certain holding companies that resulted in a
non-cash net gain due to the realization of cumulative translation adjustments
5. Includes noncash pension and postretirement healthcare costs and accretion expense
2223
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