21 may 2009 the manager for personal use only managing director

21 May 2009 The Manager Company Announcements Australian Securities Exchange Dear Sir/Madam,

UNIMIN TAKEOVER OFFER TARGET'S STATEMENT

In accordance with section 633(1) item 14 of the Corporations Act 2001 (Cth), we attach a copy of the Target's Statement prepared by Consolidated Rutile Limited ("CRL") (ASX: CRT) in response to the off-market takeover bid by Unimin Australia Limited ("Unimin") for all of the ordinary shares in CRL. A copy of the Target's Statement has today been sent to Unimin and lodged with the Australian Securities and Investments Commission. CRL Shareholders with any queries regarding the Unimin takeover offer may contact the CRL Shareholders' Information Line on 1800 239 524 (for Australian callers) or + 61 3 9415 4855 (for international callers). Chris Cobb Managing Director

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In response to the off-market takeover offer by Unimin Australia Limited

dated 4 May 2009

Financial advisor to Consolidated Rutile Limited Legal advisor to Consolidated Rutile Limited

ABN 28 009 719 902

Target’s Statement

Consolidated Rutile Limited

The Directors of Consolidated Rutile Limited unanimously recommend that you ACCEPT the Unimin Offer, in the absence of a superior

proposal, after Iluka Resources’ acceptance

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2 | Consolidated Rutile Limited

Image caption here image caption here image caption here image caption here9.0

Effect of Offer on CRL’s Material Contracts

Important informationTarget’s Statement

This Target’s Statement is dated 21 May 2009 and is given by Consolidated Rutile Limited ABN 28 009 719 902 (CRL) under Part 6.5 of the Corporations Act. It is given in response to the Bidder’s Statement dated 17 April 2009 issued by Unimin Australia Limited ABN 20 000 971 844 (Unimin) and relates to the offer made by Unimin to acquire your shares in CRL.

A copy of this Target’s Statement was lodged with the Australian Securities and Investments Commission (ASIC) on 21 May 2009. ASIC takes no responsibility for the contents of this Target’s Statement.

A number of defi ned terms are used in this Target’s Statement. These terms are defi ned in Section 10 of this Target’s Statement.

Key dates

Bidder’s Statement lodged with ASIC 17 April 2009

Unimin Offer opened (date of Offer) 4 May 2009

Target’s Statement lodged with ASIC 21 May 2009

Unimin Offer closes (unless extended or withdrawn) 7.00pm (AEST) 5 June 2009

Investment decisions

This document does not take into account the investment objectives, fi nancial situation or particular needs of any person. Before making any investment decision on the basis of this document you should consider whether that decision is appropriate in the light of these factors and seek independent fi nancial and taxation advice if necessary.

Forward looking statements

In respect of any forward looking statements in this document, such statements are not based on historical facts, but are based on CRL’s current expectations of future results or events. These forward looking statements are subject to risks, uncertainties and assumptions which could cause actual results or events to differ materially from the expectations described in such forward looking statements. Those risks and uncertainties are not within the control of CRL and cannot be predicted by CRL and include changes in risks, circumstances and events specifi c to the industry, countries and markets in which CRL operates. They also include general economic conditions, prevailing exchange rates and conditions in the fi nancial markets that may cause objectives to change or may cause outcomes not to be realised.

While CRL believes that the expectations refl ected in the forward looking statements in this document are reasonable, no assurance can be given that such expectations will prove to be correct. Matters as yet not known to CRL or not currently considered material by CRL, may cause actual results or events to be materially different from those expressed, implied or projected in any forward looking statements. Any forward looking statement contained in this document is qualifi ed by this cautionary statement.

Independent Expert’s Report

An Independent Expert’s Report accompanies this Target’s Statement at Annexure B.

Shareholder Information Line and website

If you have any queries in relation to the Unimin Offer or this Target’s Statement, please contact the CRL Shareholder Information Line on:

1800 239 524 For Australian callers

+61 3 9415 4855 For international callers

Further information relating to Unimin’s Offer can be obtained from CRL’s website at http://www.consrutile.com.au.

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Target’s Statement | 1

ContentsPART A – CHAIRMAN’S LETTER 3

PART B – WHY YOU SHOULD ACCEPT THE OFFER 4

PART C – YOUR CHOICES 6

PART D – FREQUENTLY ASKED QUESTIONS 8

PART E – ADDITIONAL INFORMATION 10

1. KEY FEATURES OF UNIMIN’S OFFER 10 1.1 Unimin’s Offer 10

1.2 Variation of Offer on 18 May 2009 to $0.45 per CRL share 10

2. MECHANICS OF UNIMIN’S OFFER 10 2.1 Offer Period 10

2.2 Extension of Offer Period 10

2.3 Withdrawal of Unimin’s Offer 10

2.4 Effect of acceptance 10

2.5 Limited rights to withdraw your acceptance 10

2.6 Timing of payment 11

2.7 Notice of Status of Conditions 11

2.8 Effect of an increase in consideration on CRL Shareholders 11

3. COMPULSORY ACQUISITION 11 3.1 Follow on compulsory acquisition 11

3.2 General compulsory acquisition 11

4. HOW YOU CAN ACCEPT THE UNIMIN OFFER 12

5. DIRECTORS’ RECOMMENDATION AND INTENTIONS 12 5.1 Directors of CRL 12

5.2 Directors’ recommendation 12

5.3 Directors’ intentions 12

6. INFORMATION RELATING TO YOUR DIRECTORS 12 6.1 Interests of the Directors in CRL securities 12

6.2 Dealings in CRL securities 13

6.3 Interests of the Directors in Unimin securities 13

6.4 Dealings in Unimin securities 13

6.5 Interests of the Directors in Iluka Resources securities 13

6.6 Dealings in Iluka Resources securities 13

6.7 Benefi ts and agreements 13

7. EFFECT OF OFFER ON CRL’S MATERIAL CONTRACTS 13 7.1 Arrangements between CRL and Iluka Resources 13

7.2 Facility agreements 13

8. EFFECT OF UNIMIN’S OFFER ON THE CRL EXECUTIVE SHARE PLAN 14

9. OTHER MATERIAL INFORMATION 14 9.1 Changes in Target’s fi nancial position 14

9.2 CRL’s issued securities 14

9.3 Recent ASX announcements 14

9.4 New mine strategy announced on 13 May 2009 14

9.5 Taxation considerations 15

9.6 ASIC modifi cations and exemptions 15

9.7 Consents 15

9.8 Continuous disclosure 16

9.9 No other material information 16

10. DEFINITIONS AND INTERPRETATION 16 10.1 Defi nitions 16

10.2 Interpretation 17

ANNEXUREA CRL ASX ANNOUNCEMENTS FROM 1 JANUARY 2009 TO 18 MAY 2009 18

B INDEPENDENT EXPERT’S REPORT 20

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Target’s Statement | 3 Target’s Statement | 3

PART A – CHAIRMAN’S LETTER

21 May 2009

Dear CRL Shareholder

On 17 April 2009, Unimin Australia Limited (Unimin), a wholly owned subsidiary of SCR-Sibelco NV, announced a takeover offer for all of your shares in Consolidated Rutile Limited (CRL) (the Original Offer). The Original Offer was increased to $0.45 per CRL Share and declared unconditional by Unimin on 18 May 2009 (Offer). This Target’s Statement contains your Directors’ formal response to the Offer (as revised).

The Board of CRL has actively considered alternative options to Unimin’s Offer that could maximise value for CRL Shareholders, including potential rival bids for CRL. As part of the process of considering alternative options, the Board of CRL offered a number of parties access to a data room containing information about CRL.

To accommodate the possibility that a superior proposal may emerge, CRL’s controlling shareholder, Iluka Resources Limited (Iluka Resources), has advised the Board that it proposes to wait until 27 May 2009 and then, in the absence of a superior proposal, it intends to accept the Unimin Offer on that date. However, Iluka Resources reserves the right to accept earlier if circumstances change.

On this basis, your Board unanimously recommend that, in the absence of a superior proposal, you ACCEPT Unimin’s Offer after Iluka Resources’ acceptance. Each of your Directors intends to accept the Offer for the CRL Shares they own after Iluka Resources’ acceptance, in the absence of a superior proposal.

CRL will release an announcement on or before 27 May 2009 updating CRL Shareholders. In the meantime, the Board of CRL will also continue to keep CRL Shareholders informed by issuing ASX releases if there are any material developments with regard to a possible superior proposal. ASX announcements also appear on the CRL website, http://www.consrutile.com.au.

An Independent Expert’s Report prepared by Ernst & Young is attached as Annexure B to this Target’s Statement. The Independent Expert has valued CRL Shares at between $0.41 and $0.44 per CRL Share and concluded that the Offer is both fair and reasonable.

The Directors of CRL unanimously recommend that, in the absence of a superior proposal, CRL Shareholders ACCEPT the Offer after Iluka Resources’ acceptance for the following reasons:

the Independent Expert has valued CRL Shares at between $0.41 and $0.44 per CRL Share and concluded that the • Offer is both fair and reasonable;

the Offer is a premium to CRL’s recent share price, representing a 41% premium to the CRL closing share price of • $0.32 on 16 April 2009, the last day prior to the announcement of the Unimin Offer;

whilst the Directors are confi dent in CRL’s stand alone prospects, Unimin’s cash Offer provides CRL Shareholders • with an opportunity to realise certainty in value and avoid the risks associated with CRL’s future development; and

CRL’s controlling shareholder, Iluka Resources, has publicly announced that it intends to accept the Offer in the • absence of a superior proposal.

Although the Independent Directors (Jim Babon and John Hall) recommend acceptance of the Offer after Iluka Resources’ acceptance, in the absence of a superior proposal, they consider that the Offer is opportunistic and is below their view of the underlying value of the business. However, they also recognise the risks currently facing a small company like CRL in the current diffi cult economic climate, with uncertainty surrounding future sales in the short term and the refi nancing of debt later in the year. They are also aware of the risk of the remaining CRL Shareholders being locked into an increasingly illiquid stock.

By now, you should have received a copy of Unimin’s Bidder’s Statement setting out the terms and conditions of Unimin’s Original Offer. Following the revision of the Offer on 18 May 2009, Unimin is required to send to CRL Shareholders to whom offers were made under the takeover bid constituted by Unimin’s Original Offer a notice confi rming the increase in the Offer to $0.45 per CRL Share and that the Offer has been declared unconditional. CRL Shareholders who have already accepted the Unimin Offer are entitled to receive the revised consideration offered under Unimin’s Offer.

The purpose of this Target’s Statement, including the report of the Independent Expert, is to provide you with all the information you need to make an informed decision about whether or not to accept the Offer. If you require additional assistance please contact CRL’s Shareholder Information Line on 1800 239 524 (for Australian callers) or +61 3 9415 4855 (for international callers). Your Directors will continue to keep you informed of all material developments relating to the Offer.

Yours sincerely

David RobbChairman

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1. The Independent Expert considers Unimin’s Offer to be both fair and reasonable

The Independent Expert’s Report, prepared by Ernst & Young, has valued CRL Shares at between $0.41 and $0.44 per CRL Share and concluded that the Unimin Offer is both fair and reasonable.

Unimin’s Offer of $0.45 per CRL Share is above the Independent Expert’s valuation range.

A complete copy of the Independent Expert’s Report is contained in Annexure B. It is recommended that you read the Independent Expert’s Report in full, including the reasons for the Independent Expert’s conclusion.

2. The Unimin Offer price represents a signifi cant premium to CRL’s recent share price

The Unimin Offer of $0.45 per Share represents:

a 41% premium to the CRL share price on 16 April 2009 of • $0.32; and

a 52% premium to the CRL Share VWAP during the three • months preceding 16 April 2009.

Source: IRESS

Notes

The VWAP’s referred to above have been calculated over the 30-days, • three and six months, respectively, to 16 April 2009, the last trading day prior to the announcement of the Offer.

IRESS has not provided consent to this reference or the u• se of its information.

3. CRL Shareholders will be provided with value certainty for their investment in CRL

Unimin’s Offer provides CRL Shareholders who accept with certainty of receiving $0.45 in cash per CRL share.

By accepting the Offer, CRL Shareholders avoid the ongoing risks associated with owning CRL Shares. These risks include, but are not limited to:

mineral sands price volatility;•

volatility in foreign exchange markets;•

operating risks associated with CRL’s mining operations • on North Stradbroke Island;

environmental and community risks;•

changes in the regulatory or political regime;•

fi nancing and capital investment risks; and•

movements in the equity markets, particularly during the • current environment of greater uncertainty.

4. No superior proposal has emerged though it is possible that a superior proposal may emerge

The Board considers that CRL has an attractive portfolio of assets that might be of appeal to a broad range of potential bidders. The Board of CRL has actively considered alternative options to Unimin’s Offer that could maximise value for CRL Shareholders, including potential rival bids for CRL. As part of the process of considering alternative options, the Board of CRL offered a number of parties access to a data room containing information about CRL.

PART B

WHY YOU SHOULD ACCEPT THE OFFER

$0.45

$0.44

0.40

0.41

0.42

0.43

0.44

0.45

0.46

Independent Expert valuation of your shares

Unimin Offer for your shares

Share price (A$/share)

$0.41

16 April 2009 (last tradingday prior to announcement)

1-month VWAP 3-month VWAP 6-month VWAP

Share price (A$/share)

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

41% 48% 52% 26%

$0.320 $0.304 $0.297 $0.357

Unimin 45c Offer price

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To accommodate the possibility that a superior proposal may emerge, CRL’s controlling shareholder, Iluka Resources, has advised the Board that it proposes to wait until 27 May 2009 and that if no superior proposal has emerged by then and the Unimin Offer is or will with its acceptance become unconditional, it intends to accept the Unimin Offer on that date. However, Iluka Resources reserves the right to accept earlier if circumstances change.

On this basis, your Board unanimously recommend, in the absence of a superior proposal, that you accept Unimin’s Offer after Iluka Resources’ acceptance.

CRL will release an announcement on or before 27 May 2009 updating CRL Shareholders. In the meantime, the Board of CRL will also continue to keep CRL Shareholders informed by issuing ASX announcements if there are any material developments with regard to a possible superior proposal. ASX announcements also appear on the CRL website, http://www.consrutile.com.au.

5. If the Unimin Offer does not proceed, the CRL share price MAY fall in the short term

The closing CRL share price as at 16 April 2009 (the day before the announcement of the Unimin Offer was made) was $0.32. At the close of trading on 15 May 2009 (the last practical date before the fi nalisation of this Target’s Statement), the CRL share price was $0.44.

Given that the current share price is likely to be impacted by the existence of the Unimin Offer, the CRL share price is likely to fall below current levels in the short term, and possibly below the Offer price, if the Unimin Offer does not proceed and no superior proposal emerges.

6. Acceptance by controlling shareholder Iluka Resources

Iluka Resources, which holds 51.04% of the issued share capital in CRL, publicly announced in an ASX announcement on 17 April 2009 that, in the absence of a superior proposal, it will accept the Offer from Unimin if Unimin’s Offer is or will with Iluka Resources’ acceptance become unconditional. As Unimin’s Offer was declared unconditional on 18 May 2009, CRL understands that Iluka’s intention to accept the Offer now depends only on whether or not a superior proposal to acquire CRL Shares emerges.

As noted in Section 4 of Part B of this Target’s Statement, Iluka Resources has also now advised the CRL Board that, to accommodate the possibility that a superior proposal may emerge, it proposes to wait until 27 May 2009 and that if no superior proposal has emerged by then, it intends to accept the Unimin Offer on that date. However, Iluka Resources reserves the right to accept earlier if circumstances change.

As a consequence, it is likely that Unimin’s relevant interest in CRL Shares will increase to over 72% under the Offer if no superior proposal has emerged by 27 May 2009. If Unimin’s relevant interest reaches 90%, then it becomes entitled to exercise rights of compulsory acquisition of all remaining CRL Shares.

7. Risk of being a minority CRL Shareholder

If Unimin does not obtain suffi cient acceptances to move to compulsory acquisition, CRL Shareholders who do not accept the Unimin Offer will continue as minority shareholders in CRL. There would then be a risk that CRL Shareholders would remain part of a minority group of shareholders in a stock with further reduced liquidity.

If Iluka accepts the Unimin Offer, Unimin’s interest in CRL will increase to over 72% and this will limit the scope for any third party to lodge a future takeover offer for your CRL Shares.

8. No brokerage will be payable

CRL Shareholders will not be required to pay brokerage or any other costs in relation to the sale of their CRL Shares under the Unimin Offer.

9. Additional economic and other risk factors

Operating in the resources sector, CRL is subject to a variety of risk factors that assist a conclusion that the Unimin Offer should be accepted. Those factors specifi c to the current circumstances of CRL are as follows.

In an ASX announcement on 2 April 2009, CRL stated that “sales volumes in early 2009 have been adversely impacted by the global economic crisis, which has resulted in general market uncertainty and customers drawing down inventories before ordering new product. CRL is therefore taking action to better match production to customers’ shipping requirements as they unfold, as well as to reduce operating costs and minimise earnings impacts.”

CRL has deferred major capital expenditure, temporarily suspended production from one of its two dry mining units, and implemented various other cost reduction programs.

Although CRL has demonstrated its clear commitment to guiding its business through this period of reduced market demand, the risk still remains that the global economy will not begin to recover in the anticipated timeframe, with a subsequent negative impact on the business.

In relation to CRL’s working capital facilities, a A$15 million working capital facility with Commonwealth Bank of Australia will be subject to renegotiation for renewal prior to expiry at the end of September 2009.

In relation to licences and permits for its operations, as with many other resources companies there is no guarantee that CRL will be in a position to maintain the necessary licences and permits in the future as this will be dependent on Government regulations and policies.

In addition, the introduction of new laws and regulations as a result of current or future climate change and carbon pollution reduction schemes may have an effect on CRL’s operations in the future that cannot presently be accurately quantifi ed.F

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Your Directors encourage you to have regard to your individual risk profi le, portfolio strategy, tax position and fi nancial circumstances before making any decision in relation to your CRL Shares.

You have the following choices as a CRL Shareholder.

1. Timing of acceptance of the Unimin Offer

As noted in Section 4 of Part B of this Target’s Statement, the Board of CRL has actively considered alternative options that could maximise value for CRL Shareholders. As part of the process of considering alternative options, the Board of CRL offered a number of parties access to a data room containing information about CRL.

To accommodate the possibility that a superior proposal may emerge, CRL’s controlling shareholder, Iluka Resources, has advised the Board that it proposes to wait until 27 May 2009 and that if no superior proposal has emerged by then, it intends to accept the Unimin Offer on that date. However, Iluka Resources reserves the right to accept earlier if circumstances change.

In these circumstances, the Directors recommend that if CRL Shareholders decide to accept the Offer, they do so after Iluka Resources’ acceptance, in order to allow for the possibility of a superior proposal emerging.


2. Procedure for acceptance of the Unimin Offer

If you choose to accept the Unimin Offer, your valid acceptance must be received before the end of the Offer Period.

Instructions on how to accept the Unimin Offer are set out in Section 1 of the Bidder’s Statement and on the Acceptance

Form accompanying the Bidder’s Statement. You may only accept the Unimin Offer for all of your CRL Shares. You cannot accept the Unimin Offer for only some of your CRL Shares. (However, you can sell and transfer some of your CRL Shares (see 3 below) and then accept the Unimin Offer for all your remaining CRL Shares.)

The effect of your acceptance is described in Section 7 of Appendix 1 of the Bidder’s Statement. You should read those provisions in full to understand the effect that acceptance will have on your ability to exercise the rights attaching to your CRL Shares and the representations and warranties that you are deemed to give to the Bidder by accepting the Unimin Offer. In particular, if you accept the Unimin Offer then, unless withdrawal rights are available (see Section 2.5 of Part E of this Target’s Statement) and you exercise these rights, you will give up your right to sell your CRL Shares on market or to any other person that may make an alternative takeover offer, or deal with them in any other manner.

3. Selling your CRL Shares on the ASX

You may sell some or all of your CRL Shares on the ASX. The price you will receive for your CRL Shares will depend on the prevailing market price of the CRL Shares at the time of sale. You should be aware that the market price of CRL Shares may rise or fall in the period during which the Unimin Offer remains open and following the close of the Unimin Offer.

You should also note that you will need to pay any brokerage fees which will be payable on such sale and you will not benefi t from any increase in the price payable under the Unimin Offer or from any better offer made by an alternative bidder for your CRL Shares, if such an offer eventuates.

The latest trading price for CRL Shares may be obtained from the ASX website www.asx.com.au using the code ‘CRT’.

4. Rejecting the Unimin Offer

If you wish to reject the Unimin Offer and retain your CRL Shares you do not need to take any action.

PART C

YOUR CHOICES

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Target’s Statement | 7 Target’s Statement | 7

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This part answers some key questions that you may have about Unimin’s Offer and should only be read in conjunction with the entire Target’s Statement.

Image caption here image caption here image caption here image caption herePART D

FREQUENTLY ASKED QUESTIONS

What am I being offered under Unimin’s Offer? Unimin is offering $0.45 per CRL Share in cash.

What are the Directors of CRL recommending?

The Directors unanimously recommend that shareholders ACCEPT the Unimin Offer after Iluka Resources’ acceptance, in the absence of a superior proposal.

Further details about the Directors’ recommendation are containedin Part B and in Section 5.2 of Part E of this Target’s Statement.

What does the Independent Expert say?

The Independent Expert considers that the Unimin Offer is fair and reasonable, and has valued CRL Shares at between $0.41 and $0.44 per CRL Share.

The Independent Expert’s Report is set out in full in Annexure B to this Target’s Statement.

Why are the Directors recommending that CRL Shareholders wait until after Iluka Resources’ acceptance before accepting the Offer?





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What do the Directors of CRL intend to do with their CRL Shares?

Mr Chris Cobb and Mr Jim Babon intend to ACCEPT Unimin’s Offer, in the absence of a superior proposal, in relation to those CRL Shares that are held by them or in which they have a relevant interest. No other Directors have any interest in CRL Shares.

What choices do I have as a CRL Shareholder?

As a CRL Shareholder, you have the following choices in respect of your CRL Shares:

accept Unimin’s Offer for your CRL Shares;•

sell some or all of your CRL Shares on the ASX (unless you • have already accepted Unimin’s Offer for your CRL Shares); or

do nothing.•

How do I accept Unimin’s Offer?To accept the Unimin Offer, you need to follow the instructions set out in Section 4 of Part E of this Target’s Statement.

What happens if I do nothing?

If you do nothing you will remain as a CRL Shareholder unless Unimin can compulsorily acquire your CRL Shares. If you do nothing, but Unimin acquires at least 90% of the CRL Shares (by number) on issue at any time during the Offer Period and the conditions of Unimin’s Offer are satisfi ed or waived, Unimin has stated that it intends to compulsorily acquire your CRL Shares.

What are the consequences of accepting Unimin’s Offer now?

If you accept Unimin’s Offer, subject to the withdrawal rights set out in Section 2.5 of Part E of this Target Statement, you will give up your right to sell your CRL Shares on the ASX or to any competing bidder or to deal with them in any other manner.

If I accept Unimin’s Offer, can I withdraw my acceptance?

You only have limited rights to withdraw your acceptance of Unimin’s Offer. You may only withdraw your acceptance of Unimin’s Offer if:

• Unimin’s Offer is still subject to a defeating condition; and

• Unimin’s Offer is varied in a way that postpones, for more than one month, the time when Unimin needs to meet its obligations under Unimin’s Offer. This may occur if Unimin extends the Offer Period by more than one month and Unimin’s Offer is still subject to a defeating condition.

When does Unimin’s Offer close?Unimin’s Offer will close at 7.00pm (AEST) on 5 June 2009 unless it is extended or withdrawn.

What are the tax consequences if I accept Unimin’s Offer?

The tax consequences of accepting Unimin’s Offer will depend on the circumstances of individual shareholders. You should consult a taxation adviser if you need further information regarding your tax position.

Is there a phone number I can call if I have further queries in relation to Unimin’s Offer?

If you have any further queries in relation to Unimin’s Offer, please call the Shareholder Information Line on 1800 239 524 (within Australia) or + 613 9415 4855 (from outside Australia). Calls may be recorded.

In addition, announcements made to the ASX and other important information will be posted on CRL’s website at http://www.consrutile.com.au.

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1. KEY FEATURES OF UNIMIN’S OFFER

1.1 Unimin’s Offer

On 17 April 2009, Unimin announced its intention to make an offer to CRL Shareholders to acquire all of their CRL Shares.

The Unimin Bidder’s Statement indicates that, subject to Unimin obtaining the relevant ASIC relief, the Unimin Offer will also extend to all CRL Shares that are issued between 17 April 2009 and the end of the Offer Period as a result of the exercise of Executive Share Rights. Please see Section 8 for a summary of the existing Executive Share Rights. Unimin has confi rmed that the relevant ASIC relief has been issued, and so the Unimin Offer will also extend to all CRL Shares that are issued between 17 April 2009 and the end of the Offer Period as a result of the exercise of Executive Share Rights.

For further information regarding the terms of Unimin’s Offer, please refer to Appendix 1 and Appendix 2 of the Bidder’s Statement.

1.2 Variation of Offer on 18 May 2009 to $0.45 per

CRL Share

On 18 May 2009, Unimin increased the consideration payable under the Offer to $0.45 per CRL Share and declared the Offer unconditional.

2. MECHANICS OF UNIMIN’S OFFER

2.1 Offer Period

Unimin’s Offer is open for acceptance until 7.00pm (AEST) on 5 June 2009 (unless it is extended or withdrawn in accordance with the Corporations Act).

2.2 Extension of Offer Period

As Unimin’s Offer is no longer subject to a defeating condition, Unimin may extend the Offer Period at any time before the end of the Offer Period. To extend the Offer Period, Unimin must

lodge a notice of variation with ASIC and give a notice to CRL and to each CRL Shareholder to whom offers were made under the takeover bid constituted by Unimin’s Offer.

In addition, there will be an automatic extension of the Offer Period if, within the last seven days of the Offer Period:

(a) Unimin improves the consideration under Unimin’s Offer; or

(b) Unimin’s voting power in CRL increases to more than 50%.

If either of these events occurs, the Offer Period is automatically extended so that it ends 14 days after the relevant event occurs.

2.3 Withdrawal of Unimin’s Offer

Unimin may not withdraw the Offer if you have already accepted it. Before you accept the Offer, Unimin may withdraw the Offer with the written consent of ASIC and subject to the conditions (if any) specifi ed in that consent.

2.4 Effect of acceptance

If you accept Unimin’s Offer, subject to the withdrawal rights set out in Section 2.5 below, you will give up your right to sell your CRL Shares on the ASX or to any competing bidder or to deal with them in any other manner.

The effect of acceptance is set out in detail in Section 7 of Appendix 1 of the Bidder’s Statement. This section describes the rights attached to your CRL Shares that you will be giving up, the representations and warranties that you will be making and the irrevocable authorities and appointments that you will be giving Unimin if you accept Unimin’s Offer. CRL Shareholders should read these provisions in full and seek advice if they do not fully understand their implications.

2.5 Limited rights to withdraw your acceptance

You have only limited rights to withdraw your acceptance of Unimin’s Offer. You may withdraw your acceptance of Unimin’s Offer only if Unimin’s Offer is varied in a way that postpones,

Image caption here image caption here image caption here image caption herePART E

ADDITIONAL INFORMATION

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for more than one month, the time when Unimin needs to meet its obligations under Unimin’s Offer. This may occur if Unimin extends the Offer Period by more than one month and Unimin’s Offer is still subject to a defeating condition.

If you have accepted Unimin’s Offer and the Offer conditions are not satisfi ed or waived by the end of the Offer Period (which may be extended) Unimin’s Offer will lapse and you will be free to deal with your CRL Shares.

2.6 Timing of payment

If you accept Unimin’s Offer in accordance with the instructions contained in the Bidder’s Statement, Unimin will pay or provide the consideration for your CRL Shares to you on or before 7 days after the later of:

(a) receipt of your acceptance; and

(b) the date on which the Unimin Offer becomes unconditional.

2.7 Notice of Status of Conditions

The Bidder’s Statement states that Unimin will give its Notice of Status of Conditions to the ASX and CRL on 28 May 2009. If the Offer Period is extended by a period before the time by which the Notice of Status of Conditions is to be given, the date for giving the Notice of Status of Conditions will be taken to be postponed for the same period. If there is such an extension, Unimin is required, as soon as possible after the extension, to give a notice to the ASX and CRL that states the new date for the giving of the Notice of Status of Conditions.

Unimin is required to set out in its Notice of Status of Conditions:

(a) whether Unimin’s Offer is free of any or all conditions;

(b) whether, so far as Unimin knows, any of the conditions have been fulfi lled; and

(c) Unimin ‘s voting power in CRL.

As Unimin declared the Offer to be free of conditions on 18 May 2009, the Notice of Status of Conditions must contain a statement to this effect, together with Unimin’s voting power in CRL at the time the Notice of Status of Conditions is given.

2.8 Effect of an increase in consideration on CRL Shareholders

If Unimin increases the consideration under the Unimin Offer, all CRL Shareholders who sell their CRL Shares to Unimin under the Unimin Offer, whether or not they have accepted the Unimin Offer prior to that increase in consideration, will be entitled to the benefi t of that improved consideration.

3. COMPULSORY ACQUISITION

Unimin has stated in Section 4.3 of the Bidder’s Statement that if it becomes entitled to proceed to compulsory acquisition of CRL Shares in accordance with the Corporations Act and the other conditions of Unimin’s Offer are satisfi ed, then Unimin intends to proceed to compulsory acquisition.

The two types of compulsory acquisition under Chapter 6A of the Corporations Act are discussed overleaf.

3.1 Follow on compulsory acquisition

Under Part 6A.1 of the Corporations Act, Unimin will be entitled to compulsorily acquire any outstanding CRL Shares for which it has not received acceptances on the same terms as Unimin’s Offer if, during or at the end of the Offer Period, Unimin (together with its associates):

(a) has relevant interests in at least 90% (by number) of the CRL Shares; and

(b) has acquired at least 75% (by number) of the CRL Shares that Unimin offered to acquire under Unimin’s Offer (whether the acquisitions happened under Unimin’s Offer or otherwise).

If these thresholds are met, Unimin will have up to one month after the end of the Offer Period within which to give compulsory acquisition notices to CRL Shareholders who have not accepted Unimin’s Offer. CRL Shareholders have statutory rights to challenge the compulsory acquisition, but a successful challenge will require the relevant CRL Shareholder to establish to the satisfaction of a Court that the terms of Unimin’s Offer do not represent “fair value” for the CRL Shares.

CRL Shareholders should be aware that if they do not accept Unimin’s Offer and their CRL Shares are compulsorily acquired, those CRL Shareholders will face a delay in receiving the consideration for their CRL Shares compared with CRL Shareholders who have accepted Unimin’s Offer.

3.2 General compulsory acquisition

Under Part 6A.2 of the Corporations Act, Unimin will be entitled to compulsorily acquire any outstanding CRL Shares, if Unimin holds full benefi cial interests in at least 90% of CRL Shares (by number) (i.e. if Unimin becomes a 90% holder).

If this threshold is met, Unimin will have six months after Unimin becomes a 90% holder within which to give compulsory acquisition notices to CRL Shareholders. The compulsory acquisition notices sent to CRL Shareholders must be accompanied by an Independent Expert’s Report and an objection form.

The Independent Expert’s Report must set out whether the terms of the compulsory acquisition give a “fair value” for the CRL Shares and the Independent Expert’s reasons for forming that opinion.

If CRL Shareholders with at least 10% of CRL Shares covered by the compulsory acquisition notice object to the acquisition before the end of the objection period (which must be at least one month), Unimin may apply to the Court for approval of the acquisition of the CRL Shares covered by the notice.

CRL Shareholders should be aware that if they do not accept Unimin’s Offer and their CRL Shares are compulsorily acquired, those CRL Shareholders will face a delay in receiving the consideration for their CRL Shares compared with CRL Shareholders who have accepted Unimin’s Offer.

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Image caption here image caption here image caption here image caption here

PART E – ADDITIONAL INFORMATION (continued)

4. HOW YOU CAN ACCEPT THE UNIMIN OFFER

You should read this Target’s Statement and the Bidder’s Statement before making a decision on whether or not to accept the Unimin Offer.

If you wish to accept the Unimin Offer, you should follow the instructions in Section 1.2 of the Bidder’s Statement.

To validly accept the Unimin Offer, Unimin must receive your acceptance before 7.00pm (AEST) on 5 June 2009, unless the Offer Period is extended.

5. DIRECTORS’ RECOMMENDATION AND INTENTIONS

5.1 Directors of CRL

As at the date of this Target’s Statement, the CRL Directors are:

(a) Mr David Robb (Chairman)

(b) Mr Chris Cobb (Managing Director and Chief Executive Offi cer)

(c) Mr Cameron Wilson (Director)

(d) Dr Victor Hugo (Director)

(e) Mr John Hall (Independent Director)

(f) Mr Jim Babon (Independent Director)

Mr Robb, Mr Wilson and Dr Hugo are all executives and nominees of Iluka Resources.

5.2 Directors’ recommendation

The Directors of CRL unanimously recommend that, in the absence of a superior proposal, CRL Shareholders ACCEPT the Offer after Iluka Resources’ acceptance for the reasons outlined in Part B.

In considering whether to accept the Unimin Offer, each of the Directors encourages you to:

(a) read the Independent Expert’s Report, which has determined that the Unimin Offer is both fair and reasonable to CRL Shareholders;

(b) read this Target’s Statement and the Bidder’s Statement; and

(c) have regard to your individual risk profi le, portfolio strategy, tax position and fi nancial circumstances.





Although the Independent Directors (Jim Babon and John Hall) recommend acceptance of the Offer after Iluka Resources acceptance, in the absence of a superior proposal, they consider that the Offer is opportunistic and is below their view of the underlying value of the business. However, they also recognise the risks currently facing a small company like CRL in the current diffi cult economic climate, with uncertainty surrounding future sales in the short term and the refi nancing of debt later in the year. They are also aware of the risk of the remaining CRL Shareholders being locked into an increasingly illiquid stock.

5.3 Directors’ intentions

Mr Chris Cobb intends, in the absence of a superior proposal, to ACCEPT Unimin’s Offer in relation to the CRL Shares that he currently holds after Iluka Resources’ acceptance, and also in respect of any CRL Shares that he may become entitled to before the end of the Offer Period under the terms of the Executive Share Plan.

Mr Jim Babon intends, in the absence of a superior proposal, to ACCEPT Unimin’s Offer in relation to the CRL Shares that he currently holds after Iluka Resources’ acceptance.

No other Directors have any interest in CRL Shares.

6. INFORMATION RELATING TO YOUR DIRECTORS

6.1 Interests of the Directors in CRL securities

As at the day before the date of this Target’s Statement, the Directors of CRL have the following direct or indirect interests in securities of CRL:

CRL Director CRL Shares

Mr David Robb Nil

Mr Chris Cobb1 20,000

Mr Cameron Wilson Nil

Dr Victor Hugo Nil

Mr John Hall Nil

Mr Jim Babon 22,415

1 Mr Chris Cobb also holds 839,131 Share Rights granted under the terms of the Executive Share Plan. See Section 8 for a summary of these Share Rights.

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6.2 Dealings in CRL securities

No Director has acquired or disposed of any CRL Shares in the four month period ending on the date immediately before the date of this Target’s Statement.

6.3 Interests of the Directors in Unimin securities

As at the day before the date of this Target’s Statement, no Directors have any direct or indirect interest in securities of Unimin.

6.4 Dealings in Unimin securities

No Director has acquired or disposed of a relevant interest in any Unimin securities in the four month period ending on the date immediately before the date of this Target’s Statement.

6.5 Interests of the Directors in Iluka Resources securities

As at the day before the date of this Target’s Statement, the Directors of CRL have the following direct or indirect interests in securities of Iluka Resources:

CRL Director Iluka Resources ordinary shares

Mr David Robb 591,171

Mr Chris Cobb Nil

Mr Cameron Wilson 81,048

Dr Victor Hugo 121,204

Mr John Hall Nil

Mr Jim Babon 3,886

6.6 Dealings in Iluka Resources securities

No Director has acquired or disposed of any Iluka Resources securities in the four month period ending on the date immediately before the date of this Target’s Statement except as shown below.

Mr Robb acquired 185,373 shares in Iluka Resources Limited pursuant to the Directors, Executives and Employees Share Acquisition Plan on 16 April 2009.

Mr Wilson acquired 42,935 shares in Iluka Resources Limited pursuant to the Directors, Executives and Employees Share Acquisition Plan on 16 April 2009. Mr Wilson also disposed of 14,913 shares in Iluka Resources shares on 27 February 2009.

Dr Hugo acquired 35,341 shares in Iluka Resources Limited pursuant to the Directors, Executives and Employees Share Acquisition Plan on 16 April 2009.

Mr Babon disposed of 4,600 shares in Iluka Resources on 20 March 2009.

6.7 Benefi ts and agreements

As a result of Unimin’s Offer, no person has been or will be given any benefi t (other than a benefi t which can be given without member approval under the Corporations Act) in connection with the retirement of that person or someone else from a board or managerial offi ce of CRL or a related body corporate of CRL.

There are no agreements made between any Director and any other person (including Unimin) in connection with, or conditional upon, the outcome of Unimin’s Offer.

None of the Directors have entered into any contracts with Unimin.

7. EFFECT OF OFFER ON CRL’S MATERIAL CONTRACTS

The following material contracts contain rights which will be triggered as a result of the Unimin Offer.

7.1 Arrangements between CRL and Iluka Resources

(a) Marketing Services Agreement

CRL is a party to a Marketing Services Agreement with Iluka Resources under which Iluka Resources has been appointed as CRL’s exclusive worldwide agent and representative for the marketing, sale and disposal of CRL’s mineral sands products.

Under the terms of the Marketing Services Agreement, in the event that CRL ceases to be a subsidiary of Iluka Resources (which will occur if Iluka Resources accepts the Unimin Offer, either Iluka Resources or CRL may elect to terminate the Agreement by giving six months written notice to the other party.

In accordance with its announcement to the ASX on 17 April 2009, Iluka Resources has undertaken not to exercise any rights of termination arising under the Agreement upon a change of control of CRL in relation to the Unimin Offer.

(b) Management Services Agreement

CRL is a party to a Management Services Agreement with Iluka Resources under which Iluka Resources has been engagedto perform a number of key management services to CRL.

Under the terms of the Management Services Agreement, in the event that CRL ceases to be a subsidiary of Iluka Resources (which will occur if Iluka Resources accepts the Unimin Offer), either Iluka Resources or CRL may elect to terminate the Agreement by giving six months written notice to the other party.

7.2 Facility agreements

CRL and Stradbroke Rutile Pty Limited are parties to a Cash Advance Facility Agreement, a Working Capital Facility Agreement and a Support Guarantee Facility Agreement with the Commonwealth Bank of Australia (CBA).

Under the terms of these facility agreements, if at any time without the written consent of CBA, which consent is not to be unreasonably withheld, any person (excluding Iluka Resources), holds more than half of the issued share capital of CRL (which will occur if Iluka Resources accepts Unimin’s Offer), CBA will be entitled to give notice of the cancellation of the commitments under the agreements.

The Cash Advance Facility Agreement and the Working Capital Facility Agreement further provide that, in the event that:

(a) Iluka Resources reduces its shareholding in CRL to less than 50% (which will occur if Iluka Resources accepts Unimin’s Offer); and

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(b) the Management Services Agreement is terminated or varied such that after such variation or termination Iluka Resources is no longer responsible for marketing and selling products produced by CRL.

CBA is entitled to increase the margin on the interest rate paid by CRL under the agreements by up to 2.175% per annum.

CRL also has in place hedging agreements with CBA. In the event that all of the facility agreements with CBA (described above) are cancelled, and subject to prescribed notice periods, CBA is permitted to terminate these hedging arrangements early. In the event of termination of these hedging arrangements, CRL will be required to close out its hedging positions. Whether CRL will be required to make any payment to CBA as a result of the closing out of these positions will be dependent on the US dollar/Australian dollar exchange rate at the relevant time. Based on the exchange rate as at14 May 2009, CRL would not be required to make any additional payment to CBA as a result of the close out of the hedging arrangements. However, this position may change as a consequence of exchange rate movements. CRL is also party to a Facility Agreement with the Australia and New Zealand Banking Group Limited (ANZ). Under the terms of this agreement if, without the written consent of ANZ, there is a change of control in CRL (which will occur if Iluka Resources accepts Unimin’s Offer), ANZ will be entitled to terminate some or all of its obligations under the agreement.

Irrespective of the Unimin Offer:

(a) the Working Capital Facility Agreement with CBA is due to expire at the end of September 2009 and will be subject to renegotiation for renewal before that time; and

(b) the Facility Agreement with ANZ is subject to annual review on 31 May 2009 and may be subject to renegotiation at that time.

CRL makes no representation as to whether these facility agreements will be able to be renegotiated at this time, or the likely terms of any renegotiated facility agreements.

8. EFFECT OF UNIMIN’S OFFER ON THE CRL EXECUTIVE SHARE PLAN

CRL operates the Executive Share Plan which provides for share-based remuneration of key executives. Mr Chris Cobb has been granted 839,131 Share Rights under this plan, which entitle him to receive a corresponding number of CRL Shares subject to meeting certain performance conditions and the rules of the Executive Share Plan.

Subject to meeting certain performance conditions, the terms of the grant of Share Rights entitle automatic vesting of the Share Rights into CRL Shares at the end of the vesting period on 5 March 2013. The terms of the Executive Share Plan also permit the Board, in its absolute discretion, to determine that all (or any number) of the Share Rights vest prior to this automatic vesting date.

There is also an obligation under the terms of the Executive Share Plan for the Board to consider the early vesting of the Share Rights in the event of a change of control in CRL (which will occur if Iluka Resources accepts Unimin’s Offer).

The Board, excluding Mr Cobb, has resolved that in the event of Unimin (or another party) acquiring at least 90% of the CRL Shares, all of the 839,131 Share Rights granted to Mr Cobb will immediately vest and, at Mr Cobb’s election, entitle him to have either 839,131 CRL Shares transferred or issued to him, or to receive an equivalent cash payment based on CRL’s share price as at the vesting date.

9. OTHER MATERIAL INFORMATION

9.1 Changes in Target’s fi nancial position

So far as is known to the Directors of CRL, there have been no material changes to the fi nancial position of CRL since the date of the last statement of fi nancial position sent to CRL Shareholders (as at 31 December 2008) which has not been announced to ASX. A list of ASX announcements made in relation to CRL between 1 January 2009 and the last practical time before the fi nalisation of this Target’s Statement on 18 May 2009 is set out in Annexure A to this Target’s Statement.

9.2 CRL’s issued securities

As at the close of business on the day before the date of this Target’s Statement, the issued securities of CRL consist of 366,595,816 fully paid ordinary shares.

9.3 Recent ASX announcements

A list of ASX announcements made in relation to CRL between 1 January 2009 and the last practical time before the fi nalisation of this Target’s Statement on 18 May 2009 is set out in Annexure A to this Target’s Statement.

Copies of these announcements can be obtained from ASX’s website at http://www.asx.com.au or from CRL’s website at http://www.consrutile.com.au.

9.4. New mine strategy announced on 13 May 2009

On 13 May 2009, CRL released an ASX announcement that stated: “Following a comprehensive two-year review, the Board of Consolidated Rutile Limited (“CRL”) has determined that the company will move from the current two mine operation on North Stradbroke Island to a single mine operation when mining at Yarraman Mine is completed in late 2013.

The single mine strategy enhances business value, with signifi cantly reduced capital expenditure and operating costs offsetting lower annual production post 2013.

The strategy also eliminates risks associated with moving Yarraman Mine dredge and concentrator equipment to the Enterprise North ore body (as Enterprise Mine equipment will instead continue mining into Enterprise North) and is expected to extend the life of CRL’s Enterprise Mine on North Stradbroke Island by approximately four years, to 2027.


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The strategy may also provide an opportunity to redeploy the Yarraman Mine dredge, concentrator and associated infrastructure to another, as yet unidentifi ed, mine site located off the island.”

The decision is the intention of the current CRL Board. Unimin Australia Limited (“Unimin”) has offered to purchase all of the shares of CRL and has stated its intention, following the expiry of the offer period, to undertake an extensive review of CRL’s operations and review all aspects of CRL’s business should the takeover bid be successful. The decision to move to a single mine operation may therefore be subject to further review by Unimin.

No immediate job losses result from the strategy but with one mine operating on North Stradbroke Island, employee numbers are expected to approximately halve by 2014.

Mr Cobb, CRL Managing Director and CEO said ‘ We have about four years to work with employees and the community to plan for the change. Our employees are integral to our success, and we will work to ensure the best possible outcomes for them.’

Prior to this announcement CRL’s intention was for the Yarraman dredge and concentrator to be disassembled and relocated to CRL’s Enterprise North deposit where it would operate concurrently with CRL’s ongoing Enterprise mine operations from 2014. The new strategy is to extract the combined Enterprise and Enterprise North ore bodies using the dredge and concentrator already established in the Enterprise deposit.

The new mine strategy follows from a change in the Enterprise mine path that allows higher grade ore previously scheduled for extraction in the last few years of mine life to be accessed sooner. The main feature of the changed path at the Enterprise mine is a challenging switchback to intersect with the higher grade ore in 2009 and 2010 followed by an approximately straight path in a northern direction positioned to enter directly into the adjacent Enterprise North deposit. The path contemplated in the previous strategy was a longer route that involved a return to the southern end of the deposit to extract the high grade ore now being captured by the switchback, near the end of mine life.

Transitioning to a single mine operation in 2014 results in cash operating cost savings approximately proportional to the reduced production levels. Earlier mining of higher grade ore at Enterprise combined with reduction of risk and approximately $62 million of capital expenditure associated with relocating the Yarraman dredge, concentrator and ancillary equipment provides a signifi cant enhancement to CRL’s business value.

The new mine strategy was assumed for the discounted cash fl ow valuation provided in the Independent Expert’s Report by Ernst and Young.

9.5 Taxation considerations

The taxation consequences of accepting Unimin’s Offer will depend on the circumstances of individual shareholders. You should consult a taxation adviser if you need further information regarding your taxation position.

If you are in any doubt as to the action you should take in relation to Unimin’s Offer, you should consult a professional adviser.

9.6 ASIC modifi cations and exemptions

CRL obtained relief under section 655A(1) of the Corporations Act to enable it to despatch this Target’s Statement no later than 21 May 2009. Except for this relief, CRL has not obtained from ASIC any modifi cations of, or exemptions from, the Corporations Act in relation to this Target’s Statement. However, ASIC has published various instruments providing for modifi cations and exemptions that apply generally to all persons, including CRL.

9.7 Consents

Each of the parties referred to in this section:

(a) has not authorised or caused the issue of this Target’s Statement;

(b) does not make, or purport to make, any statement in this Target’s Statement, nor is any statement in this Target’s Statement based on any statement by that party, other than as specifi ed in this section; and

(c) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Target’s Statement other than a reference to its name and a statement included in this Target’s Statement with the consent of that party as specifi ed in this section.

Blake Dawson has given and has not before the date of this Target’s Statement withdrawn its consent to be named in this Target’s Statement as Legal Advisor to CRL in the form and context in which it is named.

Rothschild Australia Limited has given and has not before the date of this Target’s Statement withdrawn its consent to be named in this Target’s Statement as fi nancial advisor to CRL in the form and context in which it is named.

Ernst & Young has given and has not before the date of this Target’s Statement withdrawn its consent to:

(a) be named as the Independent Expert in the form and context in which it is named;

(b) the inclusion of its report as Annexure B to this Target’s Statement; and

(c) the references to its report in this Target’s Statement, in the form and context in which they appear.

This Target’s Statement includes or is accompanied by statements which are made in or based on statements made in documents lodged with ASIC or on the company announcement platform of the ASX. Under the terms of ASIC class order 01/1543, the parties making those statements are not required to consent to, and have not consented to, those statements being included in this Target’s Statement. If you would like to receive a copy of any of these documents please contact Padraig O’Donoghue (Company Secretary of CRL) on +61 7 3909 4513 and you will be sent copies free of charge.F

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9.8 Continuous disclosure

CRL is a “disclosing entity” under the Corporations Act and is subject to regular reporting and disclosure obligations under the Corporations Act and the Listing Rules. These obligations require CRL to notify the ASX of information about specifi ed matters and events as they occur for the purpose of making that information available to the market. In particular, CRL has an obligation (subject to limited exceptions) to notify the ASX immediately on becoming aware of any information which a reasonable person would expect to have a material effect on the price or value of CRL Shares.

Copies of the documents fi led with the ASX may be obtained from the ASX website at http://www.asx.com.au or from the CRL website at http://www.consrutile.com.au.

Copies of documents lodged with ASIC in relation to CRL may be obtained from, or inspected at, an ASIC offi ce.

9.9 No other material information

There is no information that holders of CRL Shares and their professional advisers would reasonably require to make an informed assessment whether or not to accept Unimin’s Offer and reasonably expect to fi nd in this Target’s Statement that is known to any of the Directors other than:

(a) information set out in this Target’s Statement and the Bidder’s Statement and Unimin’s Offer; and

(b) information which has previously been disclosed to CRL Shareholders or disclosed to the ASX or ASIC under the regular reporting and disclosure obligations to which CRL is subject as a disclosing entity for Corporations Act purposes.

The Directors have assumed, for the purposes of preparing this Target’s Statement, that the information contained in the Bidder’s Statement is accurate (unless they have expressly indicated otherwise in this Target’s Statement). However, the Directors do not take any responsibility for the contents of the Bidder’s Statement and are not to be taken as endorsing, in any way, any or all of the statements contained in it.

In deciding what information should be included in this Target’s Statement, the CRL Directors have had regard to:

(a) the nature of the CRL Shares (being fully paid ordinary shares);

(b) the matters which CRL Shareholders may reasonably be expected to know;

(c) the fact that certain matters may reasonably be expected to be known to the professional advisors of CRL Shareholders; and

(d) the time available to CRL to prepare this Target’s Statement.

10. DEFINITIONS AND INTERPRETATION

10.1 Defi nitions

The following defi nitions apply in interpreting this Target’s Statement, except where the context makes it clear that a defi nition is not intended to apply:

Acceptance Form means the form with that title that accompanied the Bidder’s Statement.

ASIC means Australian Securities and Investments Commission.

ASTC means the ASX Settlement and Transfer Corporation Pty Limited.

ASTC Settlement Rules means the operating rules of the settlement facility provided by ASTC.

ASX means ASX Limited.

Bidder’s Statement means the Bidder’s Statement received by CRL from Unimin under Part 6.5 of the Corporations Act on 17 April 2009.

Board means the Board of Directors of CRL.

Controlling Participant has the meaning set out in the ASTC Settlement Rules.

Corporations Act means the Corporations Act 2001 (Cth).

CRL or Target means Consolidated Rutile LimitedABN 28 009 719 902.

CRL Executive Share Plan means the Executive Share Plan described at Section 8.

CRL Shareholder means a registered holder of CRL Shares.

CRL Share or Target Share means a fully paid ordinary share in the capital of CRL.

Director means a director of CRL.

Ernst & Young means Ernst & Young Transaction Advisory Services Limited ABN 87 003 599 844.

Executive Share Rights means rights to receive CRL Shares under the CRL Executive Share Plan.

Independent Directors means the non-executive Directors not associated with Iluka Resources, being Jim Babon and John Hall.

Independent Expert means the Independent Expert appointed by CRL to prepare the Independent Expert’s Report, being Ernst & Young Transaction Advisory Services Limited ABN 87 003 599 844.

Independent Expert’s Report means the report prepared for this Target’s Statement by the Independent Expert in accordance with the Corporations Act and ASIC policy and practice, provided at Annexure B to this Target’s Statement.


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Iluka Resources means Iluka Resources Limited ABN 34 008 675 018.

Listing Rules means the listing rules of the ASX.

Management Services Agreement means the agreement between CRL and Iluka Resources, described at Section 7.1(b).

Managing Director means Chris Cobb (Managing Director and Chief Executive Offi cer of CRL).

Marketing Services Agreement means the agreement between CRL and Iluka Resources, described at Section 7.1(a).

Notice of Status of Conditions means Unimin’s notice disclosing the status of the conditions of Unimin’s Offer which is required to be given by Section 630(3) of the Corporations Act.

Offer Period means the period during which Unimin’s Offers are open for acceptance by CRL Shareholders.

Target’s Statement means this Target’s Statement, being the statement made by CRL under Part 6.5 Division 3 of the Corporations Act relating to Unimin’s Offer.

Unimin or Bidder means Unimin Australia Limited ABN 20 000 971 844.

Unimin’s Offer or Offer means the offer to acquire CRL Shares made by Unimin in the Bidder’s Statement.

VWAP means the volume weighted average price of shares sold on the ASX.

10.2 Interpretation

(a) Words and phrases which are defi ned by the Corporations Act have the same meaning in this Target’s Statement and, if a special meaning is given for the purposes of Chapter 6 or 6A or a provision of Chapter 6 or 6A of the Corporations Act, have that special meaning.

(b) Headings are for convenience only, and do not affect interpretation.

(c) The following rules also apply in interpreting this Target’s Statement, except where the context makes it clear that a rule is not intended to apply:

(i) a singular word includes the plural, and vice versa;

(ii) a word which suggests one gender includes the other genders;

(iii) if a word is defi ned, another part of speech has a corresponding meaning;

(iv) references in this Target’s Statement to parts, sections, paragraphs and sub-paragraphs are to parts, sections, paragraphs and sub-paragraphs of this Target’s Statement;

(v) a reference to any legislation (including subordinate legislation) is to that legislation as amended, re-enacted or replaced, and includes any subordinate legislation issued under it;

(vi) a reference to a person includes a body corporate;

(vii) a reference to dollars, $, A$ or AUD is to the lawful currency in Australia unless otherwise stated; and

(viii) appendices to this Target’s Statement form part of it.

DATED 21 May 2009

SIGNED for Consolidated Rutile Limited ABN 28 009 719 902 by Mr Chris Cobb, a Director of Consolidated Rutile Limited who is authorised to so sign under a resolution passed at a meeting of the Directors of Consolidated Rutile Limited.

Chris CobbDirector

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Image caption here image caption here image caption here image caption hereAnnexure A

CRL ASX ANNOUNCEMENTS FROM 1 JANUARY 2009 TO 18 MAY 2009

Date Announcement

18/05/2009 Unimin First Supplementary Bidders Statement

18/05/2009 Unimin takeover offer update

18/05/2009 Increased unconditional recommended offer

15/05/2009 Change in substantial holding



13/05/2009 CRL New Mine Strategy




07/05/2009 ILU: Unimin Takeover Offer For Consolidated Rutile Limited

04/05/2009 CRT Bidder’s Statement from Unimin Australia Ltd

01/05/2009 ILU: Institutional Share Placement Completed

28/04/2009 Unimin notice: Bidder’s Statement

27/04/2009 Appointment of Financial Advisors

22/04/2009 Results of Meeting

22/04/2009 Chairman’s and Managing Director’s Address to Shareholders

22/04/2009 Appointment of Independent Expert

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Date Announcement

21/04/2009 Change of Director’s Interest Notice




17/04/2009 Board of Consolidated Rutile Considers Offer by Unimin

17/04/2009 Unimin Takeover Offer for Consolidated Rutile Limited

17/04/2009 Bidder’s Statement from Unimin Australia Limited

17/04/2009 Unimin Australia Limited Covering Letter re T/O

17/04/2009 Intention to Make Takeover Bid

15/04/2009 Quarterly Activities Report

02/04/2009 Temporary Suspension of Dry Mining Activities

25/03/2009 Annual Report to shareholders

19/03/2009 Notice of Annual General Meeting/Proxy Form


18/02/2009 2008 Appendix 4E Preliminary Financial Report

20/01/2009 Quarterly Activities Report



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Independent Expert's Report and Financial Services Guide In relation to the Offer by Unimin Australia Limited for Consolidated Rutile Limited

18 May 2009

INDEPENDENT EXPERT’S REPORT

Annexure B F

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Ernst & Young Transaction Advisory Services Limited, ABN 87 003 599 844 Australian Financial Services Licence No. 240585

PART 1 – INDEPENDENT EXPERT’S REPORT

The Board of Directors Consolidated Rutile Limited 1/58 Metroplex Ave, MURRARIE QLD 4172

18 May 2009

Dear Directors

Independent Expert’s Report in relation to the Offer by Unimin Australia Limited

Introduction and Purpose of Report On 17 April 2009, Unimin Australia Limited (“Unimin”) lodged its Bidder’s Statement in respect of an all-cash, off-market takeover offer for all of the issued shares in Consolidated Rutile Limited (“Consolidated Rutile”) that it does not already own. On 18 May 2009, Unimin lodged a Supplementary Bidder’s Statement whereby the original offer’s all-cash consideration amount was revised (the “Offer”). The Directors of Consolidated Rutile have appointed Ernst & Young Transaction Advisory Services Limited (“Ernst & Young Transaction Advisory Services”) to prepare an independent expert’s report (“Independent Expert’s Report” or “Report”) in relation to the Offer.

Under Section 640 of the Corporations Act 2001 (“the Corporations Act”) in the circumstances of a takeover offer, if either the bidder has a voting interest of 30% or greater in the target or the bidder and target have a common director the target statement must contain an independent expert’s report. The purpose of the independent expert’s report is to state whether or not the takeover offer is fair and reasonable and set out the reasons for forming that opinion.

With Unimin not having a 30% interest in Consolidated Rutile and there being no common directors there is no requirement under Section 640 for Consolidated Rutile to provide an independent expert’s report. However, for reasons of good corporate governance the Directors of Consolidated Rutile have requested us to prepare the Independent Expert’s Report as if Section 640 was deemed to apply. Accordingly, the purpose of our Report is to consider whether or not, in our opinion, the Offer is fair and reasonable.

The effective date of this valuation is as at the date of this Report (the “Valuation Date”).

In preparing our Report, we have had reference to Australian Securities and Investments Commission (“ASIC”) Regulatory Guide 111 Content of expert reports (“RG111”) and ASIC Regulatory Guide 112 Independence of Experts (“RG112”). F

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Consolidated Rutile Limited Independent Expert's Report and Financial Services Guide Ernst & Young ii

The Offer Unimin is offering $0.45 cash per Consolidated Rutile share that it does not already own (the “Consideration”). As at the date of the original offer on 17 April 2009, Unimin held a 19.59% interest in the issued ordinary shares of Consolidated Rutile. As at the date of this Report, Unimin has received acceptances totalling 2.16m issued ordinary shares, taking its interest in Consolidated Rutile to 20.18%.

The Directors’ of Consolidated Rutile unanimously recommend that Consolidated Rutile Shareholders accept the Unimin Offer in respect of all their Consolidated Rutile shares in the absence of a superior proposal and if Unimin receives acceptances to increase its relevant interest to 50.1% of Consolidated Rutile. This will occur when, in the absence of a superior proposal, Iluka Resources accepts the Offer.

Summary and Opinion An offer is considered to be “reasonable” if it is “fair”. An offer may also be “reasonable” if, despite not being “fair” but after considering other significant factors, shareholders should accept the offer in the absence of any higher bid before the close of the offer.

Ernst & Young Transaction Advisory Services has determined that the Offer is fair and reasonable to Consolidated Rutile Shareholders.

In forming our opinion, Ernst & Young Transaction Advisory Services has considered the factors as set out in the attached Independent Expert’s Report. This opinion should be read in conjunction with our detailed Independent Expert’s Report which sets out our scope and findings.

Other Matters This Independent Expert’s Report constitutes general financial product advice only and has been prepared without taking into account the individual circumstances of Consolidated Rutile Shareholders. Consolidated Rutile Shareholders should consider the advice in the context of their own circumstances and preferences. Consolidated Rutile Shareholders should also have regard to the Target’s Statement in relation to the Offer.

Ernst & Young Transaction Advisory Services has prepared a Financial Services Guide in accordance with the Corporations Act. The Financial Services Guide is included as Part 2 of this Report.

The decision whether to accept the Offer is a matter for individual Shareholders to consider having regard to factors such as value expected, future market conditions, investment objectives, risk profile, liquidity preferences and portfolio strategy. Shareholders who are in doubt as to the impact of the Offer on their personal circumstances should consult their own professional adviser.

Yours sincerely Ernst & Young Transaction Advisory Services Limited

Cathy Montesin Grant Murdoch Representative Director and Representative Attachments: Part 1 – Independent Expert’s Report Part 2 – Financial Services Guide

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Consolidated Rutile Limited Independent Expert's Report and Financial Services Guide Ernst & Young 3

Contents

Glossary.....................................................................................................................4 1. Overview of the Offer ..........................................................................................5

1.1 Overview ...............................................................................................................................5 1.2 Conditions of the Offer ...........................................................................................................5 1.3 Unimin’s Background ..............................................................................................................6 1.4 Unimin’s Intentions.................................................................................................................6

2. Scope of the Report ............................................................................................8 2.1 Requirements of the Corporations Act .....................................................................................8 2.2 ASIC guidelines on Fair and Reasonable ...................................................................................8 2.3 Basis of Assessment ...............................................................................................................8 2.4 Limitations and Reliance .........................................................................................................9

3. Industry Overview.............................................................................................11 3.1 Overview of the Mineral Sands Mining Industry,......................................................................11

4. Profile of Consolidated Rutile ............................................................................16 4.1 Overview of Consolidated Rutile ............................................................................................16 4.2 Mine Profile .........................................................................................................................17 4.3 Environment and community.................................................................................................18 4.4 Board of Directors ................................................................................................................18 4.5 Capital Structure and Ownership ...........................................................................................19 4.6 Share Price History ..............................................................................................................21 4.7 Earnings and Financial Position .............................................................................................23

5. Valuation Methodologies and Selection of Methodologies ....................................30 5.1 Value Definition....................................................................................................................30 5.2 Valuation Methodologies.......................................................................................................30 5.3 Selection of Valuation Methodologies ....................................................................................30

6. Valuation Analysis ............................................................................................31 6.1 Introduction.........................................................................................................................31 6.2 DCF Assumptions .................................................................................................................31 6.3 Net Debt ..............................................................................................................................32 6.4 Surplus Assets and Liabilities ................................................................................................32 6.5 Capital Losses ......................................................................................................................32 6.6 Employee and Executive Share Plans .....................................................................................33 6.7 Valuation Summary ..............................................................................................................34

7. Valuation Conclusion.........................................................................................35 7.1 Valuation Summary ..............................................................................................................35 7.2 Comparison to Trading Prices ...............................................................................................35 7.3 Cross Check .........................................................................................................................35

8. Evaluation of the Offer ......................................................................................37 8.1 Approach to Assessing Fairness and Reasonableness..............................................................37 8.2 Value of Consideration Offered to Shareholders .....................................................................37 8.3 Control Premium..................................................................................................................38 8.4 Other Matters ......................................................................................................................38

Appendix A Sources of Information.......................................................................40 Appendix B Statement of Qualifications and Declarations ......................................41 Appendix C Assessment of Discount Rate.............................................................43

Overview.................................................................................................................................................43 Weighted Average Cost of Capital .............................................................................................................43 CAPM......................................................................................................................................................43 Assessment of WACC ...............................................................................................................................48

Appendix D Valuation Methodologies ....................................................................49

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Glossary

Term Meaning

ABN Australian Business Number AFSL Australian Financial Services Licence A$/t Australian Dollars per tonne ASIC Australian Securities and Investments Commission ASX Australian Securities Exchange Bidder’s Statement Unimin’s Bidder’s Statement dated 17 April 2009 CAPM Capital Asset Pricing Model Consideration Unimin is offering $0.45 cash per Consolidated Rutile share for all shares it does not

already own. Corporations Act Corporations Act 2001 Consolidated Rutile Consolidated Rutile Limited ACN 009 719 902 Dec0XA Actual results for the financial year ended 31 December 200X DCF Discounted Cash Flow EBIT Earnings before interest and taxation EBITDA Earnings before interest, taxation, depreciation and amortisation Ernst & Young Transaction Advisory Services

Ernst & Young Transaction Advisory Services Limited ABN 87 003 599 844

FSG Financial Services Guide Iluka Resources Iluka Resources Limited Incl Including Independent Expert’s Report or Report

This Independent Expert’s Report prepared by Ernst & Young Transaction Advisory Services

KPI Key Performance Indicator kt Kilotonnes LOM Life of Mine Model Management The management team of Consolidated Rutile Limited NPAT Net Profit after Tax NPBT Net Profit before Tax NPV Net Present Value n/a Information not available for the purposes of our analysis Offer Unimin’s all-cash, off-market takeover offer for all of the issued shares in

Consolidated Rutile that it does not already own Ospraie The Ospraie Portfolio Ltd RG111 ASIC Regulatory Guide 111 Content of expert reports RG112 ASIC Regulatory Guide 112 Independence of experts Supplementary Bidder’s Statement

Unimin’s Supplementary Bidder’s Statement dated 18 May 2009

TZMI TZ Minerals International Pty Ltd Unimin Unimin Australia Limited USD United States Dollars Valuation Date As at the date of this Report VWAP Volume Weighted Average Price WACC Weighted Average Cost of Capital WDV Written down value A$ / AUD All monetary values stated in Australian Dollars, unless otherwise stated

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1. Overview of the Offer

1.1 Overview An overview of the Offer is outlined below. This overview is only that and should not be regarded as a complete description of the Offer. A more detailed discussion of the Offer is outlined in the Target’s Statement. This Report should be read in full in conjunction with the Target’s Statement to allow shareholders to whom the Offer is being made (the “Shareholders”) to make an informed decision about the Offer.

On 17 April 2009, Unimin announced an off-market takeover offer for all of the issued shares in Consolidated Rutile. Its Bidder’s Statement was lodged with Consolidated Rutile and Australian Securities Exchange (“ASX”) on the same day.

Under the original offer, Unimin was offering $0.41 cash per Consolidated Rutile share. The offer price was to be increased to $0.45 cash per share if Unimin obtained a relevant interest in at least 90% of the Consolidated Rutile shares and became entitled to proceed to compulsory acquisition of the remaining Consolidated Rutile shares in accordance with Part 6A.1 of the Corporations Act before the Offer closed.

On 18 May 2009 the original offer was revised to $0.45 cash for every Consolidated Rutile share only and declared the Offer unconditional, as detailed in the Supplementary Bidder’s Statement sent to Shareholders on the same day.

The Bidder’s Statement was sent to Shareholders on 4 May 2009 with the Supplementary Bidder’s Statement sent to Shareholders on 18 May 2009, being the date of the Offer. Unless extended, the Offer closes on 5 June 2009.

The consideration in relation to the Offer is set out below:

Figure 1: Consideration for issued share capital in Consolidated Rutile that Unimin does not already own

Number of issued shares 366,595,816Less: issued shares held by Unimin (71,805,985)Balance of shares 294,789,831Consideration per share $0.45Source:Bidder's Statement and management information

Where Unimin proceeds to compulsory acquisition, the total cash consideration will be approximately $133m.

The Directors of Consolidated Rutile unanimously recommend that Consolidated Rutile Shareholders accept the Unimin Offer in respect of all their Consolidated Rutile shares in the absence of a superior proposal and if Unimin receives acceptances to increase its relevant interest to 50.1% of Consolidated Rutile. This will occur when, in the absence of a superior proposal, Iluka Resources accepts the Offer.

Consolidated Rutile’s largest shareholder Iluka Resources Limited (“Iluka”), which has a 51.04% interest in the company, has announced that in the absence of a superior offer and subject to approval from its financiers, it intends to accept the Offer.

1.2 Conditions of the Offer Unimin’s Offer was declared unconditional on 18 May 2009.

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1.3 Unimin’s Background Unimin is an Australian industrial minerals mining company. It is wholly-owned by Unimin Asia Pacific Pty Ltd, which is in turn wholly-owned by Unimin Corporation of the United States of America. Unimin Corporation is itself wholly-owned by SCR-Sibelco NV of Belgium.

Unimin was acquired by Unimin Corporation in June 2000. Since this time Unimin has grown through numerous acquisitions and capital developments. Unimin now comprises over 30 mining and processing operations located throughout Australia and New Zealand, including a silica sand mining and processing facility on North Stradbroke Island in Queensland, the same island on which Consolidated Rutile has its mineral sands mines.

Unimin mines, processes and sells various industrial minerals, including silica sand and ground silica, lime, limestone, magnetite, feldspar, dolomite, bentonite and barite, supplying important raw materials for the manufacture of every day products such as glass, plastics, paper, building products, steel, rubber and paint.

On 11 September 2008, Unimin entered into an agreement with The Ospraie Portfolio Ltd (“Ospraie”) to acquire 71,805,985 Consolidated Rutile shares. The acquisition of these shares was completed by 20 October 2008 and provided Unimin with a relevant interest in 19.59% of the Consolidated Rutile shares on issue.

Further detail in respect of Unimin and SCR-Sibelco NV is detailed in the Bidder’s Statement.

1.4 Unimin’s Intentions 1.4.1 Intentions upon acquisition of 90% or more of Consolidated Rutile

shares Unimin’s intentions if it increases its holding to 90% or more of the Consolidated Rutile shares are detailed below.

Unimin intends to proceed with compulsory acquisition, giving notice in accordance with the Corporations Act;

Unimin will replace all the members of Consolidated Rutile’s Board of Directors;

At the conclusion of the compulsory acquisition, Unimin intends to remove Consolidated Rutile from official quotation on the ASX;

Unimin may look to consolidate the head office functions of Consolidated Rutile and Unimin;

Unimin will undertake an extensive review of Consolidated Rutile’s operations with a view of further developing current operations;

Subject to undertaking a review, Unimin will seek to involve existing Consolidated Rutile employees in the mineral sands operations. Some corporate and managerial functions may become redundant with the combination of the two companies and the delisting of Consolidated Rutile. Whilst Unimin does not expect substantial changes in employee numbers, this will only be determined upon a review by Unimin; and

Unimin intends to seek to terminate any management services arrangements currently provided by Iluka Resources to Consolidated Rutile.

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1.4.2 Intentions upon acquisition of less than 90% of Consolidated Rutile shares

If Unimin were able to gain effective control of Consolidated Rutile, but without becoming entitled to compulsorily acquire the outstanding shares, its intentions, as detailed in the Bidder’s Statement, are summarised as follows:

Consolidated Rutile is likely to remain listed on the ASX as long as it continues to meet the requirements of the Listing Rules for maintaining a listing, including maintaining a sufficient spread of shareholders;

Subject to the Corporations Act and Consolidated Rutile’s constitution, Unimin intends to procure the appointment of all or a majority of the Consolidated Rutile Board of Directors, after gaining effective control of Consolidated Rutile. The Consolidated Rutile Board will continue to have at least two independent Directors while the Company remains listed;

If Consolidated Rutile becomes a controlled entity, but not a wholly-owned subsidiary, of Unimin, it is the present intention of Unimin to attempt to procure that Consolidated Rutile’s Board of Directors implements the goals detailed in Unimin’s intention upon compulsory acquisition; and

To the extent that Consolidated Rutile is not a wholly-owned subsidiary of Unimin, and there are minority Shareholders, Unimin intends that the Directors of Consolidated Rutile will act at all times in accordance with their fiduciary duties and that all requisite Shareholder approvals and other legal requirements are complied with.

1.4.3 Intentions generally Except for as indicated above, Unimin intends to:

Continue the business of Consolidated Rutile;

Not make any major changes to the business of Consolidated Rutile or the deployment of Consolidated Rutile’s assets; and

Continue the employment of the majority of Consolidated Rutile’s employees.

Further detail in respect of Unimin’s intentions is detailed in the Bidder’s Statement.

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2. Scope of the Report

2.1 Requirements of the Corporations Act Ernst & Young Transaction Advisory Services has been requested by the Directors of Consolidated Rutile to prepare this Report in accordance with Section 640 of the Corporations Act.

Under Section 640 of the Corporations Act, in the circumstances of a takeover offer, if either the bidder has a voting interest of 30% or greater in the target or the bidder and target have a common director the target statement must contain an independent expert’s report. The purpose of the independent expert’s report is to state whether or not the takeover offer is fair and reasonable and to set to reasons for forming that opinion.

With Unimin not having a 30% interest in Consolidated Rutile and there being no common directors there is no requirement under Section 640 for Consolidated Rutile to provide an independent expert’s report. However, for reasons of good corporate governance the Directors of Consolidated Rutile have requested us to prepare the Independent Expert’s Report as if Section 640 was deemed to apply. Accordingly, the purpose of our Report is to consider whether or not, in our opinion, the Offer is fair and reasonable.

2.2 ASIC guidelines on Fair and Reasonable With respect to the meaning of fair and reasonable in the context of Section 640 of the Corporations Act, ASIC has issued RG111 which is applicable to takeover offers.

RG111 establishes “fair” and “reasonable” as two distinct criteria. An offer is considered to be “fair” if the value of the offer price of consideration is equal to or greater than the value of the securities that are the subject of the offer. This comparison is made assuming 100% ownership of the company.

An offer is considered to be “reasonable” if it is “fair”. An offer may also be “reasonable” if, despite not being “fair” but after considering other significant factors, shareholders should accept the offer in the absence of any higher bid before the close of the offer.

2.3 Basis of Assessment In assessing the fairness and reasonableness of the Offer, Ernst & Young Transaction Advisory Services has considered the following:

The value of 100% of the issued shares of Consolidated Rutile on a controlling basis;

The value of the consideration being offered by Unimin;

Whether a premium for control is being paid to Consolidated Rutile Shareholders in relation to the acquisition of Consolidated Rutile; and

Other issues relevant to Consolidated Rutile Shareholders in deciding whether or not to accept the Offer.

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2.4 Limitations and Reliance We have considered a number of sources of information in preparing this Independent Expert’s Report and arriving at our opinion. These sources of information are detailed in Appendix A to our Report.

Our opinion is based on economic, market and other conditions prevailing at the date of this Independent Expert’s Report. These conditions can change significantly over relatively short periods of time. Unless otherwise stated all currency amounts included in this Report are in Australian Dollars (“AUD” or “A$”).

This Independent Expert’s Report is also based upon financial and other information provided by Consolidated Rutile in relation to the Offer. Ernst & Young Transaction Advisory Services has considered and relied upon this information. The information provided to Ernst & Young Transaction Advisory Services has been evaluated through analysis, enquiry and review for the purposes of forming an opinion as to the fairness and reasonableness of the Offer. However, Ernst & Young Transaction Advisory Services does not warrant that its enquiries have identified all of the matters that an audit, an extensive examination or ‘due diligence’ and/or tax investigation might disclose. It should be noted that:

The projected cash flows have been based on a number of assumptions made by Management, with reference to mine and market conditions prevailing at the Valuation Date. Unpredictable events which may occur in the Life of Mine period may potentially render the valuation inadequate due to the changed circumstances; and

To the extent that the Life of Mine projected cash flows provided do not eventuate, the valuation conclusion could be materially different to that contained in this Report.

Preparation of this Independent Expert’s Report does not imply that Ernst & Young Transaction Advisory Services has, in any way, audited the accounts or records of Consolidated Rutile. It is understood that the accounting information that was provided was prepared in accordance with generally accepted accounting principles and including Australian equivalents to International Financial Reporting Standards as applicable.

Ernst & Young Transaction Advisory Services has relied upon the work of geologists with the Company in relation to resources and reserves, as well as mine production and quality of product.

In forming our opinion Ernst & Young Transaction Advisory Services has also assumed that:

Matters such as title, compliance with laws and regulations and contracts in place are in good standing and will remain so and that there are no material legal proceedings, other than as publicly disclosed;

The information set out in the Target’s Statement and accompanying documents sent to Consolidated Rutile Shareholders is complete, accurate and fairly presented in all material respects;

The publicly available information relied upon by Ernst & Young Transaction Advisory Services in its analysis was accurate and not misleading;

The Offer will be implemented in accordance with the terms; and

The legal mechanisms to implement the Offer are correct and will be effective.

To the extent that there are legal issues relating to assets, properties or business interests or issues relating to compliance with applicable laws, regulations and policies, Ernst &

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Young Transaction Advisory Services assumes no responsibility and offers no legal opinion or interpretation on any issue.

The statements and opinions given in this Independent Expert’s Report are given in good faith and in the belief that such statements and opinions are not false or misleading.

Ernst & Young Transaction Advisory Services provided draft copies of this Independent Expert’s Report to the Directors and Management of Consolidated Rutile for their comments as to factual accuracy, as opposed to opinions, which are the responsibility of Ernst & Young Transaction Advisory Services alone. Changes made to this Independent Expert’s Report as a result of this review by the Directors and Management of Consolidated Rutile have not changed the methodology or conclusions reached by Ernst & Young Transaction Advisory Services.

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3. Industry Overview

3.1 Overview of the Mineral Sands Mining Industry1,2 The mineral sands mining industry consists of two core product streams:

Titanium dioxide minerals – in the form of rutile, ilmenite and leucoxene; and

Zircon

Titanium dioxide products are more prevalent than zircon, with an average titanium dioxide to zircon ratio of 5:1 in typical mineral sands deposits. The major known locations of mineral sands ore bodies are in Australia, India, southern Africa and southern USA. Australia’s mineral sands deposits occur along the coast of eastern Australia from the central western region of New South Wales to northern Queensland, and in Western Australia. The Murray Basin (Vic/NSW/SA) and more recently the Eucla Basin are becoming important mineral sands regions owing to the large size of deposits and the increased proportion of zircon in the deposits.

Mineral sands products are used in a broad range of consumer and industrial applications. The products are associated with industrialisation and increasing urbanisation, displaying growth rates which correlate closely with global economic growth rates. Growth in demand for mineral sands products from China, and to a lesser extent, India, has outstripped demand from the more mature markets of North America and Europe since 2000, with China now the largest net importer of zircon accounting for approximately 30% global market share in 2007.

The global Mineral Sands Industry is dominated by Australian miners and producers, with Australia’s share of world output of mineral sands typically 20% for ilmenite, 50% for zircon and 45% for rutile, as detailed in the following charts:

Figure 2: Australia’s share of global mineral sands output Source: IBISWorld

The majority of the Australian industry’s revenue is derived from exports, which IBISWorld expects to generate approximately 60% of the industry’s revenue in 2008-09. The performance of the Australian Mineral Sands Mining Industry depends heavily on both the demand for and price of titanium minerals (formed from rutile and/or ilmenite) and zircon – minerals whose demand is tied mainly to pigment and ceramic product manufacturing respectively. The industry is not segmented in any clear fashion and though a number of products are mined, co-production of two or more mineral sands typically occurs at the same mine site.

1 IBISWorld Industry Report 12 November 2008: Mineral Sands Mining in Australia: B1315 2 ABARE Australian Mineral Statistics

I lmenite

20%

80%

Australia share Rest of w orld

Zircon

50%50%


Rutile

45%55%


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3.1.1 Demand Determinants Rutile and ilmenite are both prime sources of titanium dioxide, which is the main whitening pigment used in paint, paper, plastics and rubber. Rutile contains about 95% titanium dioxide, while ilmenite has only 56%. A number of Australian producers are processing ilmenite to synthetic rutile prior to export, though the volume of production is on the decline. Pigment accounts for 90% of titanium usage, with only a small proportion (about 3%) of the world’s titanium mineral production being consumed in making titanium metal (which is a high-strength, light-weight alternative to steel). Approximately 5% of the remaining demand for titanium minerals is for use in the ceramic and chemical industries. Worldwide, the demand for titanium minerals is strongly linked with overall economic growth. Figure 3 below details the end uses of mineral sands products in the global market:

Figure 3: Mineral sands products by end use globally

90%

3%5% 2%

Pigment Titanium metal

Ceramic and chemical Other

Source: IBISWorld Industry Report 12 November 2008: Mineral Sands Mining in Australia: B1315

Zircon is often co-produced with rutile and ilmenite. The main use for zirconium compounds is in ceramics, refractory bricks, foundry castings and furnace linings. These uses account for 80% of the demand for zircon. The demand for zircon is strongly linked with investment spending worldwide.

A number of industries affect downstream demand for mineral sand mining including:

Paint manufacturing;

Paper and paper product manufacturing;

Plastic product manufacturing; and

Industrial machinery and equipment manufacturing (trends in furnace and kiln capacity affect demand for zircon products).

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3.1.2 Market size and key players IBISWorld indicates that the Mineral Sands Mining Industry in Australia is highly concentrated, with the two major industry participants – Iluka Resources and Exxaro Australia Sands - accounting for approximately 80% of output and sales (refer to figure 4 below for a breakdown of mineral sands producers in Australia by market share). The industry is expected to generate revenue of $1.3 billion in 2008-2009, compared with $1.1 billion in 2003-2004 (2008-2009 prices). It is expected that the industry’s revenue will account for 0.04% of Australia’s GDP in 2008-2009 despite the fact that Australia dominates world output of the major mineral sands. We understand that Consolidated Rutile’s production is included in Iluka Resources as a result of the accounting for Iluka Resources 51.04% interest.

Figure 4: Australian mineral sands producers by Australian market share

67%

18%

13% 2%

Iluka Resources Ex x aro Australia Sands

Bemax Resources Other

Source: IBISWorld Industry Report 12 November 2008: Mineral Sands Mining in Australia: B1315

Global concentration in both the titanium minerals and zircon markets is high with the top ten producers accounting for 75% and 86% of total supply in 2006 respectively. Collectively, Iluka Resources and Consolidated Rutile accounted for 19% of the global titanium minerals market and 34% of the global zircon market in 2006.

As at 2006, vertical integration within the titanium minerals and titanium dioxide pigment industries was low with only a small amount of titanium dioxide pigment producers holding interests in titanium minerals mining, of which their interest represented a minimal portion of their total requirements. This is evident in the below graphs. Barriers to entry for titanium minerals mining industry include access to customer markets for long term supply, capital and project lead times. The titanium dioxide pigment industry’s barriers to entry include capital and production technology.

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Figure 5: Global titanium mineral producers in 2006

19%

14%

13%

25%

6%5%5%

3%3%3%

4%

Iluka / CRL RBM QIT Titania

Bemax Tiw est IRE Vilnohirsk

Irshansk DuPont Others

Source: TZMI Figure 6: Global titanium dioxide pigment producers in 2006

21%

14%

11%10%

9%

35%

DuPont Cristal / Millennium Tronox Huntsman Kronos Others

Source: TZMI

3.1.3 Historical performance and outlook After a difficult period in the early 2000s, the Mineral Sands Mining Industry faced more favourable conditions in 2004-05, as demand for a number of its products improved, particularly from developing countries. Export prices for rutile and zircon increased in real terms (by 7.6% and nearly 22%) although those for ilmenite fell 8.8%. Favourable market conditions prevailed over 2005-06 and 2006-07, as increased output combined with higher prices for rutile and zircon produced increases in industry revenue of over 5% in 2005-06 and over 11% in 2006-07. The volume of rutile and zircon production expanded in 2007-08 as Iluka Resources’ Murray Basin project ramped up production and BeMax’s Pooncarie project expanded. Figure 7 below details the historical production volumes and export prices since 2000-01 for the Australian Mineral Sands Mining Industry: F

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Figure 7: Australia’s historical production volumes and export prices for Rutile, Ilmenite and Zircon

0

500

1000

1500

2000

2500

3000

2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Volu

me

(kt)

0

100

200

300

400

500

600

700

800

900

1000

Expo

rt pr

ice

(A$/

t)

Volume ilmenite Volume rutile Volume zircon Price ilmenite (bulk) Price rutile (bagged) Price zircon (bagged)

Source: ABARE Australian Mineral Statistics

Mineral sands contracts are negotiated in USD and hence reported revenues for Australian producers are impacted by exchange rate movements. Generally, ilmenite and rutile sales are contracted out 12 months or more, where as in recent times zircon has been contracted out on shorter terms. The figure below highlights the AUD/USD exchange rate for the period 2000-01 to 2007-08.

Figure 8: Historical AUD/USD exchange rates

- 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90

FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08

AUD

/ USD

AUD/USD av erage ex change rate

Source: Oanda

A weakening in demand conditions for mineral sands products has occurred recently, which has resulted in commodity price pressures and production cuts by many of Australia’s major producers in early 2009.

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4. Profile of Consolidated Rutile

4.1 Overview of Consolidated Rutile Consolidated Rutile is an Australian listed company involved in mineral sand mining. The Company was incorporated in 1963, listed on the ASX in 1965 and commenced mining on North Stradbroke Island in 1966. Consolidated Rutile’s operations comprise two operating mines on North Stradbroke Island and a dry mill processing facility at Pinkenba, an industrial suburb of Brisbane. The Company currently employs approximately 250 personnel.

In 2001 Consolidated Rutile was subject to an off-market takeover bid from Iluka Resources, a major mineral sand producer headquartered in Western Australia. At the close of the bid in August 2001, Iluka Resources had acquired a 48.9% interest in Consolidated Rutile. Since that time Iluka Resources’ interest has increased to 51.04%. Consolidated Rutile’s sales are marketed by Iluka Resources under an agreement between the two companies. In relation to the Offer from Unimin, Iluka Resources has announced that in the absence of a superior offer and subject to approval from its financiers, it intends to accept the Offer.

Minerals extracted include rutile, zircon and ilmenite, which have a wide array of applications in every day common products. Rutile is used in the production of paints, plastics, cosmetics, aerospace components, surgical equipment, welding components and titanium. Ilmenite is used in the steel making industry and is also used to produce titanium dioxide and titanium metal. Zircon is used in the ceramic industry and various building products.

Consolidated Rutile exports its mineral sands to over 20 countries around the globe with Asia, the largest market, comprising 80% of total mineral sand sales. North America and Australia are second and third largest markets representing 13% and 4% of total sales respectively. The following graph provides an overview of the breakdown of sales by region.

Figure 9: Consolidated Rutile FY08 sales by region

Asia80%

Australia4%

Europe2%North America

13%

Other¹1%

Source: Consolidated Rutile Limited Annual Report for the year ended 31 December 2008 ¹Other includes hedge gains and losses

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Consolidated Rutile’s extraction methods comprise both dry mining and dredge mining practices. The dry mining process is sub-contracted to a third party. The mineral sands are then transported by barge to Consolidated Rutile’s processing facility at Pinkenba.

The Consolidated Rutile group comprises five companies as outlined in the below chart. The activities of the Company are all conducted under the holding company Consolidated Rutile, with the other companies dormant or in start-up phase. Queensland Construction Materials Pty Ltd was established to act as a holding company for Consolidated Rutile’s construction sand business, where excess sand tailings from mining operations are intended to be sold to the construction industry. Approval for this has been sought from state and environmental authorities however approval from the Redlands City Council was rejected and is currently in appeal.

Figure 10: Consolidated Rutile corporate structure

Source: Consolidated Rutile

4.2 Mine Profile Consolidated Rutile currently has two mines in operation, Yarraman and Enterprise South. Both mines are located on North Stradbroke Island.

4.2.1 Yarraman Mine Yarraman has been in operation since 1999 and is scheduled to be mined until 2013. Yarraman operations include both dredge and dry mining however, an announcement was made to the ASX on 2 April 2009 advising that dry mining operations at Yarraman had been suspended for a period of three to six months in light of declining global demand. An overview of available reserves is detailed in Section 4.2.3.

4.2.2 Enterprise Mine The Enterprise mine is comprised of the Enterprise South and Enterprise North ore bodies. The Enterprise mine has been in operation since 2005 and is scheduled to be mined out by 2028. The mines have dry and dredge mining operations. An overview of available reserves is detailed below in Section 4.2.3.


(Holding Company)

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4.2.3 Reserves The following table indicates the available ore reserves of Consolidated Rutile as at 31 March 2009 by mine.

Figure 11: Consolidated Rutile Ore reserves

Currency: $ 000 Category Ore Mt HM grade % In-situ HM ktDredgeYarraman Proved 95.3 0.65% 620Enterprise Proved 227.0 0.99% 2,251Total proved 322.3 0.89% 2,871Yarraman Probable 11.8 0.91% 107Enterprise Probable 280.4 0.74% 2,083Total probable 292.2 0.75% 2,190Total dredge 614.5 0.82% 5,061Dry MineYarraman Proved 3.9 1.12% 44Enterprise Proved 8.3 1.72% 143Total proved 12.2 1.53% 187Yarraman Probable 3.4 1.06% 36Enterprise Probable 49.8 1.14% 567Total probable 53.2 1.14% 603Total dry mine 65.4 1.21% 790Total ore reserves 679.9 0.86% 5,851

Source: Consolidated Rutile Management

4.3 Environment and community Consolidated Rutile has committed significant resources to ensure the sustainability of rehabilitated land at North Stradbroke Island, establishing a vegetation monitoring program in 1991 to assess the long-term impact of rehabilitated areas. In 1994, Consolidated Rutile received accreditation for its native seedlings nursery used in the rehabilitation process and in 1999 submitted an inaugural Public Environment Report.

Consolidated Rutile today continues to support environmental and community groups including a Koala tracking program, the University of Queensland’s dugong research and the North Stradbroke Island Community Peer Support Group.

4.4 Board of Directors The table below summarises Consolidated Rutile’s Board of Directors:

Figure 12: Board of Directors

Directors PositionDavid Robb ChairmanChris P Cobb Chief Executive OfficerJim F Babon Non-Executive DirectorCameron Wilson Non-Executive DirectorEdward J Hall Non-Executive DirectorVictor Hugo Non-Executive DirectorSource: Consolidated Rutile Limited 2008 Annual Report

As at the date of this Report, there are no common Directors between Consolidated Rutile and Unimin.

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4.5 Capital Structure and Ownership 4.5.1 Share Ownership As at 13 May 2009, the top 20 Shareholders of Consolidated Rutile were as set out in the table below:

Figure 13: Top 20 Shareholders

Number of shares Percentage of total('000) shares on issue

Iluka Corporation Limited (owned by Iluka Resources) 187,110,483 51.04%Citicorp Nominees Pty Limited 75,963,864 20.72%J P Morgan Nominees Australia 13,412,340 3.66%Citicorp Nominees Pty Limited 7,989,614 2.18%HSBC Custody Nominees 5,936,393 1.62%ANZ Nominees Limited 4,023,131 1.10%UBS Nominees Pty Ltd 374,450 0.10%Mr David Terence Clarke 3,250,751 0.89%Reynolds (Nominees) Pty Ltd 2,460,000 0.67%Australian Reward Investment 2,347,003 0.64%National Nominees Limited 2,128,349 0.58%RBC Dexia Investor Services 1,998,256 0.55%Cogent Nominees Pty Limited 1,586,236 0.43%G Harvey Nominees Pty Limited 1,400,000 0.38%Welas Pty Limited 1,069,705 0.29%Mr James Gardiner 1,000,000 0.27%Mcneil Nominees Pty Limited 1,000,000 0.27%Abtourk (Syd No 415) Pty Ltd 821,871 0.22%Citicorp Nominees Pty Limited 733,519 0.20%J S Millner Holdings Pty Ltd 632,862 0.17%Total shares of top 20 shareholders 315,238,827 85.99%Other shareholders 51,356,989 14.01%Total shares on issue 366,595,816 100.00%Source: Computershare As at 13 May 2009 Consolidated Rutile had approximately 2,250 Shareholders. At the same date, Consolidated Rutile’s substantial shareholders were as follows:

Figure 14: Substantial Shareholders

Consolidated Rutile Shareholder Shares % holdingIluka Corporation Limited (owned by Iluka Resources Limited) 187,110,483 51.04%Unimin Australia Limited 71,805,985 19.59%452 Capital Pty Limited 27,773,315 7.58%Commonwealth Bank of Australia1 25,707,018 7.01%Substantial Shareholders total 312,396,801 85.22%Source: Bidder's Statement1 The Commonwealth Bank of Australia holding includes 452 Capital Pty Ltd holding as a deemed relevant interest

The table shows that Consolidated Rutile’s top four shareholders hold 85.22% of the issued shares with the top 20 shareholders holding 85.99%. Iluka Resources is the largest shareholder of Consolidated Rutile, holding 51.04% of the total issued share capital, with Unimin the second largest shareholder with a 19.59% interest. Combined, these two companies hold 70.63% of issued shares.

The remaining 14.01% of shareholders not within the top 20 shareholders consists of numerous small holdings of less than 0.17%.

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4.5.2 Employee and Executive Share Options Consolidated Rutile maintains both an exempt employee share plan and an executive share plan.

The exempt employee share plan commenced at the end of May 2006. The terms of the plan are such that eligible Consolidated Rutile employees are able to purchase Consolidated Rutile shares and access the taxation exemption concessions available under Division13A of the ITAA. The plan includes a restriction period whereby employee shareholders under the plan may not assign, transfer, sell or grant an encumbrance over or otherwise deal in the plan’s shares within three years of the acquisition date. Consolidated Rutile’s Company Secretary has advised the employee shareholders under the plan that they are unable to accept the Offer due to the aforementioned restrictions.

At the date of this Report, employee shareholders under the plan account for 99,045 of the total shares on issue.

The executive share plan is retention and performance related. Mr Cobb, Managing Director and Chief Executive Officer, is the only party subject to the plan. Mr Cobb currently holds 839,131 share rights. These were granted on 6 March 2008 and have a vesting date of 5 March 2013.

At the Board meeting on the 22nd April 2009 the Board excluding the Managing Director, reviewed the status of existing share rights granted to the Managing Director under the terms of the executive share plan in light of the Unimin Offer. After discussion, the Board resolved that in the event of Unimin or another company acquiring 90% of Consolidated Rutile shares then:

Such an event is deemed to be a "Control Event" (as defined in the rules of the executive share plan);

The vesting conditions in respect to all unvested share rights held by the Managing Director are automatically satisfied; and

All unvested share rights held by the Managing Director automatically become vested share rights.

The Board further resolved that upon the vesting of the Managing Director's share rights (Vesting Date) the Managing Director will, at his election, be entitled to have either the relevant number of shares transferred or issued to him in accordance with rule 4.12 of the executive share plan or receive an equivalent cash payment based on the Company's share price at the Vesting Date.

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4.6 Share Price History A graph of the movements in Consolidated Rutile’s share price and trading volumes across the period from 1 January 2008 to 18 May 2009 is detailed as follows:

Figure 15: Consolidated Rutile Limited – Monthly share price and trading volume since 1 January 2008

Source: Factiva

The items noted on the graph related to the following announcements made by Consolidated Rutile:

1. Consolidated Rutile announced results for the full year ended 31 December 2007 with profit down 6%.

2. Consolidated Rutile announced results for the half year ended 30 June 2008, interim profit was down 35.7%.

3. High trading volume as a result of Unimin purchasing 71.8m Consolidated Rutile shares from Ospraie.

4. Consolidated Rutile upgraded its profit guidance for FY08 to $13-15m from previous guidance of $7-9m, production down 7.4%.

5. Consolidated Rutile announced results for the full year ended 31 December 2008, profit down 18%.

6. Consolidated Rutile announced that its full year output would be at the lower end of its forecast due to demand.

7. Original offer announced to the ASX on 17 April 2009.

8. Revised Offer announced to the ASX on 18 May 2009.

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The share price performance of Consolidated Rutile is also set out in the figure below.

Figure 16: Consolidated Rutile share trading history

Consolidated Rutile - Share Trading History

DateHigh

$Low

$Close

$ VolumeMonthly liquidity

listed sharesAnnual Summary 2007 0.750 0.500 0.560 167,657,552(calendar year) 2008 0.580 0.290 0.360 138,186,720

Period to 15/05/2009 0.445 0.250 0.440 23,697,200

Monthly summary 31/05/2008 0.470 0.360 0.410 3,431,320 0.94%30/06/2008 0.450 0.315 0.325 10,828,310 2.95%31/07/2008 0.390 0.300 0.370 2,415,880 0.66%31/08/2008 0.410 0.350 0.360 1,482,560 0.40%30/09/2008 0.390 0.340 0.350 56,091,848 15.30%31/10/2008 0.385 0.310 0.310 21,781,110 5.94%30/11/2008 0.355 0.290 0.310 2,406,760 0.66%31/12/2008 0.370 0.310 0.360 5,638,130 1.54%31/01/2009 0.365 0.270 0.300 1,180,990 0.32%28/02/2009 0.300 0.250 0.290 1,604,050 0.44%31/03/2009 0.320 0.270 0.300 1,405,030 0.38%30/04/2009 0.435 0.290 0.430 10,999,710 3.00%

Weekly summary 17/04/2009 0.435 0.310 0.425 4,994,08824/04/2009 0.435 0.425 0.430 4,588,848

1/05/2009 0.435 0.430 0.430 991,2098/05/2009 0.440 0.425 0.440 4,468,622

15/05/2009 0.450 0.440 0.440 3,329,795Source: Factiva

The low level of liquidity of Consolidated Rutile’s shares is highlighted in the table above. This can be attributed Consolidated Rutile’s substantial shareholders holding 85.2% of the issued share capital.

Trading, and hence liquidity, was high in September and October 2008 as a result of Unimin’s purchase of shares from Ospraie. In addition liquidity increased in late April 2009 as a result of the announcement of the original offer.

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4.7 Earnings and Financial Position 4.7.1 Earnings Set out below are the historical income statements for the years ended 31 December 2006, 31 December 2007 and 31 December 2008:

Figure 17: Income statements

Currency: $ 000 FY06A FY07A FY08ASales revenue 125,911 124,735 125,996Other income 75 236 185Net foreign exchange (losses)/gains (958) (967) 2,984Operating expenses (80,912) (80,693) (90,385)EBITDA 44,116 43,311 38,780Depreciation and amortisation (12,430) (12,183) (13,784)EBIT 31,686 31,128 24,996Net interest (expenses)/income (1,799) (1,844) (1,903)Profit before income tax 29,887 29,284 23,093Significant items:Net gain/(loss) on sale of assets 164 37 3Net profit after significant items before tax 30,051 29,321 23,096Income tax expense (8,172) (8,858) (6,190)Net profit after tax 21,879 20,463 16,906KPIsEBITDA margin 35.0% 34.7% 30.8%EBIT margin 25.2% 25.0% 19.8%Source: Consolidated Rutile Limited Annual Reports for the years ended 31 December 2006, 2007 and 2008 In relation to the above income statements we note the following:

Revenue: sales revenue is a function of sales volumes, sales price, exchange rates and the timing of shipments to customers. We note the following in respect of the sale of individual mineral sands:

Rutile: sales volumes in FY08A were less than that of the prior period. Management advised that the decrease in volumes, particularly in quarter four was as a result of the impact of the Global Financial Crisis on economic activity. In addition at year end there was a deferred shipment to a customer due to reduced demand for pigment in Asia. Rutile sales prices in FY08A were relatively consistent with prices in FY07A.

Ilmenite: as with rutile, sales volumes in FY08A were less than that of the prior year as a result of the impact of the Global Financial Crisis and two large deferred shipments as a result of a decline in demand. Ilmenite sales prices in FY08A were relatively consistent with prices in FY07A.

Zircon: on balance zircon sales volumes in FY08A were largely consistent with the volumes in FY07A. Sales prices were relatively low in the first three quarters, however picked-up significantly in the last quarter of FY08A.

Other income: primarily relates to the sale of scrap metal and external income earned by the laboratories.

Net foreign exchange (losses)/gains: Consolidated Rutile is exposed to currency risk on sales denominated in USD and as such generally enters into forward exchange contracts/foreign exchange options to hedge this risk. Following a $1.0m foreign exchange loss in FY07A, Consolidated Rutile made a $3.0m gain in 2008.

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Operating expenses: 84.9% of operating expenses in FY08A related to costs of production. The increase in operating expenses between FY07A to FY08A was as a result of increases in production costs.

EBITDA and EBITDA margin: margins have declined as a result of the higher operating expenses in FY08.

The table below outlines the sales revenue per geographical segment:

Figure 18: Segment sales of mineral sands to external customers

Currency: $ 000 FY06A FY07A FY08AAsia 86,188 93,234 100,618Australia 5,339 6,696 5,511North America 14,259 14,105 15,830Europe 16,187 3,611 2,228Other¹ 3,938 7,089 1,809Sales revenue 125,911 124,735 125,996Source: Consolidated Rutile Limited Annual Report 2007 and 20081 Other includes hedge gains and losses

The majority of sales are made to the Asian market. Typically sales in the second half of the year are greater than that of the first half (where the first half of the year is impacted by Chinese New Year). Sales in the second half of FY08A were less than anticipated as a result of the deferral of a number of shipments to customers because of the fall in demand.

As previously indicated, sales volumes in FY08A were less than the prior period as a result of the decline in demand experienced after the impact of the Global Financial Crisis became more widespread.

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4.7.2 Financial Position Set out below are the historical balance sheets as at 31 December 2007 and 31 December 2008:

Figure 19: Balance sheets

Currency: $ 000 Dec07A Dec08ACurrent assetsCash and cash equivalents 4,191 14,477Trade and other receivables 24,804 14,072Inventories 23,735 22,697Derivative financial instruments 5,691 -Other assets 356 375Total current assets 58,777 51,621Non-current assetsDerivative financial instruments 286 -Other assets 714 161Property, plant and equipment 107,089 101,255Intangibles 798 525Deferred tax assets 1,063 11,132Total non-current assets 109,950 113,073Total assets 168,727 164,694Current liabilitiesTrade and other payables 18,401 14,392Derivative financial instruments - 11,045Current tax liabilities 4,470 3,636Employee benefits 4,018 5,748Provisions 5,817 9,418Total current liabilities 32,706 44,239Non-current liabilitiesDerivative financial instruments - 2,872Employee benefits 687 363Provisions 21,017 20,023Total non-current liabilities 21,704 23,258Total liabilities 54,410 67,497Net assets 114,317 97,197EquityContributed equity 130,172 130,172Reserves 4,184 (9,679)(Accumulated losses)/retained profits (20,039) (23,296)Total equity 114,317 97,197Source: Consolidated Rutile Limited Annual Report for the yeas ended 31 December 2008 In relation to the 31 December 2008 balance sheet we note the following:

Cash and cash equivalents: relates to cash on hand and deposits held at call with banks, the details of which are set out below:

Figure 20: Cash and cash equivalents

Currency: $ 000 Dec07A Dec08ABank balances 4,191 2,977Call deposits - 11,500Total 4,191 14,477Source: Consolidated Rutile Limited Annual Report 2008

The increase in cash at 31 December 2008 is as a result of the timing of receivables collections at year end. The $11.5m balance in the call deposit account relates to this receipted cash which has been transferred to higher interest bearing money-market account.

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Trade and other receivables: the composition of Consolidated Rutile’s trade and other receivables balance is outlined below:

Figure 21: Current trade and other receivables

Currency: $ 000 Dec07A Dec08ATrade receivables 21,903 11,608Other receivables 784 654Prepayments 2,117 1,810Total 24,804 14,072Source: Consolidated Rutile Limited Annual Report 2008

The decrease in trade receivables between 31 December 2007 and 31 December 2008 is due to the timing of shipments and associated collections in the quarter to December in each period. In December 2008, approximately $20m in receivable collections were made (double that typically received in a month). Trade receivables are due for settlement no more than 90 days from invoice/shipment date.

The balance of other receivables and prepayments at 31 December 2008 is relatively consistent with the prior period.

Inventories: the composition of Consolidated Rutile’s inventory balance is detailed below:

Figure 22: Inventories

Currency: $ 000 Dec07A Dec08AWork in progress (heavy mineral concentrate)

At cost 6,925 8,375At net realisable value 573 -

Finished goods (mineral sands)At cost 10,614 9,016

Consumable stores 5,623 5,306Total 23,735 22,697Source: Consolidated Rutile Limited Annual Report 2008

Inventory includes heavy mineral concentrate stockpiles held at North Stradbroke Island, processed mineral sands and stores consumables for use at mine site. The balance of inventory at 31 December 2008 is relatively consistent with that of the prior year and is as a result of the timing of sales and production.

Property, plant and equipment: the composition of Consolidated Rutile’s property, plant and equipment is detailed below:

Figure 23: Property, plant and equipment

Currency: $ 000 Dec07A Dec08AFreehold land and buildings 4,275 4,284Leasehold land and improvements 2,251 2,013Plant and equipment 83,561 79,234Motor vehicles 815 594Mine reserves and development

Areas in production 15,410 14,859Areas in development 777 271

Total 107,089 101,255Source: Consolidated Rutile Limited Annual Report 2008

As at 31 December 2008 property, plant and equipment accounted for 61.5% of Consolidated Rutile’s total asset base (63.5% at 31 December 2007). The majority of this balance is attributed to plant and equipment.

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Consolidated Rutile incurred $7.2m in additions, $0.02m in disposals and $12.9m in depreciation and amortisation between 31 December 2007 and 31 December 2008.

The majority of mine reserves and development relates to areas in production with the balance representing the accumulation of development expenditure in relation to areas of interest in which mine development has commenced.

Intangibles: relate to the licence and associated implementation costs incurred in relation to computer software. The reduction in the intangible balance from the prior period is as a result of amortisation.

Other assets: relate to capitalised deferred mining expenditure. The reduction in the non-current balance is as a result of amortisation.

Deferred tax assets and current tax liabilities: represent temporary differences primarily attributable to cash flow hedges.

Trade and other payables: The balance of trade and other payables at 31 December 2008 includes $6.8m of trade payables (Dec07A: 12.9m). The balance of trade payables is higher than that at 31 December 2008 due to timing differences. Trading terms are generally 30 days from date of invoice.

Other payables include government royalties, payroll tax and an intercompany payable to Iluka Resources (Dec08A:$4.3m, Dec07A: $3.0m).

Derivative financial instruments: relate to forward foreign exchange contracts held in respect of sales. The classification of these derivative financial instruments as either assets or liabilities is dependent upon the foreign exchange at which the forward contracts were entered into and the foreign exchange rate prevailing at year end. Likewise the quantum of the financial instrument balance is dependent upon the variation between the contracted foreign exchange rate and that at year end, as well as the number of contracts held.

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Employee benefits: the composition of Consolidated Rutile’s employee benefits balance is outlined below:

Figure 24: Employee benefits

Currency: $ 000 Dec07A Dec08ACurrentLiability for annual leave 1,553 2,179Liability for long serve leave 1,904 2,811Liability for other employee leave entitlements 237 387Liability for directors' retirement benefits 324 371Total current employee benefits 4,018 5,748Non-currentLiability for long service leave 687 363Total non-current employee benefits 687 363Total 4,705 6,111Source: Consolidated Rutile Limited Annual Report 2008

The increase in employee benefits is as a result of an increase in the length of time that service employees have been with the Company, which are reflected in the Annual Leave and Long Serve Leave balances above.

Provisions: the composition of Consolidated Rutile’s provisions balance is outlined below:

Figure 25: Mining restoration and rehabilitation provisions

Currency: $ 000 Dec07A Dec08ACurrent 5,817 9,418Non-current 21,017 20,023Total 26,834 29,441Source: Consolidated Rutile Limited Annual Report 2008

The increase in the total provisions balance is attributed to an additional provision made during the year which related to newly mined areas, as well as the unwinding of provision discount.

Equity: the table below provides a reconciliation of total equity between share capital, the hedging reserve, the share reserve and retained earnings. Accumulated losses represent those losses resulting from Consolidated Rutile’s project in Sierra Leone that failed due to political unrest.

The payment of dividends was paid out of the parent entity, which had an opening retained profit balance of $54m.

Figure 26: Equity

Currency: $ 000 Share capitalHedging reserve Share reserve

(Accumulated losses) / retained

profits Total equityBalance at 1 January 2008 130,172 4,184 - (20,039) 114,317Total recognised income and expense - (13,926) - 16,906 2,980Equity settled transactions, net of tax - - 63 - 63Dividends to Shareholders - - - (20,163) (20,163)Balance at 31 December 2008 130,172 (9,742) 63 (23,296) 97,197Source: Consolidated Rutile Annual Report 31 December 2008

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4.7.3 Tax Position Consolidated Rutile and its wholly-owned controlled entities operate as a tax consolidated group, with Consolidated Rutile as the head entity. As a consequence Consolidated Rutile recognises current and deferred tax amounts related to transactions, events and balances of the controlled entities in the group as if those transactions, events and balances were its own, in addition to the current and deferred tax amounts arising in relation to its own transactions, events and balances. Consolidated Rutile has tax funding arrangements in place with its controlled entities.

As at 31 December 2008 Consolidated Rutile did not have any income tax losses, however had capital losses resulting from the aforementioned Sierra Leone project.

4.7.4 Hedging Consolidated Rutile is exposed to currency risk on sales denominated in USD. Historically Consolidated Rutile has hedged revenue. Forward exchange contracts and/or foreign exchange options are used to hedge foreign currency risk.

4.7.5 Dividends Dividends paid or provided for in the past three financial years are set out in the table below:

Figure 27: Consolidated Rutile historical dividends

Balance date Dividend type Dividend per share ($) Franked (%) Book close date30/12/2008 Interim 0.02 100.0% 29/08/200830/12/2008 Final 0.01 100.0% 10/03/200930/12/2007 Interim 0.02 100.0% 31/08/200731/12/2007 Final 0.04 100.0% 11/03/200830/12/2006 Interim 0.02 65.0% 1/09/200630/12/2006 Final 0.04 100.0% 9/03/2007Source: DatAnalysis Franking credits available for future financial years at 31 December 2008 amount to approximately $8.8m.

We note that since 31 December 2008, the Directors declared a $0.01 per share fully franked final dividend which was paid on 26 March 2009.

4.7.6 Contingent Liability Consolidated Rutile Management has advised that as at the date of this Report, no contingent liabilities exist.

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5. Valuation Methodologies and Selection of Methodologies

5.1 Value Definition Ernst & Young Transaction Advisory Services considers that the appropriate definition of value for the purposes of valuing the shares in Consolidated Rutile is market value. Market value is typically defined as:

“The price that would be negotiated in an open and unrestricted market between a knowledgeable, willing but not anxious buyer and a knowledgeable, willing but not anxious seller acting at arm’s length.”

Consistent with the requirements of RG111 we have assessed the market value of 100% of the issued shares of Consolidated Rutile as a whole.

5.2 Valuation Methodologies 5.2.1 Common business valuation methodologies There are a number of commonly used valuation methodologies available to value a business. The four primary methodologies used for valuing a business are:

Discounted cash flow (“DCF”);

Capitalisation of earnings;

Net realisable value of assets; and

Market-based assessments.

Each methodology is appropriate in certain circumstances. The decision as to which methodology to apply generally depends on the nature of the business being valued, the methodology most commonly adopted in valuing such businesses and the availability of appropriate information.

We have outlined each of the above valuation methodologies in more detail in Appendix D.

5.3 Selection of Valuation Methodologies Whilst there are a number of valuation methodologies that can be considered in making an assessment of the value of a business, for the purposes of valuing a mineral sands business, the most appropriate and common method used is the DCF method.

The DCF method calculates a net present value (“NPV”) by discounting the future cash flows to their present value using an appropriate discount rate. The discount rate is generally determined as a weighted average cost of capital (“WACC”). F

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6. Valuation Analysis

6.1 Introduction As set out in Section 5 of this Report, we have adopted the DCF methodology for valuing the shares in Consolidated Rutile. Applying the DCF methodology involves:

Quantification and assessment of the cash flow forecasts of the business;

Determination of a discount rate which is used to convert the future cash flows into a present day value. The discount rate reflects both the time value of money and the risks inherent in the projected cash flows; and

A deduction for the value of net interest bearing debt of the business (if the discounted cash flows have been determined on a pre financing basis) and an adjustment for the value of any surplus assets and liabilities.

6.2 DCF Assumptions The DCF has been prepared for the period FY09F to FY28F. The base year represents the sum of year to date actual results and Management’s budget for the period.

The major assumptions underlying the free cash flow projections are detailed below.

6.2.1 Selling Prices Mineral sand prices are generally agreed bilaterally between the producer and consumer based on product quality and contract term, and are not traded at referenced exchange prices (for example such as gold or copper). There are a limited number of independent groups that provide forecasts for mineral sands prices. In analysing rutile, ilmenite and zircon prices, we have had regard to the views of Consolidated Rutile and other independent groups based on the anticipated global supply and demand for mineral sands. We note significant variability between various forecasts, particularly for zircon beyond 2009. We have also had regard to the product specific premiums (rutile and zircon) and discounts (ilmenite) Consolidated Rutile has received for its specific quality material over recent years.

For the valuation we have adopted Consolidated Rutile’s forecast prices for rutile, ilmenite and zircon. We have cross referenced the adopted prices to a reputable independent group, adjusted for the product specific premium or discount and found them to fall within the independent group's range of estimates.

6.2.2 Foreign Exchange Rates Mineral sands sales prices are denominated in USD. As an Australian operator, Consolidated Rutile’s revenue is contingent upon the USD sales price, hedging arrangements in place and the differential between the USD and AUD exchange rates.

Broker’s consensus median and mean forward exchange rates are set out below.

Figure 28: Forward exchange rates

FY08A FY09F FY10F FY11F FY12F FY13F FY14FBrokers consensus forecast AUD/USD exchange rates (median) n/a 0.70 0.70 0.70 0.75 0.74 n/aBrokers consensus forecast AUD/USD exchange rates (mean) n/a 0.69 0.71 0.70 0.73 0.71 n/aSource: Bloomberg Ernst & Young Transaction Advisory Services has adopted a range of long term forward exchange rates of $0.72 to $0.73 in determining our valuation range.

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6.2.3 Other Key Assumptions Other key assumptions adopted in the valuation of Consolidated Rutile include:

Yarraman is due for closure in mid 2013. Estimated proceeds from the sale of the dredge and concentrator used in this operation have been included;

A project focussed on improving the throughput rate of the concentrator at Enterprise South will be implemented in 2010;

The Enterprise mines are due for closure in 2028;

No value has been ascribed to the construction sands business;

Marketing expenses consistent with that paid by Consolidated Rutile to Iluka Resources are maintained and escalated at CPI;

No expansionary capital expenditure is forecast;

Production assumptions adopted are inline with Consolidated Rutile’s forecast for the Life of Mine;

Generally, CPI is applied to all cost categories;

Company tax rate at 30%; and

Rehabilitation is forecast to occur at the end of mine life.

6.2.4 Discount Rate Ernst & Young Transaction Advisory Services has applied a nominal post tax WACC range of 9.0% to 11.0% to the free cash flow projections included in the Life of Mine Model.

Further detail in respect of the calculation of this discount rate is set out in Appendix D to this Report.

6.3 Net Debt Ernst & Young Transaction Advisory Services has had regard to Consolidated Rutile’s average borrowings during the 12 month period to the Valuation Date, as well as the core cash balance, the details of which are set out in the following table:

Figure 29: Consolidated Rutile net debt as at Valuation Date

Currency: $ 000BorrowingsLess: cash and cash equivalentsNet debtSource: Management's monthly net debt position

Valuation Date3,500

(1,000)2,500

6.4 Surplus Assets and Liabilities Ernst & Young Transaction Advisory Services has considered assets and liabilities of Consolidated Rutile’s operations. No material surplus assets or liabilities have been noted.

6.5 Capital Losses Ernst & Young Transactions Advisory Services has had consideration to the available capital losses held by Consolidated Rutile. We note that in considering fair market value, an implicit

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assumption is the sale of 100% of Consolidated Rutile’s issued shares. Accordingly, the Continuity of Ownership Test will not apply in considering whether the capital losses may be carried forward. As such we have had regard to the Same Business Test in the assessment of the availability and utilisation of capital losses in a fair market value context.

To the extent that the capital losses are available and the Same Business Test has been satisfied, it will be necessary to consider that the utilisation of the capital losses will be contingent upon, amongst others, the following:

The extent to which a potential acquirer has available capital gains in order to make use of the capital losses, as capital losses are only able to be offset against capital gains;

The future timing of a potential acquirer’s capital gains including whether specific disposal transactions are contemplated;

A potential acquirer’s intentions with respect to satisfying the strict requirements of the Same Business Test; and

Whether Consolidated Rutile will be incorporated into a tax consolidation group, such that further rules beyond the Same Business Test will apply and that the rate of capital losses used may be limited to an available fraction.

As a result Ernst & Young Transaction Advisory Services has not assigned value to the available Consolidated Rutile capital losses due to the considerations set out above.

6.6 Employee and Executive Share Plans As previously indicated, shares held under the exempt employee share plan are restricted whereby employee shareholders may not assign, transfer, sell or grant an encumbrance over or otherwise deal in the plan’s shares within three years of the end of May 2006 acquisition date.

As noted in Section 4.5.2, should the Offer proceed such that Unimin obtains a 90% shareholding in Consolidated Rutile, allowing the company to be delisted, then the vesting conditions associated with the instruments under the executive share plan would be automatically satisfied and the shares or equivalent cash value awarded.

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6.7 Valuation Summary Based on the above, Ernst & Young Transaction Advisory Services has assessed the value of Consolidated Rutile shares on a 100% controlling interest basis. We have considered the impact of whether the executive share plan is satisfied by way of a cash payment or a share issue, as is detailed below.

Figure 30: Valuation – where executive share plan is fulfilled by way of a cash payment

Currency: $ 000 Low HighValue of mineral sands operations 153,974 165,536Less: net debt (2,500) (2,500)Less: surplus liabilities relating to the executive share plan (378) (378)Equity value 151,096 162,658Shares on issue 366,596 366,596Value per share 0.41 0.44

Surplus liabilities have been calculated as 839,131 shares at $0.45 per share and relate to the executive share plan payout. Figure 31: Valuation – where executive share plan is fulfilled by way of a share issue

Currency: $ 000 Low HighValue of mineral sands operations 153,974 165,536Less: net debt (2,500) (2,500)Add: consideration under the executive share plan - - Adjusted equity value 151,474 163,036 Shares on issue 366,596 366,596Add: share rights 839 839Adjusted shares on issue 367,435 367,435Diluted value per share 0.41 0.44

As a result, we note that the way in which the executive share plan is satisfied has no impact on the valuation per share.

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7. Valuation Conclusion

7.1 Valuation Summary As detailed in Section 6 of this Report, Ernst and Young Transaction Advisory Services has valued Consolidated Rutile in the range of $0.41 to $0.44 per share. This value represents the value of Consolidated Rutile assuming 100% ownership of the Company is acquired and includes a premium for control.

7.2 Comparison to Trading Prices Prior to reaching our valuation conclusion, Ernst and Young Transaction Advisory Services has considered the reasonableness of our valuation by comparing our results to the recent share prices of Consolidated Rutile. Set out below is a summary of the prices at which Consolidated Rutile shares traded on the ASX prior to the announcement of the original offer on 17 April 2009 and the revised Offer on 18 May 2009:

Figure 32: Comparison of Unimin Offer consideration and Consolidated Rutile historical VWAP share prices

Consideration per share

Original offer date to date of revised Offer

One month prior to original offer*

Two months prior to original offer

Six months prior to original offer

$0.45 $0.43 $0.31 $0.30 $0.33*Original 17 April 2009 offer

Source: Bidder's Statement and Factiva

Consolidated Rutile VWAP Share Price

In considering the above prices, Ernst and Young Transaction Advisory Services note that:

Our valuation is inclusive of a premium for control, whereas the share prices used in our comparison are in respect of minority parcels of shares traded prior to the announcement of the Offer. Accordingly, these share prices are not likely to include a premium for control; and

Consolidated Rutile shares are not actively traded with monthly trading volumes generally being less than 1% of the shares on issue. Even considering the impact of Iluka Resources having a 51.04% interest, liquidity remains low.

Based on the above, Ernst & Young Transaction Advisory Services considers that the trading prices are not necessarily representative of the value of the Consolidated Rutile business on a controlling interest basis.

7.3 Cross Check As a cross check to our primary valuation, Ernst & Young Transaction Advisory Services has had regard to recent trading and transaction EBITDA multiples of comparable listed companies within the mineral sands industry, as detailed below.

Figure 33: Trading multiples

Comparable companies Country Enterprise value Historic EBITDA Enterprise value Historic EBITDA Forecast FY09 Iluka Resources Limited Australia 1,546,412 6.3 1,630,691 6.7 5.5Exxaro Resources Limited Republic of South Africa 4,065,617 5.3 4,469,908 5.7 5.9Consolidated Rutile Limited Australia 102,834 2.7 146,825 3.9 3.3* Pre Unimin Offer as at 16 April 2009.** Post Unimin Offer as at 18 May 2009.

pre-original bid * post-original bid **

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Figure 34: Transaction multiples

Transaction multiples EBITDAExxaro purchase of Namakwa Sands in October 2008 4*Cristal purchase of BeMax in June 2008 10Note: Namakwa Sands EBIT based on FY08 & Bemax EBITDA based on forecast FY08* EBITDA multiple not available, as such EBIT multiple has been provided.

The implied EBITDA multiples from our primary methodology are set out below.

Figure 35: Implied EBITDA multiples

Currency: $ 000 Low HighEnterprise value 153,974 165,536FY08A EBITDA 38,780 38,780Implied EBITDA multiple 4.0 4.3

Ernst & Young Transaction Advisory Services notes that Consolidated Rutile’s market capitalisation is comparatively smaller than the aforementioned comparable companies. We consider that this cross check is not inconsistent with our primary valuation.

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8. Evaluation of the Offer

8.1 Approach to Assessing Fairness and Reasonableness Ernst & Young Transaction Advisory Services has assessed the fairness and reasonableness of the Offer, the results of which are detailed in this Section.

8.1.1 Fairness RG111 establishes that an offer is considered to be “fair” if the value of the offer price of consideration is equal to or greater than the value of the securities that are the subject of the offer. This comparison is made assuming 100% ownership of the company.

The Offer consideration of $0.45 is greater than Ernst & Young Transaction Advisory Services’ value range of $0.41 to $0.44 per Consolidated Rutile share.

8.1.2 Reasonableness RG111 establishes that an offer is considered to be “reasonable” if it is “fair”. An offer may also be “reasonable” if, despite not being “fair” but after considering other significant factors, shareholders should accept the offer in the absence of any higher bid before the close of the offer. A comparison of the valuation range and consideration indicates that the Offer fair and reasonable.

In assessing the reasonableness of the Offer, Ernst and Young Transaction Advisory Services has had regard to the following:

The extent to which a premium for control is being paid to Consolidated Rutile Shareholders;

There is timing and certainty of the consideration per share. If the Offer does not proceed, the amount for which Consolidated Rutile Shareholders can realise their shares will be uncertain;

Iluka Resources has indicated it intends to accept the Offer in the absence of a higher bid. Liquidity of Consolidated Rutile’s shares will reduce if the Offer is not generally accepted;

The likelihood of an alternative offer; and

A comparison of the volume weighted average listed trading prices of Consolidated Rutile shares prior to and subsequent to the Offer as detailed in Section 7.2 of this Report.

8.1.3 Opinion Ernst & Young Transaction Advisory Services has determined that the Offer is fair and reasonable to Consolidated Rutile Shareholders.

8.2 Value of Consideration Offered to Shareholders Below is a comparison of the value of a Consolidated Rutile share per Section 7 of this Report, and the consideration offered by Unimin under the Offer.

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Figure 36: Valuation and Offer consideration comparison

Low HighEquity value per Consolidated Rutile share $0.41 $0.44Offer consideration per share $0.45 $0.45

8.3 Control Premium A party obtaining control of a company usually pays a premium over and above the price at which minority parcels of shares are traded. The higher the premium, the greater the benefit to all existing Shareholders.

The control premium reflects the fact that:

The owner of 100% of the shares in a company obtains access to all of the free cash flows of the company being acquired, which it would otherwise be unable to do as a minority shareholder;

The controlling shareholder can direct the disposal of surplus assets and the redeployment of the proceeds;

A controlling shareholder can control the appointment of Directors, Management policy and the strategic direction of the company; and

A controlling shareholder is often able to increase the value of the entity being acquired through synergies and/or rationalisation savings.

Ernst & Young Transactions Advisory Services notes that empirical evidence suggests an average control premium for transactions in Australia of 15% to 35%. However, the control premiums vary widely from transaction to transaction.

The table below sets out the premium for control based upon a Volume Weighted Average Price (“VWAP”) up to three months prior to the announcement of the original offer.

Figure 37: Premium of Offer price to Consolidated Rutile VWAP

VWAP for Concolidated Rutile for 3 months prior to original bid $0.30Unimin Offer price $0.45Premium of Offer to Consolidated Rutile VWAP $0.15Percentage premium of Offer over VWAP 52.1%

Source: Factiva and Bidder's Statement

Further we note that our valuation is on a controlling basis. As the consideration is greater than our valuation range, we would consider that the consideration includes a control premium.

8.4 Other Matters In addition to the specific areas discussed above, we have also considered other matters that we consider to be of importance for the Consolidated Rutile Shareholders in forming their view of the Offer.

Shareholders should consider their own personal circumstances in evaluation of the Offer

The decision of each Shareholder as to whether to accept the Offer is a matter for individual Shareholders. The decision of each Shareholder should be based on their own views as to

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the matters at hand, including the underlying value of the Offer, risk profiles, liquidity preferences, future market and industry conditions and their tax positions.

Alternative takeover offer

The Directors of Consolidated Rutile have advised us that they have not received any alternative takeover offers for the Company. The attractiveness of Consolidated Rutile’s operations to a potential acquirer would depend on any potential acquirer’s view of Consolidated Rutile’s operations, mineral sands prices, and the depth of the economic downturn and the impact of the Company’s share price.

Consolidated Rutile Shareholders should be aware that the likelihood of an alternative offer is not certain and cannot be predicted. Further, if an alternative offer is received, there is no certainty that the offer would be superior to the Unimin Offer.

Future takeover bid

Consolidated Rutile Shareholders should be aware that the Offer will not deter any third party from making a takeover bid for Consolidated Rutile. At the least, should Iluka Resources accept the Offer, Unimin will hold approximately 70% of the issued share capital. The existence of a 70% Shareholder may prevent an alternative offer being successfully accepted due to the existence of a blocking stake in the Company.

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Appendix A Sources of Information Discussions with Management of Consolidated Rutile;

ASIC Regulatory Guides 111 and 112;

Internal information provided by the Management of Consolidated Rutile, including Board Reports and management accounts;

Annual and half yearly statutory financial reports of Consolidated Rutile;

Annual reports of, and news releases related to, the comparable companies and their respective transactions;

Employee Share Plan;

Capital IQ;

Bloomberg;

OneSource;

DatAnalysis;

IBISWorld Industry Reports, IBISWorld Pty Limited;

RBA website;

Iluka Resources Limited Prospectus dated 19 March 2008;

TZ Minerals International Pty Ltd;

Oanda;

ABARE Australian Mineral Statistics; and

Dow Jones Factiva.

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Appendix B Statement of Qualifications and Declarations

Ernst & Young Transaction Advisory Services, which is wholly owned by Ernst & Young holds an Australian Financial Services Licence under the Corporations Act and its Representatives are qualified to provide this Report. The Directors of Ernst & Young Transaction Advisory Services responsible for this Report have not provided financial advice to either Consolidated Rutile or Unimin in respect of the Offer. Prior to accepting this engagement Ernst & Young Transaction Advisory Services considered its independence with respect to Consolidated Rutile and Unimin with reference to the ASIC RG112 entitled “Independence of experts”. In Ernst & Young Transaction Advisory Services’ opinion it is independent of Consolidated Rutile and Unimin. We advise that Ernst & Young Transaction Advisory Services has had no relationship with Consolidated Rutile or Unimin over the past two years. The statements and opinions given in this Report are given in good faith and the belief that such statements and opinions are not false or misleading. In the preparation of this Report Ernst & Young Transaction Advisory Services has relied upon and considered information believed after due inquiry to be reliable and accurate. Ernst & Young Transaction Advisory Services has no reason to believe that any information supplied to it was false or that any material information has been withheld from it. Ernst & Young Transaction Advisory Services has evaluated the information provided to it by Consolidated Rutile as well as other parties, through inquiry, analysis and review, and nothing has come to its attention to indicate the information provided was materially misstated or would not afford reasonable grounds upon which to base this Report. Ernst & Young Transaction Advisory Services does not imply and it should not be construed that it has audited or in any way verified any of the information provided to it, or that its inquiries could have verified any matter which a more extensive examination might disclose. Consolidated Rutile has provided an indemnity to Ernst & Young Transaction Advisory Services for any claims arising out of any misstatement or omission in any material or information provided to it in the preparation of this Report. Ernst & Young Transaction Advisory Services provided draft copies of this Report to the Directors and Management of Consolidated Rutile for their comments as to factual accuracy, as opposed to opinions, which are the responsibility of Ernst & Young Transaction Advisory Services alone. Changes made to this Report as a result of this review by the Directors and Management of Consolidated Rutile has not changed the methodology or conclusions reached by Ernst & Young Transaction Advisory Services. Ernst & Young Transaction Advisory Services will receive a professional fee based on time spent in the preparation of this Report, estimated at approximately $80,000 excluding GST. Ernst & Young Transaction Advisory Services will not be entitled to any other pecuniary or other benefit whether direct or indirect, in connection with the making of this Report. Ms Cathy Montesin, Representative of Ernst & Young Transaction Advisory Services and an Executive Director of Ernst & Young has assumed overall responsibility for this Report. Cathy has over 15 years experience in providing financial advice and valuation advice and has professional qualifications appropriate to the advice being offered.

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Mr Grant Murdoch, a Director and Representative of Ernst & Young Transaction Advisory Services and a Partner of Ernst & Young has also been involved in the preparation of this Report. He has over 35 years experience in providing financial advice and valuation advice and has professional qualifications appropriate to the advice being offered. The preparation of this Report has had regard to relevant ASIC Regulatory Guides. It is not intended that the Report should be used for any other purpose other than to accompany the Target Statement sent to Consolidated Rutile Shareholders. In particular, it is not intended that this Report should be used for any other purpose other than as an expression of its opinion as to whether or not the takeover offer is fair and reasonable to Shareholders of Consolidated Rutile. The financial forecasts used in the preparation of this Report reflect the Directors and Management’s judgement based on present circumstances, as to both the most likely set of conditions and the course of action it is most likely to take. It is usually the case that some events and circumstances do not occur as expected or are not anticipated. Therefore, actual results during the forecast period will almost always differ from the forecast and such differences may be material. To the extent that our conclusions are based on forecasts, we express no opinion on the achievability of those forecasts. Ernst & Young Transaction Advisory Services consents to the issue of this Report in the form and context in which it is included in the Target Statement to be sent to Consolidated Rutile Shareholders.

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Appendix C Assessment of Discount Rate

Overview A discount rate in the form of a WACC represents the rates of return required by providers of debt and equity capital to compensate for the time value of money and the perceived risk or uncertainty of the cash flows, weighted in proportion to the optimal proportions of equity and debt for the circumstances.

The selection of an appropriate discount rate is ultimately a matter of professional judgment. Valuation theories, including the Capital Asset Pricing Model (“CAPM”) which is used to determine the cost of equity capital, can provide some guidance, but are subject to various shortcomings. For example, the formula for CAPM contains variables for expected future returns and volatility in those returns (namely, the anticipated market risk premium and betas), which are matters that cannot be observed.

In practice, the variables are estimated from historical data, which may not necessarily be an accurate guide to the future and can be subject to material errors of measurement. However, despite its drawbacks, CAPM is frequently used by practitioners because of its relative simplicity in defining and measuring risk factors.

Weighted Average Cost of Capital The formula conventionally used to calculate the WACC is as follows:

Nominal Post Tax WACC = [Re × E/(D+E)] + [Rd × (1- tc) × D/(D+E)]

Where:

WACC = weighted average cost of capital

Re = required rate of return on equity capital

E = market value of equity capital

D = market value of debt capital

Rd = required rate of return on debt capital

tc = statutory corporate tax rate

In the following paragraphs we comment on the assumptions we have made in respect of each of the variables in the above formula.

CAPM CAPM is a model for estimating the rate of return required by an equity investor on an investment. It assumes that an investor holds a large portfolio comprising risk-free and risky investments. The total risk of an investment comprises systematic risk and specific risk. Systematic risk is the variability in an investment’s expected return that relates to general movements in capital markets (such as the share market), while specific risk is the variability that relates to matters that are specific to the investment being valued.

CAPM maintains that specific risk can be avoided by holding investments as part of a large and well-diversified portfolio. CAPM assumes that the investor will only require a rate of return sufficient to compensate for the additional, non-diversifiable systematic risk that the

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investment brings to the portfolio. Diversification cannot eliminate the systematic risk due to economy-wide factors that are assumed to affect all securities in a similar fashion. Accordingly, whilst investors can eliminate specific risk by diversifying their portfolio, they will seek to be compensated for the non-diversifiable systematic risk by way of a risk premium on the expected return. The extent of this compensation depends on the extent to which the company’s returns are correlated with the market as a whole. The greater the systematic risk faced by investors, the larger the required return on capital will be demanded by investors.

The systematic risk is measured by the investment’s beta. The beta is a measure of the co-variance of the expected returns of the investment with the expected returns on a hypothetical portfolio comprising all investments in the market (“the market portfolio”). It is a measure of the investment’s relative risk. A risk-free investment has a beta of zero and the market portfolio has a beta of one. The greater the non-diversifiable systematic risk of an investment, the higher the beta of that investment.

CAPM assumes that the return required by an investor in respect of an investment will be a combination of the risk-free rate of return and a premium for systematic risk, which is measured by multiplying the beta of the investment by the return earned on the market portfolio in excess of the risk-free rate (“the market risk premium”).

Further, to value operations and assets in specific locations or at specific stages of development, risks and opportunities specific to the location or stage of development must be considered, therefore it may be appropriate to apply an additional risk premium.

Under CAPM the required rate of return on equity (Re) is calculated as follows:

Re = Rf + e × (Rm – Rf) + ARP

Where:

Re = rate of return on equity

Rf = risk free rate of return

e = expected equity beta of the investment

Rm = expected rate of return on the market portfolio of risky investments

(Rm – Rf) = market risk premium

ARP = additional risk premium

Risk free rate of return In the absence of an official risk free rate, most valuation practitioners adopt the yield on Government Bonds (in the appropriate jurisdiction) of a term matching the cash flow projection period as a proxy. A more accurate approach would be to use the one-year spot bond rate for each future discounting period. This would avoid possible distortions when a single long-term bond rate is adopted in circumstances in which the yield curve is steeply sloping or the cash flows are significantly front or back ended. However, such projections are not readily available and the ten-year Government Bond rate is broadly accepted in practice as an appropriate substitute.

The risk free rate on ten year Australian government bonds at Valuation Date was 4.03%. The Australian, and World, economies are experiencing recessionary pressures which are reflected in this risk free rate. As the valuation of Consolidated Rutile is being performed on

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the Life of Mine Model which extends to 2028, Ernst & Young Transaction Advisory Services has had consideration to the average historical risk free rate over the long term.

Ernst & Young Transaction Advisory Services has adopted a risk free rate of 5.72%.

Market risk premium The market risk premium represents the additional return an investor expects to receive to compensate for additional risk associated with investing in equities as opposed to assets on which a risk free rate of return is earned.

The market risk premium refers to investor’s expectations of returns required to compensate them for investing in risky assets. However, such expectations are not observable, so historical returns are examined as a guide to future expectations. This implicitly assumes that the historical market risk premium measured over many decades will provide an estimate of the future market risk premium.

One of the difficulties with estimating the market risk premium is the distinction between ex post (i.e. historical) data and ex ante (i.e. forward looking expectations) data. Given this distinction, it is possible that future market risk premiums may differ from past returns. Accordingly, care must be taken when forming expectations about future returns based on past returns, which may or may not be repeated in the future.

To understand risk and return in the stock market, long periods of historical results must be examined, given the volatility of the markets and variation in returns from one year to another. Judgements should be drawn from long periods of financial market history, not simply from recent stock market performance. Even with a century or more of data, market fluctuations have an impact, and estimates can be imprecise. It is also unclear what impact significant events in the past, such as the Great Depression, have had on investor expectations, whether such events will be repeated and what the reaction of investors would be to such events in the future.

Generally, most estimates fall within a range of 4% to 8%. However, investors’ expectations of the premium can change as the market fluctuates and perceptions of the riskiness of equities change. Ernst & Young Transaction Advisory Services has adopted a market risk premium of 6% for the purposes of this valuation.

Beta The beta measures the expected relative risk of the equity in a company. The choice of the beta requires judgement and necessarily involves subjective assessment, as it is subject to measurement issues and a high degree of variation. Accordingly, sector averages may present a more reliable beta figure rather than placing reliance on the beta of any one particular comparable company.

Beta can be expressed as an equity beta, which includes the effect of gearing on equity returns, and as an asset beta, which removes the impact of gearing. The asset beta will be lower than the equity beta for any given investment, with the extent of the difference dependent on the level of debt in the capital structure. The greater the level of gearing, the greater is the risk faced by equity holders (as debt holders have a contractual right of return and so first claim on the operating income). Accordingly, for a given asset beta, the equity beta will increase as the level of gearing increases.

The asset beta provides a fundamental reflection of business risk, as it refers to the riskiness of returns on the asset, rather than returns to equity holders. Hence, asset betas can be compared across asset classes independent of the impact of the financial structure adopted by the owners of the business.

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Where there is publicly available evidence of the equity betas for companies with comparable risk profiles to the business being valued, those betas may be useful in forming a view of an appropriate equity beta for the subject business.

Figure 38: Observed betas for selected comparable companies

Comparable company Raw betaIluka Resources Ltd (0.08)Astron Ltd 0.97Australian Zircon NL 1.46Minerals Corp. Ltd 1.24Kenmare Resources plc 1.78Exxaro Resources Limited 1.19Consolidated Rutile Ltd 0.95Source: Bloomberg and AGSM We have adjusted the equity betas for the effect of gearing to obtain an estimate of the business risk (rather than financial risk) of the comparables by deriving an asset beta. We have ungeared the equity betas using the observed gearing for the comparable companies. We have then recalculated the equity beta based on an assumed “optimal” capital structure (refer to ‘Capital structure’ section below). This is a subjective exercise, which carries a significant possibility of estimation error. This is particularly so as it is based on debt levels at a single point in time, when in fact the debt to equity position of a company may change over time and in many cases, involves very complex capital structures.

We have recalculated the equity beta based on the assumed optimal capital structure appropriate to each category.

We used the following formula to undertake the de-gearing and regearing exercise:

e = a × [1 + (D / E) × (1 - tc)]

Where:

e = equity or geared beta

a = asset or ungeared beta

tc = statutory corporate tax rate in the country in which the comparable company has its primary taxation obligations

(D / E) = market value of debt divided by the market value of equity capital

The selection of a beta factor requires a high degree of professional judgement, particularly in circumstances in which the betas for the comparable companies vary widely. Ernst & Young Transaction Advisory Services has taken into account Consolidated Rutile’s operations and the fact that they do not undertake exploration activities, as with other comparable companies. For the purposes of this Report, Ernst & Young Transaction Advisory Services has adopted low and high equity betas of 0.9 and 1.0, respectively.

Specific risk premium We have added a specific risk premium of 2% to the cost of equity for Consolidated Rutile due to the significant uncertainty in equity and debt markets as at the Valuation Date as a result of the Global Financial Crisis.

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Required rate of return on debt capital The debt premium over the risk free rate reflects debt risk specific to the entity being valued and represents the premium charged by debt holders to reflect credit risk (i.e. the risk that the entity will default on payments).

In arriving at an appropriate debt premium we have had regard to a number of factors including the observed credit spreads over the risk free rate at the Valuation Date.

Based on these factors and discussions with Management, we have adopted a pre-tax cost of debt of 7%.

Capital structure There is some debate whether there is an optimal capital structure for companies or whether there is a range of capital structures that are consistent with an optimal position. Generally, the gearing level adopted should reflect the level of debt that can reasonably be sustained by any company operating in a particular industry, rather than actual gearing maintained by the current entity owners.

The optimal capital structure will depend on the trade-off between the tax benefits of debt finance (the “tax shield” provided by tax deductible interest payments) and the costs of financial risk to equity holders. The cost of financial risk can outweigh the effects of tax deductibility if the level of debt causes a sufficiently high level of financial distress (and thus higher probability of insolvency).

Key factors considered in our evaluation of the optimal gearing ratio include:

the debt/equity ratios of a range of selected comparable companies;

the historical and current levels of gearing of Consolidated Rutile; and

the quality and variability in earnings streams, which impacts on the ability to service debt.

For the purposes of this Report, Ernst & Young Transaction Advisory Services has adopted an “optimal” net debt to enterprise value (D/EV) ratio of 30%.

Corporate tax rate There is some contention as to whether the statutory corporate tax rate or an effective tax rate should be used when calculating the discount rate. Historically, the effective rate of tax has differed from the statutory corporate rate due to differences between tax and accounting depreciation and other timing differences (such as provisions).

In practice, the statutory corporate tax rate is often used, given the difficulties of estimating an effective rate of tax for future years. Furthermore, following the Government’s tax reforms (most notably the abolition of accelerated depreciation) the difference between the statutory rate and effective rate is likely to be reduced. This is on the basis that accelerated depreciation was a significant driver of the difference between statutory rates and effective rates in the past.

Recognising that the cash flows to be discounted incorporate projection tax payments, Ernst & Young Transaction Advisory Services has adopted the prevailing statutory corporate tax rate of 30% at the Valuation Date.

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Assessment of WACC The assumptions described above can be summarised as follows:

Figure 39: Nominal post-tax WACC calculation

Low High

Target debt/equity D/(D+E) 30% 30%Risk free rate (Rf) 5.72% 5.72%Market risk premium (Rm) 6% 6%Cost of debt (Rd) 7% 7%Beta (Be) 0.9 1.0Tax rate (tc) 30% 30%Cost of equity (Re) 11.0% 14.0%Specific Risk - % 2.0%WACC 9.0% 11.0%Source: Bloomberg and AGSM On the basis of the assumptions above, Ernst & Young Transaction Advisory Services has adopted a nominal post-tax WACC of 9.0% to 11.0%.

The above WACC assessment reflects our assessment of an appropriate discount rate for the enterprise of Consolidated Rutile as a whole. When considering discount rates applicable to individual assets, consideration needs to be given to the perceived risk inherent in the subject asset.

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Appendix D Valuation Methodologies

DCF DCF valuations are based on the net present value of cash flows expected to be generated from future activities. The projected cash flows are discounted to a present day value at a discount rate that reflects both the time value of money and the risks inherent in the projected cash flows.

The DCF methodology is appropriate in valuing businesses with a finite life such as mines, businesses that are in a start up phase and are expecting considerable volatility in cash flows, or businesses with a changing cash flow profile over time.

This methodology requires consideration of the following factors:

Quantification and assessment of the cash flow forecasts of the business;

Calculation of a terminal value. The terminal value captures the value of cash flows occurring after the forecast period. This value is discounted to a present day value and added to the present value of the cash flows occurring during the forecast period;

Determination of a discount rate which is used to convert the future cash flows into a present day value. The discount rate reflects both the time value of money and the risks inherent in the projected cash flows; and

A deduction for the value of net interest bearing debt of the business (if the discounted cash flows have been determined on a pre financing basis) and an adjustment for the value of any surplus assets and liabilities.

Capitalisation of Earnings

Capitalisation of earnings valuations involve capitalising, or multiplying, the earnings of a business using a multiple that reflects both the risks underlying the earnings and the growth prospects of the business. This methodology is most appropriate for mature businesses with substantial operations history and a consistent earnings trend that is sufficiently stable to be indicative of ongoing earnings potential.

This methodology requires consideration of the following factors:

Estimation of normalised earnings having regard to historical and projected earnings, abnormal or non-recurring items of income and expenditure and other factors including key industry risk factors, growth prospects and the general economic outlook;

Determination of an appropriate earnings multiple that reflects the risks inherent in the business, its growth prospects and alternative investment opportunities available. Earnings multiples are generally applied to net profit after tax (“NPAT”), earnings before interest and tax (“EBIT”) or earnings before interest, tax, depreciation and amortisation (“EBITDA”). Earnings multiples applied to NPAT are known as price earnings multiples (PE multiples) and are commonly used in relation to listed public companies. Earnings multiples applied to EBIT or EBITDA are commonly used for valuing whole businesses for acquisition purposes where gearing is in the control of the acquirer. The EBIT and EBITDA alternatives are not likely to lead to a valuation conclusion which is materially different to that derived by using a PE multiple;

Adjustment for the value of net interest bearing debt of the business (if EBIT or EBITDA are being applied); and

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Adjustment for the value of any surplus assets and liabilities.

Net Realisable Value

Net realisable value of assets valuations involves the determination of the net realisable value of the assets of a business assuming an orderly realisation of those assets. It is not a valuation on the basis of a forced sale where the assets might be sold at values materially different from their fair market value. This approach is appropriate where the business is a going concern, where there are surplus or non-operating assets and where the assets are generally not generating an appropriate level of return. A discount may be included to allow for the time value of money and for reasonable costs of undertaking the realisation.

The net realisable value of the assets can be determined on the basis of:

Orderly realisation: this method estimates fair market value by determining the net assets of the underlying business including an allowance for the reasonable costs of carrying out the sale of assets, taxation charges and the time value of money assuming the business is wound up in an orderly manner. This is not a valuation on the basis of a forced sale where the assets might be sold at values materially different from their fair market value;

Liquidation: this is a valuation on the basis of a forced sale where the assets might be sold at values materially different from their fair market value; or

Going concern: the net assets on a going concern basis estimates the market value of the net assets but does not take into account any realisation costs. This method is often considered appropriate for the valuation of an investment or property holding company. Adjustments may need to be made to the book value of assets and liabilities to reflect their going concern value.

The net realisable value of assets is relevant where a company is making sustained losses or profits but at a level less than the required rate of return or where it is close to liquidation. The assets based valuation approach should provide a minimum value for the equity in the company and is adopted as the primary valuation method when the asset based approach exceeds the value obtained under the capitalisation of earnings or discounted cash flow approach.

Market-Based Assessments

Market based assessment valuations relate to the valuation of businesses, shares or other assets using the prices at which comparable companies, shares or assets have been bought and sold in arms’ length transactions. This is often the most reliable evidence as to value but in the case of companies it is often difficult to find directly comparable transactions.

For companies whose shares are traded on a stock exchange, the relevant share price would, prima facie, constitute the market value of the shares, however, such market prices usually reflect the prices paid for small parcels of shares and as such do not include a control premium relevant to a significant parcel of shares.

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Ernst & Young Transaction Advisory Services Limited, ABN 87 003 599 844 Australian Financial Services Licence No. 240585

Page 1 of 2

THIS FINANCIAL SERVICES GUIDE FORMS PART OF THE INDEPENDENT EXPERT’S REPORT

PART 2 - FINANCIAL SERVICES GUIDE

1. Ernst & Young Transaction Advisory Services

Ernst & Young Transaction Advisory Services Limited (“Ernst & Young Transaction Advisory Services” or “we,” or “us” or “our”) has been engaged to provide general financial product advice in the form of an Independent Expert’s Report (“Report”) in connection with a financial product of another person. The Report is set out in Part 1.

2. Financial Services Guide

This Financial Services Guide (“FSG”) provides important information to help retail clients make a decision as to their use of the general financial product advice in a Report, information about us, the financial services we offer, our dispute resolution process and how we are remunerated.

3. Financial services we offer

We hold an Australian Financial Services Licence which authorises us to provide the following services:

• financial product advice in relation to securities, derivatives, general insurance, life insurance, managed investments, superannuation, and government debentures, stocks and bonds; and

• arranging to deal in securities.

4. General financial product advice

In our Report we provide general financial product advice. The advice in a Report does not take into account your personal objectives, financial situation or needs.

You should consider the appropriateness of a Report having regard to your own objectives, financial situation and needs before you act on the advice in a Report. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain an offer document relating to the financial product and consider that document before making any decision about whether to acquire the financial product.

We have been engaged to issue a Report in connection with a financial product of another person. Our Report will include a description of the circumstances of our engagement and identify the person who has engaged us. Although you have not engaged us directly, a copy of the Report will be provided to you as a retail client because of your connection to the matters on which we have been engaged to report.

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TAS FSG 00005059 V3 – 1 July 2008 Page 2 of 2

5. Remuneration for our services

We charge fees for providing Reports. These fees have been agreed with, and will be paid by, the person who engaged us to provide a Report. Our fees for Reports are based on a time cost or fixed fee basis. Our directors and employees providing financial services receive an annual salary, a performance bonus or profit share depending on their level of seniority.

Ernst & Young Transaction Advisory Services is ultimately owned by Ernst & Young, which is a professional advisory and accounting practice. Ernst & Young may provide professional services, including audit, tax and financial advisory services, to the person who engaged us and receive fees for those services.

Except for the fees and benefits referred to above, Ernst & Young Transaction Advisory Services, including any of its directors, employees or associated entities should not receive any fees or other benefits, directly or indirectly, for or in connection with the provision of a Report.

6. Associations with product issuers

Ernst & Young Transaction Advisory Services and any of its associated entities may at any time provide professional services to financial product issuers in the ordinary course of business.

7. Responsibility

The liability of Ernst & Young Transaction Advisory Services, if any, is limited to the contents of this Financial Services Guide and the Report.

8. Complaints process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial services. All complaints must be in writing and addressed to the AFS Compliance Manager or Chief Complaints Officer and sent to the address below. We will make every effort to resolve a complaint within 30 days of receiving the complaint. If the complaint has not been satisfactorily dealt with, the complaint can be referred to the Financial Ombudsman Service Limited.

Contacting Ernst & Young Transaction Advisory Services

AFS Compliance Manager Ernst & Young 680 George Street Sydney NSW 2000 Telephone: (02) 9248 5555

Contacting the Independent Dispute Resolution Scheme:

Financial Ombudsman Service Limited PO Box 3 Melbourne VIC 3001 Telephone: 1300 78 08 08

This Financial Services Guide has been issued in accordance with ASIC Class Order CO 04/1572.

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Ernst & Young

Assurance | Tax | Transactions | Advisory

About Ernst & Young Ernst & Young is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 135,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential. For more information, please visit www.ey.com/au © 2009 Ernst & Young Australia.

Ernst & Young Transaction Advisory Services Limited ABN 87 003 599 844 Australian Financial Services Licence No. 240585

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Sydney Ernst & Young Centre 680 George Street Sydney NSW 2000 Tel: +61 2 9248 5555 Fax: +61 2 9248 5959

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21 may 2009 the manager for personal use only managing director

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