CONSOLIDATED RUTILE LIMITED ABN 28 009 719 902

APPENDIX 4D HALF YEAR REPORT Contents:

Page 2 Results for Announcement to the Market Page 4 Review of Results Page 8 Directors’ Report Page 10 Auditors’ Independence Declaration Page 11 Consolidated Income Statement Page 12 Consolidated Balance Sheet Page 13 Consolidated Statement of Changes in Equity Page 13 Consolidated Statement of Cash Flows Page 14 Notes to the Consolidated Financial Statements Page 17 Independent Review Report to the Members

SIX MONTHS ENDED 30 JUNE 2008 (Incorporates the Appendix 4D information required by the Australian Securities Exchange under listing rule 4.2A)

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

ABN: 28 009 719 902 Page 2 of 18

Results for Announcement to the Market

Half Year ending June 2008 $’millions

June 2007 $’millions

Percentage change

Sale of mineral sands

Other income

62.0

0.1

55.9

0.1

10.9%

-

62.1 56.0 10.9%

Earnings before interest, tax and depreciation (EBITDA) 15.3 18.5 (17.3%)

Depreciation and Amortisation (6.5) (5.7) (14.0%)

Earnings before interest and tax (EBIT) 8.8 12.8 (31.3%)

Interest (net) (1.1) (0.8) (37.5%)

Profit before tax 7.7 12.0 (35.8%)

Income tax expense (2.3) (3.6) (36.1%)

Profit 5.4 8.4 (35.7%)

Dividends per share

- interim dividend per share 1.5 cents (100% franked)

2 cents (100% franked)

Net tangible assets per security 29 cents 30 cents

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

ABN: 28 009 719 902 Page 3 of 18

First Half 2008 Summary CRL continues to have a strong safety record with only one Lost

Time Injury (LTI) in 20 months and a decline in the All Injury Frequency Rate (AIFR) again in the first half of 2008.

Combined Rutile and Zircon production increased by almost 10 per cent compared to the first half of 2007. Ilmenite production also increased by 20 per cent.

Sales revenue was 10.9 per cent higher than the corresponding period of 2007 with the improved sales volume and price offsetting the effect of higher AUD/USD exchange rate.

The average AUD/USD exchange rate realised (excluding hedging) of 0.9343 was significantly higher than the rate of 0.8090 for the corresponding period of 2007.

Costs of production of $39.5 million (refer to Consolidated Income Statement on page 11) increased by eight per cent over the corresponding period of 2007 mainly due to inflationary pressures on the cost of labour, goods and services.

Operating margin (EBIT/Sales) was 14.2 per cent compared with 23 per cent in the same period of 2007 due to higher costs and adverse movement in the AUD/USD exchange rate.

The company continues to deliver profits with net profit after tax of $5.4 million compared with $8.4 million for the first half of 2007.

Gearing remained low at 4 per cent.

An interim dividend of 1.5 cents per share fully franked was declared and is payable on 12 September 2008. The record date for the dividend is 29 August 2008, and CRL’s shares will trade ex-dividend on the Australian Securities Exchange from 25 August 2008. F

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

Review of Results Health and Safety 12 month moving average injury

frequency rates

10.011.7

3.14.64.3 4.3

8.1

5.4

7.9

0

7.6

1.5

02468

101214

MTIFR LTIFR

Dec-03 Dec-04 Dec-05Dec-06 Dec-07 Jun-08

CRL maintained its strong safety record. The first lost time injury in 20 months occurred in the first half of the year and a Lost Time Injury Frequency Rate (LTIFR) of 1.5 resulted.

Despite having a medical treatment injury, the rolling twelve-month Medical Treatment Injury Frequency Rate (MTIFR) improved and has shown a steady decline since 2006. The All Injury Frequency Rate (First Aid Injuries + Medical Treatment Injuries + Lost Time Injuries) was 15.2, which is below the December 2007 frequency of 15.8.

The focus remains on the coaching of employees and contractors in the correct use of our basic risk mitigation systems that are designed to identify and remove hazards before the task is undertaken.

CRL is proactively performing individual assessments, including hearing tests, medical examinations, skin checks, and flu vaccinations, as part of our program to improve the health of all employees.

Environment and Community During the first half of 2008, work continued on development application approvals for Queensland Construction Materials Pty Ltd (a wholly owned subsidiary of CRL) to remove an area of off-path tailings at Enterprise. The project aims to progressively remove an area of sand in excess of rehabilitation requirements for sale into the construction industry. Redland City Council is the approval agency and despite some delays, it is anticipated that a decision will be made in August. All concurrent State agencies, including the Environmental Protection Agency, have indicated their support for the project.

In 2007, the Queensland State Government passed a series of emergency laws to allow for the provision of additional water to South Eastern Queensland, including the provision of an additional 22-mega litres of water from North Stradbroke Island. The State Government commenced an Environmental Impact Statement for the additional bore field on the island, and CRL has worked closely in assisting the Government in this process to ensure sustainable extraction is proven. The study is expected to conclude in early 2009.

CRL has been assured that existing water allocations will be maintained to ensure continued mining. Availability of sufficient water for dredge mining is a key requirement of the business and water used is returned directly to the island’s aquifer.

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

Mineral Production Total sand mined for the first six months of 2008 was 24.8 mt, compared to 27.2 mt in 2007 and 23.4mt in 2006. The lower level of production compared to 2007 was due to difficult mining conditions at Yarraman slowing throughput rates and a 12 day shutdown at Enterprise mine to install a larger trommel to accommodate 4000tph throughput in the concentrator. The average rutile and zircon mine (RZ) grade of 0.27 per cent in the first half of 2008 was slightly higher than the 0.26 per cent for the 2007 calendar year. Mining throughput rates are forecast to increase in the second half of 2008 as tailings and water management issues are resolved at Yarraman. Ongoing optimisation and standardisation of mining practices and the benefits of a larger trommel and an additional tailings line at Enterprise is expected to deliver improved throughputs. Yarraman Mine A decrease in ore mined was offset by a higher RZ grade of 0.26 per cent for the half year, compared to 0.21 per cent in calendar 2007. Water management issues, caused by mining through a valley and operating below the water table, as well as elevated slimes levels hampered production. Pinkenba Mill Production

January to June Enterprise Mine Enterprise mine grade decreased to 0.29 per cent RZ compared to 0.31 per cent in 2007. This, in conjunction with the 12-day shutdown to install the trommel screen, resulted in a decrease in RZ production for the half year.

82,3

71

35,1

78

25,0

00

34,0

72

27,9

25

82,4

14

28,2

75 39,7

18

108,

218

0

20,000

40,000

60,000

80,000

100,000

120,000

Ilmenite Zircon Rutile

Tonn

es

2006 2007 2008

Pinkenba Dry Mill Processing Plant In contrast, combined rutile and zircon mill production increased by 9.7 per cent compared to the first half of 2007 when the mill upgrade commissioning restricted the plant performance. Ilmenite production increased by 31 per cent due to additional throughput and improved recoveries.

Sales Sales revenue for the first half of 2008 was 10.9 per cent higher than the corresponding period of 2007 and was similar to the second half of 2007, reflecting the higher production and demand for the company’s product. Ilmenite sales were 20.3 per cent above the corresponding period of 2007 due to timing differences in bulk shipments and improved production.

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

ABN: 28 009 719 902 Page 6 of 18

Sales Volumes 2008 1H 000’s tonnes

2007 1H 000’s tonnes

Percentage change

Natural Rutile 34.6 32.2 7.5%

Ilmenite 76.4 63.5 20.3%

Zircon 37.3 27.9 33.7%

Total 148.3 123.6 20.0%

Zircon demand in the first half has been strong in comparison to the second half of 2007 and the market remains tight as additional forecast supply fails to materialise. Price increases of approximately 10 per cent have been achieved for Zircon supply to non-contracted customers in the second half of 2008. Strong demand from China has resulted in both increased Ilmenite prices (US$) and demand compared to the corresponding period of 2007. The average AUD/USD exchange rate realised (excluding hedging) of 0.9343 was significantly higher than the rate of 0.8090 that applied for the corresponding period of 2007. This 13 cent exchange rate movement has had an adverse impact on sales revenue but resulted in a currency hedging gain of $4.1 million, compared to $2.0 million in the corresponding period of 2007.

Financial The operating margin (EBIT/Sales) was 14.2 per cent, compared to 23 per cent for the first half of 2007 and 25 per cent for the full year 2007. An electricity supply agreement, established in 2005, is providing short term protection from the high electricity pool prices being experienced on the east coast of Australia. Considering the high exchange rates in the first half of 2008, net profit after tax of $5.4 million compares favourably to $8.4 million for the first half of 2007. Net Cash flow from operating activities of $11.2 million compares to $14.9 million in the first half of 2007 and capital expenditure of $5.1 million compares to $2.7 million for the corresponding period of 2007. Borrowings of $5.5 million remained at a low level. In line with business performance, Directors have declared a reduced interim dividend of 1.5 cents per share (2007: 2 cents per share), fully franked, payable on 12 September 2008. The record date for the dividend is 29 August 2008, and CRL’s shares will trade ex-dividend on the Australian Stock Exchange from 25 August 2008.

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

ABN: 28 009 719 902 Page 7 of 18

Business development As mentioned earlier, approval for the sale of tailings sand into the South East Queensland construction and infrastructure market is being progressed and the first sales are expected in 2009. Opportunities in mineral sands and industrial minerals continue to be evaluated.

Outlook Market conditions for the company’s products continue to be favourable. The price for Zircon to be sold in the second half of 2008, which was not already contracted for the calendar year, has increased by approximately 10 per cent because of robust demand and reduced supply in this sector. Rutile demand and prices (US$) continue to improve, especially in the Asian markets. The company is therefore confident about the overall outlook for product pricing given current market conditions. Notwithstanding positive and negative factors influencing the first half, the company remains comfortable with the full year earnings guidance provided at the Annual General Meeting (NPAT of $7 to $9 million). Approximately 52 per cent of forecast foreign currency sales revenue in the second half of 2008 is hedged at an average AUD/USD exchange rate of 0.7889.

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

ABN: 28 009 719 902 Page 8 of 18

Directors’ Report The Directors present their report on the financial statements of the consolidated entity, consisting of Consolidated Rutile Limited and the entities it controlled at the end of, or during, the half-year ended 30 June 2008.

Directors The following persons were Directors of Consolidated Rutile Limited (CRL) during the whole of the half-year and up to the date of this report: D A Robb (Chairman) J F Babon C P Cobb (Managing Director) E J Hall V Hugo C Wilson

Activities The principal activities of the Company remained unchanged during the period and comprised the exploration, mining, processing and marketing of rutile, zircon and ilmenite.

Review of operations and results The consolidated entity achieved a profit from ordinary activities after tax of $5.4 million for the half-year ended 30 June 2008 (2007: $8.4 million). Further review of the operations and results is included on pages 4 to 7 of this document.

Dividends A dividend of 4.0 cents per share fully franked (2007: 4.0 cents per share 100% franked) was paid on 27 March 2008 (2007: 26 March 2007).

Auditor’s independence declaration A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 10. F

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

Rounding of amounts The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the “rounding off” of amounts in the Directors’ report and financial report. Amounts in the Directors’ report and financial report have been rounded to the nearest thousand dollars in accordance with that Class Order. This report is made in accordance with a resolution of the Directors.

D A Robb Chairman Brisbane 7 August 2008

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

ABN: 28 009 719 902 Page 11 of 18

Consolidated Income Statement For the half year ended 30 June 2008 Half Year 2008 2007 Notes $’000s $’000s Revenue from continuing operations - sale of mineral sands 61,991 55,944 - interest revenue 81 90 62,072 56,034 Other income - gain on sale of assets - 14 - other 76 36 76 50 Cost of goods sold - costs of production (39,461) (36,530) - movement in work in progress and finished goods inventories 90 4,641 - mining restoration and rehabilitation provided (1,381) (616) - depreciation and amortisation (6,512) (5,734) - government royalties (2,862) (2,588) (50,126) (40,827) Other expenses - marketing and selling (646) (747) - corporate administration (1,290) (1,113) - net foreign exchange losses - loss on sale of assets

(1,271) (10)

(557) -

(3,217) (2,417) Finance costs (1,141) (912) Profit before income tax 7,664 11,928 Income tax expense 5 (2,301) (3,578) Profit for the half-year 5,363 8,350 Earnings per share Cents Cents Basic earnings per share 3 1.5 2.3 Diluted earnings per share 3 1.5 2.3 The above consolidated income statement should be read in conjunction with the accompanying notes.

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

Consolidated Balance Sheet As at 30 June 2008 30 Jun

2008 31 Dec 2007

Notes $’000s $’000s ASSETS Current assets

Cash and cash equivalents 1,118 4,191 Trade and other receivables 21,039 24,804 Inventories 23,522 23,735 Derivative financial instruments 6,725 5,691 Total current assets 52,404 58,421 Non-current assets Property, plant and equipment 105,793 107,089 Derivative financial instruments 1,125 286 Intangible assets 661 798 Deferred tax assets 944 1,063 Other assets 1,071 1,071 Total non-current assets 109,594 110,307 TOTAL ASSETS 161,998 168,728 LIABILITIES Current liabilities

Trade and other payables 15,933 18,725 Interest bearing liabilities 5,500 - Current tax liabilities 2,472 4,470 Provisions 10,611 9,511 Total current liabilities 34,516 32,706 Non-current liabilities Provisions 21,129 21,704 Total non-current liabilities 21,129 21,704 TOTAL LIABILITIES 55,645 54,410 NET ASSETS 106,353 114,318 EQUITY Contributed equity 130,172 130,172 Reserves 5,521 4,185 Accumulated losses 6 (29,340) (20,039) TOTAL EQUITY 106,353

114,318

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

Consolidated Statement of Changes in Equity For the half year ended 30 June 2008

Half Year

2008 2007 Notes $’000s $’000s Total equity at the beginning of the financial year 114,318 115,307 Cash flow hedges (net of tax) Share based payments

1,311 25

2,622 -

Profit for the half year 5,363 8,350 Total recognised income and expense for the year 6,699 10,972 Transactions with equity holders in their capacity as equity holders: - dividends provided for or paid 4 (14,664) (14,664) Total equity at the end of the half year 106,353

111,615

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

Consolidated Statement of Cash Flows For the half year ended 30 June 2008 Half Year 2008 2007 $’000s $’000s Cash flows from operating activities Receipts from customers (incl. Goods & Services Tax) 66,542 72,277 Payments to suppliers and employees (incl. Goods & Services Tax) (50,225) (45,461) Interest received 81 90 Borrowing costs (445) (218) Income tax paid (4,741) (11,724) Net cash inflow from operating activities 11,212 14,964 Cash flows from investing activities Purchases of property, plant and equipment (5,080) (2,705) Net cash outflow from investing activities (5,080) (2,705) Cash flows from financing activities Dividends paid (14.664) (14,664) Proceeds from borrowings 15,000 27,500 Repayment of borrowings (9,500) (24,500) Net cash outflow from financing activities (9,164) (11,664) Net (decrease)/increase in cash and cash equivalents (3,032) 595 Cash and cash equivalent at the beginning of the half year 4,191 1,717 Effects of exchange rate changes on cash and cash equivalents (41) (18) Cash and cash equivalents at the end of the half year 1,118 2,294 The above consolidated cash flow statement should be read in conjunction with the accompanying notes.

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

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Notes to the Condensed Consolidated Financial Statements 1 Basis of preparation of half-year report This general purpose financial report for the interim half-year reporting period ended 30 June 2008 has been prepared in accordance with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Act 2001. This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2007 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. Unless otherwise stated, the accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period. 2 Segment Information The Company operates primarily in one business segment, being the extraction, processing and marketing of rutile, zircon and ilmenite.

3 Earnings per share Half Year 2008 2007 Cents Cents Basic earnings per share 1.5 2.3 Diluted earnings per share 1.5 2.3 Number Number Weighted average number of ordinary shares on issue used in the calculation of basic earnings per share

366,595,816

366,595,816

Weighted average number of ordinary shares and potential ordinary shares on issue used in the calculation of diluted earnings per share

366,595,816

366,595,816

The earnings used in calculation of the basic and diluted earnings per share equates to the consolidated profit after tax.

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

ABN: 28 009 719 902 Page 15 of 18

4 Dividends Half Year 2008 2007 $’000s $’000s Final dividend for 2007 of 4 cents per fully paid share, paid 27 March 2008 and fully franked

14,664

-

Final dividend for 2006 of 4 cents per fully paid share, paid 26 March 2007 and fully franked

-

14,664

Total dividends provided for or paid 14,664 14,664

5 Income tax expense Half Year 2008 2007 $’000s $’000s Reconciliation of income tax expense to prima facie tax payable Profit before tax Tax at the Australian tax rate of 30% Tax effect of amounts which are not deductible/(taxable) in calculating taxable income: - share based payment expenses

7,664 2,299 2

11,928

3,578

-

Income tax expense 2,301 3,578

6 Accumulated losses

Accumulated losses at the beginning of the period

Notes 2008 $’000s

(20,039)

2007 $’000s

(18,506)

Net profit after tax 5,363 8,350 Dividends 4 (14,664) (14,664) Accumulated losses at the end of the period (29,340) (24,820)

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CONSOLIDATED RUTILE LIMITED HALF YEAR FINANCIAL REPORT

Directors’ Declaration In the Directors’ opinion: (a) the financial statements and notes set out on pages 11 to 15 are in accordance

with the Corporations Act 2001; including,

1. Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

2. Giving a true and fair view of the consolidated entity’s financial position as at 30 June 2008 and of its performance for the half year ended on that date; and

(b) there are reasonable grounds to believe that Consolidated Rutile Limited will be

able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the Directors.

D A Robb Chairman Brisbane 7 August 2008

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