Brennen Arndt - Vice President, Investor Relations Tom Casey - Chairman & Chief Executive Officer Tim Carlson - Chief Financial Officer and Senior Vice President Willem van Niekerk - SVP of Strategic Planning & Business Development Ed Flynn - Executive Vice President and President of Tronox Alkali.

Hassan Ahmed - Alembic Global Advisors Roger Spitz - Bank of America Merrill Lynch James Finnerty - Citigroup Global Markets Brian Morgan - RMB Morgan Stanley James Oberholzer - Macquarie Equities South Africa Richard O’Reilly - Revere Associates Mike Leithead - Barclays Capital Inc Rich Bourke - Bloomberg Intelligence Brian Lalli - Barclays Capital Inc..

Good day, ladies and gentlemen and welcome to the Tronox Limited Fourth Quarter 2016 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] As a reminder, today’s conference is being recorded.

I would now like to turn the call over to Brennen Arndt, Vice President, Investor Relations. Sir, you may begin..

Thank you, Chelsea, and welcome everyone. As you saw in the press release we issued this morning, we’re very pleased to announce that Tronox has signed a definitive agreement to acquire Cristal’s TiO2 business. We also announced very strong fourth quarter 2016 results. Tom Casey, Chairman and CEO, will review both with you this morning.

Joining us for the Q&A session will be Willem Van Niekerk, our Senior Vice President of Business Development and Strategic Planning; Chuck Mancini, Senior Vice President and Chief Integration Officer; Richard Muglia, our Senior Vice President and General Counsel; Tim Carlson, Senior Vice President and Chief Financial Officer; Jean-François Turgeon, President of Tronox TiO2; and Ed Flynn, President of Tronox Alkali.

We’ll be using slides this morning as we move through the conference call. Those of you listening by the Internet broadcast through our website should already have them, and for those of you listening by telephone, if you haven’t already done so, you can access them on our website at tronox.com.

Slide two, I will not read the forward-looking statement on this slide, but instead say that the statement applies in full to our remarks this morning..

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running our mineral sands assets at full utilization, which will thus lower our cost per ton, optimizing the value and use of our feedstock, sharing of best practices across complementary technologies, production facilities and production geographies, leveraging the successful operational excellence program in our current TiO2 business, eliminating significant supplier redundancies, reducing average distances to our customers through enhanced global footprint, consolidating third-party spending and redundant functions along with the elimination of redundant corporate costs..

Our fourth quarter performance provided a strong finish to 2016, as our TiO2 and Alkali business combined to deliver $126 million of adjusted EBITDA and a $100 million of free cash flow.

Driving the performance in TiO2 were a number of factors are our highest fourth quarter and month of December pigment sales volumes, higher pigment selling prices, which increased 1% sequentially and 7% above the prior year, higher feedstock and co-products sales volumes, and continued cost reductions resulting from the success of our Operational Excellence program.

As we have said, 2016 marked the recovery in global TiO2 markets. We expect the momentum generated last year to continue in 2017 based on our view that pigment inventories in the aggregate are at or below normal levels at both customer and producer locations across the globe, resulting in continued supply-demand tightness.

As a result, we expect another sequential improvement in pigment selling prices in the first quarter. Alkali’s performance was driven by higher production volumes, lower operating costs, and increased production efficiencies. Our cash generation in the quarter reflected the strong performance by both our businesses.

We closed the quarter with cash of $248 million, and liquidity of $533 million, up from cash of $202 million and liquidity of $470 million, respectively, as of September 30. And our board declared a quarterly dividend of $0.045 per share.

We would normally review our progress in our Operational Excellence program with you in specific detail in this call.

But in the appendix of your slides, you’ll find those specifics, such as our cost reduction and working capital reduction performance as well as the EBITDA bridge, showing the sources of our cost reductions and tying the bridge to our reported financial statements so that you can reconcile our performance.

But I will say that we are ahead of schedule in meeting our targets. Cumulative cash generated from annual cost reductions totaled $246 million through the end of 2016. Cumulative cash generated from working capital reduction totaled $240 million through the end of 2016.

Therefore, total aggregate cash generated from our Operational Excellence program in its first two years is $486 million. I’ll close my remarks by sharing our perspective on 2017.

We will work diligently towards closing the acquisition of the Cristal assets by the fourth quarter of this year, and at the same time, continue our laser-like focus on generating high performance on our current portfolio. Tronox as a standalone will continue to perform very well.

As you’ve seen, our TiO2 business generated significant momentum in 2016. The momentum comes from higher pigment sales volumes and higher selling prices coupled with a continued strong operating cost performance.

We expect that momentum to continue in 2017 because all of the conditions in the market favor remaining tightness in the supply-demand balance. And this include taking into account Chinese pigment producers. We will continue to match our pigment production to meet demand while keeping inventory at or below normal levels.

Once again, we are selling all the pigment we make and we are running our pigment production plants at practical full capacity. In December, we announced the pigment price increase, our fourth announcement in the last 12 months. The last three quarters we have raised pigment selling prices by 12% above their first quarter 2016 trough level.

And as I said earlier, we expect another sequential increase in selling prices in the first quarter. With respect to the titanium feedstock market, prices for ilmenite, which is the first level titanium feedstock, have more than doubled in the last three months in China.

Because this is the input into of higher grade feedstock production, they will add cost pressure to producers of those high-grade feedstocks. This should provide further support for rising higher grade feedstock selling prices.

If this occurs, they will provide cost pressure on non-integrated pigment producers, providing further motivation for pigment selling prices in 2017. Under that scenario, we, of course, will benefit from rising margins at both the mineral sands level and the pigment level with respect to our own CP slag inventory and production levels.

We signed 100,000 metric ton supply contract for delivery of slag in 2017. This will allow us to further reduce our inventories and to restart furnaces that have been shutdown and to use that additional production to serve our own needs without affecting the market supply-demand balance.

In Alkali, 2016 performance included a number of one-off items that impacted results. Those items are now behind us and fourth quarter EBITDA of $46 million confirm them.

In 2017, we expect Alkali to return to adjusted EBITDA and free cash flow levels that overcome and exceed the one-off items of last year, and deliver another year of solid adjusted EBITDA and free cash flow. With that, I thank you. Again, I apologize for my voice and we’ll open the call for questions..

[Operator Instructions] And our first question comes from the line Hassan Ahmed with Alembic Global Advisors. Your line is now open..

Good morning, Tom..

Good morning..

Hassan Ahmed:.

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Well, first of all, we are not in conversations with anybody. With the announcement that we made this morning, we will initiate a process, and we’ll go through a process where bankers will assist us. Credit Suisse is working with us on this. We’ll issue a information memorandum.

The last process that we participated in was very robust, and had multiple bidders, and we expect that it will be robust again. So, we’re not talking to anybody now. And so, I want to clarify that. But we expect that this will be a very robust process. And we have every expectation that we’re going to get satisfactory bids for that business.

It’s in very good shape. The market is clearing, we think, and so we’re optimistic about it..

Understood. Now, again, deal related sort of two parts. One is a relatively simple one which is, any commentary about any breakup fees? So that’s part one. Part two is, you guys did a very good job at laying out the sort of medium turn EPS, EBITDA and free cash flow sort of accretion numbers.

If you could just give us some sort of guidance around what sort of titanium dioxide and ore pricing assumptions you have behind those numbers? Again, not looking for absolute pricing, but just some sort of commentary about -are those numbers being backed by significant improvements, moderate improvements, any sort of directional guide would be appreciated?.

Tom Casey:.

With respect to the accretion and the growth rates, again, it’s important that when we talked about the growth rates of EPS accretion of over 100% for example or EBITDA by over 60%, those were not mid-term or long-term forecasts. Those were year one forecasts. That’s basically 2018 forecasts for us.

So, short-term accretion, short-term increases in growth.

And the prices we assumed to get to those numbers are very similar to the major consulting firm’s middle range price, not their high price, not their optimistic price, not their peak price, but sort of their middle of the road price, which we believe, at least for the short term, it’s very close to what we are forecasting for our own internal purposes..

Very helpful, Tom. Thank you so much..

Okay..

Thank you. And our next question comes from the line of Roger Spitz with Bank of America Merrill Lynch. Your line is now open..

Yeah. Thank you, and good morning..

Good morning..

Just to be clear, sorry about my voice as well.

Are you purchasing all of Cristal including the Australian Mineral Sands business, but excluding the Jazan, Saudi slag facility?.

Yes, that’s exactly right. All of the pigment plants, all of the mineral separations, all of the mineral sands..

Roger Spitz:.

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Yes..

And when is Jazan slag plant expected to be online?.

It’s not clear. They are commissioning that facility and we are in negotiations with them to purchase it. But until we see what happens with respect to the commissioning process. Of course, we don’t have to make a decision on that, and we won’t.

but you are right about the Australian mineral sands assets and all the other TiO2 assets of Cristal, we are buying..

What is Cristal’s 2016 EBITDA? You’ve given the five-year average.

Is it possible to provide us with the 2016 EBITDA?.

Tom Casey:.

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Roger Spitz:.

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Yes, it’s still active. It will run for another 18 months or two years or so, and then there is some surplus inventory that will continue to supply that plant. After that for probably about four years. And then, as I said in the main presentation, we have a very substantial mineral sands reserve that if we want to we can easily fund to supply that.

So, that’s yes, that’s the answer to that question..

Thank you very much..

You’re welcome..

Thank you. And our next question comes from the line of James Finnerty with Citi. Your line is now open..

Hi. Good morning, Tom..

Good morning, James..

James Finnerty:.

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It assumes at closing that no synergies have been captured. And it assumes that we did not need to incorporate a bridge financing on any of the asset sales that we anticipate for funding the cash component..

Okay. So you can do the math after that..

So then you can do the math after that..

James Finnerty:.

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It was both. There were some strategics and there were some sponsor bidders and there were multiple items. I don’t obviously know the exact number, but it was a very robust process..

And if for any reason you’re unable to sell the soda ash business, you still intend to go ahead with the acquisition of Cristal and get bridge financing, et cetera?.

Tom Casey:.

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Okay. Thank you. And I hope you feel better..

Thank you very much..

Thank you. And our next question comes from the line of Brian Morgan with Morgan Stanley. Your line is now open..

Hi, Tom. Thanks for taking the call even with your voice as it is.

Could you just give us an idea of where these plants that you’re buying sits in the cost curve currently and where you think they’ll end up once you’ve got all the synergies in place?.

Tom Casey:.

I think there is room for improvement on their performance, just as there’s room for improvement on our performance. And we’ll be going in that way. One of the plants that we are particularly optimistic about improving is the Yanbu Plant in Saudi Arabia. Because the assets in Yanbu are basically obtained under license from our predecessor company.

And in essence, are the same assets that we have in Hamilton, Mississippi, except the production of Yanbu is not the same as the production out of Hamilton. So we believe that the team that runs Hamilton will be able to help the team members in Yanbu to very quickly improve the performance of that plant..

Thanks, Tom.

So was Cristal’s EBITDA margin, let’s say, in 2016, higher or lower than Tronox’s Titanium Dioxide?.

Lower..

Lower. Okay, cool. Thanks. Thanks very much..

Yeah..

Thank you. And our next question comes from the line of Tarek Hamid with JPMorgan. Your line is now open..

Unidentified Analyst:.

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Yes..

Care to elaborate on that at all?.

Tom Casey:.

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All right, great. Thank you.

And then, can you just go over why the decision not to secure bridge financing?.

I’m sorry, not to what?.

Secure bridge financing?.

Tom Casey:.

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Why did we decide not to do share [ph] but (43:02) bridge financing?.

Tom Casey:.

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Great..

Our strategy is to replace lower growing assets with higher growing assets..

Great. Thank you..

Thank you. And our next question comes from the line of James Oberholzer with Macquarie. Your line is now open..

Thank you for struggling through Tom, and I hope your voice [indiscernible] (44:11)..

Thank you, James..

And two questions from my side. The first is just on the proposed share issue.

So will this be a new issue or could this potentially offer a mechanism for existing shareholders to dilute and has Exxaro intimated any intentions to that effect?.

Tom Casey:.

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Thank you.

And then could you also just remind me how the transaction may facilitate the usage of your existing tax attributes and how those are ring-fenced?.

Tom Casey:.

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Great. Thank you..

Operator:.

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Okay. Thank you. Good morning. I have several questions. And, Tom, if you want to let others answer to save your voice, that’s fine. It looks like on the first year’s savings, about half of that is from SG&A.

And is Cristal’s headquarter still located in the Baltimore area?.

It’s Willem van Niekerk. Their U.S. head office is still in the Baltimore area. I believe they have sold their [ph] Kingdom (47:26) office, head office is still in Jeddah and they also have an office in Amsterdam in the Netherlands..

Okay.

So that would account for a large part of the SG&A savings the first year, the corporate stuff?.

Yeah. There is a lot of corporate savings that we need to look at including offices as well as R&D, et cetera. So we think there’s a number of potential SG&A savings..

Richard O’Reilly:.

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Willem van Niekerk:.

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Richard O’Reilly:.

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Well I mean, I think fundamentally the folks in Alkali understand that they have a strategic competitive advantage against 75% of the synthetic production in the world. And so they understand it’s a good business. They like working for Mr. Casey, but they’ve been through this movie before and they saw how it turned out.

So I think folks in Alkali will be fine..

Okay. Good Okay. Thanks a lot, guys..

Thank you. And we have a follow-up question from the line of James Finnerty with Citi. Your line is now open..

Hi. Just a follow-up on the tax attributes. Just to be clear, all the tax attributes will stay with Tronox.

The plan is not to take any attributes and send them off with the soda ash business?.

That’s right..

Okay. Just wanted to be clear on that. Thank you..

Tom Casey:.

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Yeah. Thanks, Tom. During 2016, we initiated a corporate restructuring program to simplify our corporate, our finance, and our legal structure which allowed us to streamline operational, administrative and commercial activities.

As part of the restructuring program, we also revised our intercompany financing structure to better align our cash flow needs. These changes eliminated withholding tax obligations that are under company debt, which resulted in $139 million tax benefit plus $2 million FX loss on the transaction..

Okay. Thank you..

Thank you. And our next question comes from the line of Duffy Fischer with Barclays. Your line is now open..

Hey guys, this is Mike Leithead on for Duffy. I guess, Tom, just wanted to check on your level of comfort, I guess, around the regulatory approval process. I know a peer transaction in the industry a few years ago took a bit longer than initially thought.

Can you just talk about your level of comfort there?.

Sure. We have done an extensive, an analysis of all of the regulatory requirements obviously and we’re very comfortable that we’ll get through that process. Well, I mean, we know from competing every day that this is a global market. We see product from all over the world in every market that we do business in.

Our total combined production share is probably 15% of the global market. It’s about comparable to the other largest producer in the United States. We’re second combined on a pro forma basis. We will have the second largest volume. So we don’t think we’re dominating any market.

We don’t think that given the dynamics of global markets and the various products that we compete in, there will be any market power that we accumulate through this combination..

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Great. And then just a follow-up, I guess, going from the number six producer in the industry to number one in terms of capacity.

Does that change at all how you think about kind of operating in the industry either in terms of supply discipline or your pricing initiatives?.

Well, look I think we have tried to be economically rational over these last several years. If there was surplus supply in the market, we slowed down our production, and we did that with respect to pigment. We also did it with respect to mineral sands.

You remember over the last couple of years that we shut down about 75,000 tons of pigment production when we felt that all we were doing was adding supply to inventory levels. And we shut down two of our four slag furnaces.

I believe, in running the business to produce returns for the owners and one of the benefits of this structure is that at the size that we are at now within this new Tronox combination that we will be able to run our assets more fully, more of the time, and still balance our supply with demand.

So you can assume that we will try to run the business for returns to the shareholders whatever that is at any given moment..

Great. Thanks, Tom. Feel better..

Thank you very much..

Thank you. And our next question comes from the line of Rich Bourke with Bloomberg Intelligence. Your line is now open..

Yeah.

So, along the regulatory approval that you’ve talked about in addition to Europe and U.S., is there any other jurisdictions, and also, what about customer overlap?.

I think, if we have the number correct, there’re nine countries where we file regulatory applications of different kinds, the United States, China, Australia, Europe and then a variety of others. So that’s the answer to that question. There is some customer overlap.

We think that we will be able to provide better service, more responsive service and preferably more attractive service to all customers everywhere in the world. So there may be some customer shifting, but we’re confident that that won’t net diminish our sales.

If we lose customers in one place, we’re confident that we can pick up customers in another. So we looked at it, but we don’t feel it as a big threat or big negative..

How about that as an opportunity to maybe shift on production and cost cutting along those lines?.

As I said in the answer to the prior question, if we’re going to run the entire portfolio in order to enhance returns, given the conditions in the marketplace but we will have hundreds of millions of dollars of synergies that we have already identified and which by the way have been validated by one of the big four auditing firms who do this kind of work.

They came in with us, looked at the synergy numbers that we have given you and have validated those numbers.

So we’re very confident that we will have a good cost position and that we’ll be able to share our benefits with the market, but we’ll always run further to produce returns for the shareholders, whatever that is, given market conditions at the time..

Thank you..

Thank you. And our next question comes from the line of Brian Lalli with Barclays. Your line is now open..

Brian Lalli:.

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Tom Casey:.

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Great. That’s really helpful. And one more if I may and I apologize if I missed this before. As you look to sell the Alkali business, there’s obviously a large amount of corporate costs at Tronox.

Have you thought about or could you give any guidance around sort of what maybe is stranded, again as we sort of think around what that last piece is of the consolidated amount of EBITDA, as we get towards, again closing and the Alkali business being theoretically gone..

Yeah. Let me say that and I’ll let Tim answer this, with respect to the aggregate level of corporate costs, but when we purchased the Alkali, we essentially ran that business as an independent standalone entity. And Ed Flynn and his team basically continued to run it. So we didn’t have a huge amount of corporate costs just for that purpose.

I don’t know, Tim, would there be....

That’s exactly right, Tom. There’s a couple of million dollars that’ll be stranded, but that’ll be taken care of easily with the synergies we’ll generate..

That’s great. Thanks for the time, guys. Appreciate it. Feel better, Tom..

Thank you very much..

Thank you. And I’m not showing any further questions at this time. I would now like to turn the call back to Mr. Tom Casey, Chairman and CEO for closing remarks..

Thank you very much. And for those of you who are still on the line after an hour-and-a-half, I appreciate you listening to me whisper to you for this period.

I hope I was able to make myself clear, and I can tell you that we are very excited about the creation of value for shareholders and the deleveraging and de-risking of the new business that this creates for all participants, lenders, customers, employees. We think this is a great transaction.

We think that 2016 ended on a very powerful note and the combination of the two developments means that our future is looking very, very bright. We’re going to go back now. We’re going to work hard on the integrating, developing an integration plan. We’re going to work on getting through all the regulatory environment.

We’ll keep you posted on progress as we move forward. I appreciate your support. Thank you very much. Goodbye..

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day..