Iluka Resources Limited under pressure due to lower production

Iluka Resources Limited under pressure

Mixed Performance in the first half 2018: Iluka Resources Limited’s (ASX: ILU) stock plunged 7.8% on August 16, 2018 after the company’s first half Z/R/SR production was reported to be 23% lower to 351kt than first half 2017 due to given cessation of HMC processing from Murray Basin and sales of Z/R/SR in the first half fell by 3.3%. However, in the 1H 2018, ILU has delivered 80% growth in the Underlying Group EBITDA to $279 million. Mineral sands revenue increased by 21% to $607 million on first half 2017. The company has reported the net profit after tax of $126 million compared to loss of $81.5 million in 1H 2017.

Moreover, Jacinth-Ambrosia is operating successfully during the first half after the restart in December 2017 but the delays in commissioning in-pit mining unit and dredge downtime has reduced the production at Sierra Rutile. Additionally, ILU expects significant capital program in 2019 for Cataby development and Sierra Rutile expansions and significant tax payments in 2019. The company has declared 10 cents per share fully franked interim dividend payable 27 September 2018, which represents 19% of H1 free cash flow. On the other hand, ILU has announced the rise to rutile resources at the Sembehun Project, which is planned to commission in 2021 and the identification of the Pejebu Exploration Target based on Exploration Results, both with potential to extend the life of current mining operations at its wholly owned Sierra Rutile Limited (SRL) Operations. Meanwhile, ILU stock has fallen 7.85% in three months as on August 15, 2018.

Iluka Resources Limited under pressure1H FY 18 Financial Performance (Source: Company Reports)

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