Two Mining Stocks To Look At – ILU & WSA

  • Jun 02, 2019 AEST
  • Team Kalkine
Two Mining Stocks To Look At – ILU & WSA

Iluka Resources Limited (ASX: ILU)

Australia’s metals and mining sector company, Iluka Resources Limited (ASX: ILU) recently showcased the presentation at 2019 Bank of America Merrill Lynch Global Metal, Mining and Steel Conference, held in Barcelona. It also showed up in the inaugural TZMI TiO2 Congress NYC 2019, New York.

The presentations highlighted the sustainable approach adopted by the company along with the promising pipeline of growth projects.

Iluka is an owner of the world’s largest zircon mine which was discovered in 2004. This mine named, Jacinth-Ambrosia South Australia, forms the major source of the company’s zircon production. Iluka reported the growth of 41% in zircon prices, steering the company’s mineral sands revenue which grew 22% in 2018.

Titanium Feedstocks marks another high-grade product of Iluka that has natural advantage in production processes with high ‘value in use’. The presentation also unleashed the high-grade titanium pricing dynamics driven by the recent decoupling of rutile and pigment prices due to supply tightness in very high-grade feedstock market.

Pipeline of Growth Projects (Source: Company’s Presentation to BoAML Conference, Barcelona, May 2019)

Looking forward with respect to titanium, the company eyes stable pigment demand in Q1 2019, which may lead to stronger demand in H2 2019. The company holds minimal inventories through value chain and have most of product contracted or committed for 2019, as per the presentation.

Further, Iluka holds a royalty over iron ore from BHP’s Mining Area C (MAC) in Western Australia. The group expects its royalty revenue to grow with BHP’s South Flank development.

Mining Royalty & MAC Sales (Source: Company’s Presentation to BoAML Conference, Barcelona, May 2019)

On 27 May 2019, the company announced that Perpetual Limited and its related bodies corporate became a substantial holder of Iluka, effective 23 May 2019. As per the notification, the substantial holders now have a voting power of 5.10% in the company.

Iluka Resources Limited is a Metal & Mining company based in Perth, Western Australia. ILU has experience of more than 60 years in the minerals and sand industry, and it provides expertise in mining, processing, exploration, development, marketing and rehabilitation.

ILU last traded at $9.740, down 1.715%, on 31 May 2019.

Western Areas Limited (ASX: WSA)

Western Areas Limited (ASX: WSA) is a metals and mining company based in Australia. Last month, WSA released its WA Mining Club Luncheon - Corporate Presentation, wherein focused remained on innovation, nickel market and its latest project in the pipeline- Odysseus.

WSA purchased the Odysseus Project from Glencore for $24 million in Oct 2015. The PFS study of the project was completed in March 2017 following which the group completed the DFS study of the project in 2018 with Board approval to start mining.

In January this year, Western Areas got a schlumberger submersible pump on the site to accelerate dewatering from the project. As per the presentation, Odysseus Project is a long-life, low cost project with Ore Reserve 8.1mt @ 2.0% for 164kt nickel at a mine life greater than 10 years.

Odysseus’ pre-production capex stands at A$299 million which includes shaft hoisting and larger mill. It also presents a significant upside underpinned by record massive sulphide intersections and AM5 & AM6 deposits containing an Indicated Mineral Resource of 57.6kt of nickel (not included in DFS).

The company’s Mill Recovery Enhancement Project (MERP) produces additional new higher-grade product (45-50% Ni), utilising waste tailings. Further, the WSA expects an upside in the nickel market with a significant increase in inbound offtake enquiries and escalated demand for nickel from the Chinese partner (stainless steel producer). The company had also reflected that the Nickel Deficits would be a reality now.

Nickel Deficits (Source: Company’s WA Mining Club Luncheon - Corporate Presentation)

WSA last traded at $2.180, down 0.457%, on 31 May 2019.


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