Iluka Resources share price crumbles as quarterly results in line with ‘expectations’

An engineer takes a break on a staircase and looks out over a huge open pit coal mine as the sun rises in the backgroundAn engineer takes a break on a staircase and looks out over a huge open pit coal mine as the sun rises in the background

Shares of Iluka Resources Limited (ASX: ILU) are tracking south today following the release of the company’s quarterly activities and cash flow update.

At the time of writing, the Iluka share price is trading at $10.26 after sliding just over 1% into the red from the open.

Iluka share price slides as spot prices soar

Key highlights from Iluka’s quarter include:

  • Zircon/Rutile/Synthetic Rutile (Z/R/SR) production of 180kt, up 44% on Q1 2021
  • Strong Z/R/SR sales of 189kt, in line with Q4 2021
  • Zircon sand prices increased US$100/tonne, effective 1 April 2022
  • Spot prices for rutile and synthetic rutile are both at ten year highs
  • Phase 1 complete of Eneabba development

What else happened for Iluka this year?

The company says that Australian operations performed in line with its expectations. For instance, its Cataby site in Western Australia produced 117,000 tonnes of heavy mineral concentrate (HMC), “in line with the mine plan”.

Whereas the Narngulu mineral separation plant in WA produced 76,000 tonnes of zircon, and its Synthetic Rutile Kiln 2 produced 54,000 tonnes of synthetic rutile.

Elsewhere, the company’s Sierra Rutile project in Sierra Leone produced 98,000 tonnes of HMC, a 14% gain from Q4 2021.

Earlier in the month, Iluka had advised of its plans to demerge its Sierra Rutile asset, pending shareholder approval. If successful, Sierra Rutile will then list on the ASX, Iluka says, as a ” West African focused mineral sands company”.

“[The project] will have the primary objective of maximising value from Sierra Rutile’s remaining deposits at Area 1 and developing the globally significant Sembehun project,” Iluka noted.

Finally, exploration and evaluation expenditure was $2.2 million for the quarter, slightly lower than $2.4 million in Q1 2021.

What’s next for Iluka?

Iluka says that it has increased the price of zircon sand by US$100 per tonne, effective from 1 April 2022.

“The company’s Q2 2022 zircon sales are fully contracted, reflecting tight supply despite a number of challenges facing the market,” it noted.

Not only that, but it announced the final investment decision for the Eneabba Phase 3 asset. Iluka says this is a “fully integrated refinery for the production of separated rare earth oxides” and is located at Eneabba, WA.

“This [investment] decision was taken following the agreement of a risk sharing arrangement with the Australian Government, including a $1.25 billion non-recourse loan under the $2 billion Critical Minerals Facility administered by Export Finance Australia,” Iluka said.

Phase 3 will produce the high value rare earth oxides neodymium, praseodymium, dysprosium and
terbium. These are critical inputs across a range of industries and technologies including electric
vehicles, sustainable energy, advanced electronics, medical and defence applications. The refinery will have a total rare earth oxide capacity of 17.5 thousand tonnes per annum. Construction is scheduled to commence in H2 2022, with first production in 2025.

Iluka Resources share price snapshot

In the last 12 months, the Iluka share price has climbed more than 37% into the green and is up 1.5% this year to date.

However, in the past week, it has scaled back and is down 16% in that time.

The post Iluka Resources share price crumbles as quarterly results in line with ‘expectations’ appeared first on The Motley Fool Australia.

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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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