Here’s why a fund manager says this ASX 200 mining share is ‘unique’ with ‘significant value’

The fund managers from WAM Leaders Ltd (ASX: WLE) have revealed one of the S&P/ASX 200 Index (ASX: XJO) mining shares in their portfolio that they are positive about. That optimistic commentary was about Iluka Resources Limited (ASX: ILU).

WAM Leaders is a listed investment company (LIC) that tries to deliver outperformance with its portfolio of ASX blue chips. The WAM Leaders gross investment portfolio performance was 14.4% per annum since May 2016, compared to an average return per annum of 8.6% for the S&P/ASX 200 Accumulation Index (ASX: XJOA).

What does ASX 200 mining share Iluka do?

Iluka describes itself as a global critical minerals company with expertise in exploration, development, mining, processing, marketing and rehabilitation.

It’s a “leading producer of zircon and the high grade titanium dioxide feedstocks rutile and synthetic rutile.” The company has also established a “significant” position in rare earth elements. The ASX 200 mining share also owns a 20% stake in Deterra Royalties Ltd (ASX: DRR), the largest ASX-listed resources focused royalty company.

The company’s commodities are seeing increasing demand, with its production used in applications like technology, construction, medical, lifestyle and industrial uses. Electric vehicles are one of the key uses for its materials.

Its projects and operations are in Australia, while exploration activities are conducted internationally.

What the WAM Leaders team likes about the business

The WAM team points out that with the core products of zircon and rutile, the company is among the largest players globally.

The fund manager said that with the Australian government’s support, the ASX 200 mining share is embarking on a move into rare earths production with the first production at the Eneabba rare earths refinery expected in 2025.

WAM Leaders explained:

We continue to hold Iluka Resources in our top 20 holdings as we believe there is significant strategic value in their assets and it is trading relatively inexpensively given its unique market position and growth opportunities.

In a recent presentation to the market, Iluka pointed out that disciplined production responses are an encouraging evolution for the mineral sands and downstream opacifier and pigment industries. This serves to “reduce volatility, with positive implications for many through the supply chain.”

Foolish takeaway

There are a number of interesting elements about Iluka, including a dividend that has grown since 2020. At the current Iluka share price, the ASX 200 mining share offers a grossed-up dividend yield of 5.5%.  

The post Here’s why a fund manager says this ASX 200 mining share is ‘unique’ with ‘significant value’ appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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 Scott Phillips.

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