Iluka Resources, the world’s biggest zircon producer, has issued $248 million new shares to institutions to fund the development of the Jacinth-Ambrosia project in South Australia’s Eucla Basin.
The offer price of $2.55 was at a significant discount of 30% from the last closing price.
Today, the stock emerged from a four day trading halt, with volatile trading signifying investor confusion about this move. Shares in ILU traded in a range between $3.27 and $3.94, to close at $3.86, up 5.4%.
Iluka said the share placement was 3.5x oversubscribed.
The Perth-based company said it plans to sell a further $105 million new shares to retail investors, with the terms of the retail offer the same as those of the institutional offer.
That will mean eligible retail shareholders will be entitled to subscribe for 4 new shares for each 7 Iluka shares held at the record date at the offer price of $2.55 per new share.
In its yearly results released last week, the group said it had decided not to pay a 2007 dividend in the context of current group earnings, cash flows and the franking credit position, together with capital required to develop the Jacinth-Ambrosia and Murray Basin 2.
Iluka is a major participant in the global mineral sands sector and is involved in the sales and marketing of titanium based products (rutile, ilmenite, leucoxene and synthetic rutile) and zircon.
