A glimmer of light at the end of the tunnel for Iluka Resources (ILU) which is looking to bring a mothballed Western Australian mine back on line because of what it sees as an improving mineral sands market.
If it happens, the company will probably be through the prolonged slump in the beach sands sector that has cost the company plenty in terms of lower revenues, losses and closure of mines in WA.
The latest quarterly report showed signs of this improvement – sales revenue was in line with the same period a year ago, as prices remain weak since dropping sharply in 2012.
Revenue for the three months to September’s end was $147.7 million compared to $147 million in the same period of 2013.
As a result Iluka now says it is through the worst of a prolonged downturn that led it to mothball some operations.
It said it had started planning for a possible restart of mining at its Tutunup South mine in next January.
Iluka says it has been encouraged by the level of customer interest being shown in securing volume from a potential restart of synthetic rutile production in WA.
The market liked the guarded optimism – the shares were down more than 4% at one stage, but rallied as the rest of the market bounced to be down only 2% at the close at $7.57.
ILU YTD – Is Iluka through the worst?
Iluka’s mineral sands mining operations produce zircon and rutile, which are used in ceramics, paints and a range of industrial products.
The company is also starting to show the benefits from a lower Australian dollar, and managed to make an $11.7 million profit for the June 30 half year.
Despite the improving outlook, Iluka saw revenue for the nine months to September fall 7% to $491 million, down 7% from $528.7 million in the same period in 2013,
Mineral sands production of 214,300 tonnes was down from 276,500 tonnes.
"On a year to date basis there has been no material change in the revenue per tonne of Z/R/SR sold ($1,015 as reported at 30 June), reflecting the continuation of relatively stable weighted average prices received for both zircon and high grade titanium dioxide products. Prices received can vary depending on quality and volume of product sold, market segment sold into and point of sale,” the company said.
