Mineral sands producer Iluka Resources (ASX:ILU) reported a 12 per cent drop in revenue in an announcement to the ASX. First quarter revenue, which came in at $115.2m, was seasonally low. But revenue was also affected by a number of other factors. There was a deferral of 11 thousand tonnes of zircon and 12 thousands tonnes of synthetic rutile sales available from stock after the end of the quarter, in line with shipping schedules. A hiatus in zircon orders and deliveries in March also affected revenue. The company engaged with customers in relation to new pricing and payments. There was also lower ilmenite and by-product revenue due to weak sulphate market conditions and lower iron oxide sales associated with the drop in iron ore prices.
Iluka Resources also cited a recovery in the high-grade titanium dioxide market. The company said it had also successfully restarted its largest synthetic rutile kiln last month. Operations at the company’s Tutunup South mine in Western Australia started again in February. Although ilmenite revenue fell around 50 per cent due to falling commodity prices, the company’s ilmenite assets make up only a small part of its total sales. Iluka’s company wide production fell 24.4 per cent in the March quarter, compared to a year earlier. Zircon production dropped 16 per cent while rutile production fell 39 per cent. Shares of Iluka have fallen significantly on Thursday. ILU has fallen 64c, or 7.66 per cent, at $7.72 per share near the end of trading on Thursday. ILU has fallen over 15 per cent in the last 12 months but has risen almost 30 per cent so far this year.
Author: Imran Valibhoy
Apr 16, 2015
Since Joining the firm in 2006, Imran has worked on a range of M&A and Capital Market transactions in the natural resources, mining as well as projects in the renewable energy sector. Prior to joining Wise-owl, Imran worked at Euroz Securities in Perth, aiding in the advisory and valuation of companies in the mining and industrial sectors in Australia. Imran has a Masters in Banking & Finance from City University's Class Business School in London and a Bacheloor degree in Commerce from UWA.