ILU Dividend Details
Farm-in agreements and third quarter performance: Iluka Resources Limited (ASX: ILU) recently issued a notice for its 51% entitlement to E70/2464 under the Farm-in and Exploration Joint Venture Agreement. Primarily, the company has undertaken very low expenditure under the terms of the Farm-in and Exploration Joint Venture Agreement and issued a corresponding notice to Governor Broome Sands Pty Ltd. Another update has been centered on the Gold farm-in agreement between Doray Minerals Ltd and Iluka with regards to Gold Rights at the West Gawler Project. As per the third quarter highlights, ILU’s production with regards to Zircon/rutile/synthetic rutile (Z/R/SR) improved by 41% to 198 thousand tonnes in September quarter, as compared to 141 thousand tonnes in June 2015 quarter. The group reported a year to date production increase of 21% to 475 thousand tonnes against 393 thousand tonnes in prior corresponding period, driven by high-grade titanium feedstock production and resumption of production from Iluka’s SR 2 kiln. Accordingly, the revenues for products of Z/R/SR rose 26% year on year to $168.9 million in September 2015 quarter driven by better sales volumes, falling Australian dollar and increased proportion of synthetic rutile in the product mix.
Farm in and Joint Exploration Activities (Source: Company Reports)
Drilling Updates: ILU is set to commence drilling for the Phar Lap Project (JV with Monax Mining Ltd) which will entail three diamond drill holes to a depth of ~500 metres for testing three separate gravity anomalies.
Stock Performance: The shares of Iluka have been correcting over 31% (as of November 12, 2015) from the last six months and fell over 17.46% in the last four weeks due to ongoing tough market conditions. Then there were deferred shipments of over 15 thousand tonnes of zircon volumes in fourth quarter while the group tried to optimize logistics costs by combining cargoes. However, Iluka Resources reiterated its production and sales guidance for the full year of 2015 and estimates a higher production as compared to last year, in spite of tough market conditions. ILU is controlling capital expenditure as well as enhancing its cash costs of production to offset the falling prices pressure. Higher volumes coupled with ongoing Australian dollar pressure against the US dollar would continue to be favorable for Iluka. Further, the titanium market seems to show signs of recovery with improved demand in North America and China. Based on the foregoing, we reiterate our “BUY” recommendation in this 3.11% dividend yield stock, at the current price of $5.99.
ILU Daily Chart (Source: Thomson Reuters)
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