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Highlights

  • Eneabba Refinery to produce heavy and light rare earth oxides, with commissioning expected by 2027
  • Estimated NPV of Eneabba refinery is AUD 869 million to AUD 3.37 billion with IRRs of 35%-51%.
  • In 1HFY24, mineral sand revenue of ILU fell 14.89% YoY to AUD 606 million

Iluka Resources Ltd (ASX:ILU) is an ASX-listed global mineral sands company that is engaged in the exploration, mining, project development, marketing and processing of zircon and titanium dioxide feedstocks.

Eneabba Rare Earths Refinery project

The company is expanding into the rare earth sector. The Eneabba refinery is anticipated to produce separated heavy and light rare earth oxides, with a capacity of 0.75 ktpa and 5.5 ktpa NdPr. The refinery is expected to be commissioned in 2027 with a multi-decade operational life.

On 6 December 2024, the company notified that it had secured a non-recourse loan of AUD 1.65 million from the Australian Government under attractive terms. Moreover, AUD 214 million in cash equity will be contributed by ILU and nearly 1 million tonnes Eneabba stockpile.

The project promises positive returns as it is expected to deliver NPV of AUD 869 million – AUD 3.37 million, with IRRs of 35% - 51%. By establishing the first integrated rare earth refinery in Australia, the company will assist in reducing reliance on Chinese supply chains, and simultaneously address the international deficits in magnet rare earths. 

Recent financial performance

In the third quarter of the financial year 2024 (3QFY24), production stood at 138kt of zircon/synthetic rutile/rutile, including 43kt of zircon sand, 59kt of synthetic rutile, 27kt of zircon-in-concentrate, with SR2 operating at full capacity.

In the first half of FY24 (1HFY24), the company saw 14.89% YoY drop in mineral sand revenue to AUD 606 million, while NPAT reached AUD 134 million (down 34.31% YoY), backed by AUD 189 million operating cash flow and an AUD 305 million net cash.  

Despite a fall in NPAT, the company declared an interim dividend of 4 cps, up 33.33% over the previous corresponding period.

Share performance of ILU

ILU shares closed 0.58% higher at AUD 5.160 apiece on 11 December 2024. Over the past year, ILU’s share price has dropped by almost 24.45%, and in the past three months, the share price has declined by 8.67%.

52-week high of ILU is AUD 8.31, recoded on 8 May 2024 and 52-week low is AUD 4.66, recorded on 6 December 2024.

Note 1: Past performance is neither an Indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, and currency, is 11 December 2024. The reference data in this report has been partly sourced from EODHD/Others.