Resources and mining company Iluka Resources Ltd (ASX: ILU) opened higher today after their quarterly review to 31 December 2018 was released to investors. Iluka is a mineral sands company focusing on exploration, mining and rehabilitation.
Key Details
The report released today shows increased revenue for Q4 2018 compared to 2017, despite a fall in sales.
Iluka’s main source of revenue comes from minerals zircon, rutile and synthetic rutile, with zircon being the biggest contributor. Q4 2018 production was up for both zircon and synthetic rutile, but full-year results for 2018 show a decrease in rutile production of 46% to 163 thousand tonnes, mostly as a result of operational issues and strikes in Sierra Leone. Over the same period, sales volumes were also down 7% for all three minerals, which Iluka refers to as Z/R/SR sales.
However, Iluka reports that there has been a 41% year-on-year increase in zircon prices based on the weighted average. Rutile also saw a 21% year-on-year increase.
The net effect of these changes in production, sales and price has been an increase in revenue for Q4 2018 to $318.2 million, an increase of over 29% from Q4 2018. Looking at full-year results for 2018, revenue increased from $1,017.5 million to $1,244.1 million.
What Else?
Other good news for Iluka is that synthetic rutile production reached a record high in 2018, providing promising signs for future production. In addition, the Government of Sierra Leone investigated the staff strike action at Iluka mines which was reported to shareholders in October and November 2018.
The Government deemed the industrial strike actions to be illegal and, according to the quarterly review this morning stated that Iluka, “had taken appropriate measures to ensure the safety of its people and assets”.
The report claims the Government has expressed support for Iluka’s operations in Sierra Leone, which could be key to achieving stability over the long-term. This could become very important going forward as, in 2018, about 74% of Iluka’s rutile production occurred in Sierra Leone.
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Disclaimer: At the time of publishing, Max does not have a financial interest in Iluka Resources.
