Impairment, rehabilitation provisions push Iluka into FY loss

PERTH (miningweekly.com) – Mineral sands miner Iluka has reported a full-year net loss of $224-million, compared with a net profit of $53.5-million in the previous financial year, on the back of a noncash impairment of $140.7-million and an increase in rehabilitation provisions for closed sites of $42.1-million.

“Iluka foreshadowed the main elements of its 2016 financial results,” said MD Tom O’Leary.

“These results reflect the continuation of both subdued market conditions and lower revenues across the three main products, mainly associated with lower zircon prices, and also a number of measures implemented as part of the review of the business.”

“Clearly, the results recorded today are unsatisfactory,” O’Leary said.

Mineral sands revenue for the full year declined by 11.4%, to $726.3-million, with revenue per tonne of zircon, rutile and synthetic rutile sold decreasing by 12.1% to $999/t, compared with the $1 136/t reported in the previous financial year.

Underlying earnings before interest, taxes, depreciation and amortisation also declined by 48.7% during the full year, to $150.5-million, while operating cash flow was down 38.2% to $137.3-million.

O’Leary said on Thursday that following the sustainable business review, Iluka is now focused on key activities, with support costs aligned with these priorities.

For 2017, the company expects higher sales volumes, including additional sales from the recently acquired Sierra Rutile project, as well as further inventory drawdown, and free cash flow generation which is likely to be weighted towards the second half of the year.

Iluka has set aside some $260-million for capital expenditure during the 2017 financial year.

Key activities for Iluka in 2017 will include the progression of the Cataby project, the continued integration of Sierra Rutile and the evaluation of expansion options, as well as progressing the evaluation of the Balranald project.