Iluka shares plunge despite govt funding deal for Eneabba refinery
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More news: Shares in Iluka Resources tanked in morning trade on the ASX after the mineral sands explorer reached a deal with the federal government to cover a funding gap at its Eneabba rare earths refinery in Western Australia.
Iluka shares were down 7.9% to $5.05 by 11:10am AEDT, having lost nearly 30% over the last 12 months.
Government injects $400m for Iluka's Eneabba refinery
The news: The federal government has agreed to contribute an additional $400 million in financing support for Iluka Resources' Eneabba rare earths refinery in Western Australia.
The numbers: The government will contribute an additional $400 million, on terms consistent with its original $1.25 billion loan for the facility, while Iluka has committed an additional $214 million of cash equity.
Iluka and the government have also agreed to establish a $150 million cost overrun facility, contributed on a 50/50 basis.
In April 2022, Iluka's board approved the development of the $1.2 billion Eneabba rare earths refinery, after agreeing a strategic partnership with the government.
Iluka's contribution included the company's rare earths stockpile and $200 million of cash equity, while the government provided a $1.25 billion non-recourse loan.
Iluka concluded front-end engineering and design in December 2023 and announced an increase in the project's expected capital cost to $1.7 billion to $1.8 billion, resulting in a funding gap.
The context: Iluka said the additional funding remains subject to the miner securing offtake agreements and delivering positive outcomes under the government's Future Made in Australia agenda.
The company is continuing to engage with potential offtake counterparties and is targeting commercially attractive supply agreements, it said.
What they said: "We expect the Eneabba refinery to deliver substantial, sustainable value over several decades — that is why Iluka is investing significant shareholder funds in this opportunity," Iluka's managing director Tom O'Leary said.
"This is a strategic infrastructure asset that puts Iluka and Australia at the forefront of global electrification, the creation of new and resilient critical minerals supply chains, and the establishment of a rare earths industry that is genuinely independent."
The source: ASX announcement
