Iluka Resources shares dive on 2024 result, production costs to rise
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More news: Shares in Iluka Resources plunged in early trading on the ASX after the mineral sands miner reported a 22% decline in production for the 2024 calendar year.
Iluka shares fell 7.9% to $4.90 by 10:30am AEDT, extending declines of more than 25% over the last 12 months.
Citi said sales volumes were 12% behind its forecasts, and revenue 17% lower than expected. The realised zircon price was 11% lower than Citi's forecasts, with weaker pricing expected again in the current quarter.
Unit cash costs of production were lower than Iluka guided for the year, reflecting slightly higher finished goods production and cost minimisation initiatives. However, costs of production are expected to rise due to operational readiness costs at its Balranald deposit.
Citi has a 'buy/high risk' rating on the stock with a price target of $6.10.
Iluka Resources reports lower output but tops FY guidance
The news: Mineral sands miner Iluka Resources exceeded its production guidance for the 2024 calendar year, and notched lower-than-expected output costs.
However, production of its core products zircon, rutile and synthetic rutile (Z/R/SR) still fell more than 20% compared to 2023.
The numbers: Iluka reported full-year Z/R/SR production of 496,000 tonnes, beating guidance of 455,000 tonnes. However, this was 22% lower than last year's haul of 639,000 tonnes.
Z/R/SR sales fell 3.8% year on year to 475,000, with the company noting "subdued demand in key markets" during the fourth quarter, as well as seasonal weakness.
Unit cash costs of production of $1,290 per tonne were below guidance.
The context: Iluka said it expects total Z/R/SR production to lower in 2025, from 496,000 tonnes to 495,000 tonnes. It also predicts an uptick in production costs, from $640 million in 2024 to $680 million in 2025, including an additional $25 million in operational readiness costs at its Balranald deposit in New South Wales.
The company noted that the fourth quarter experienced anticipated seasonal weakness with ceramic industry in China scaling back production until the Lunar New Year, producers of fused zirconia face lower demand, and ZOC producers reported stable conditions.
Last month, the federal government agreed to contribute an additional $400 million in financing support for Iluka Resources' Eneabba rare earths refinery in Western Australia, with the project now fully funded.
What they said: "More broadly, stimulus measures in China are likely to have a positive impact on demand [on zirconia], but uncertainty appears to be dominating sentiment at present," Iluka said.
The sources: ASX announcement, Citi research
