Iluka confirms Eneabba cost blowout

Iluka Resources has confirmed the cost of its Eneabba rare earths refinery will be near the top end of its guidance range, while also reporting a slide in annual profit.

The mineral sands miner has reported a net profit of $343 million for the year to December 2023, down from $589 million in the prior year.

That was on a 19 per cent fall in revenue to $1.23 billion.

It has declared a final dividend of just 4 cents per share, taking the full-year payout to 7 cents.

That is down from 45 cents.

Managing director Tom O'Leary said the company’s performance was characterised by discipline in the face of persistent inflation, subdued demand and geopolitical volatility.

In response to the soft market, the Perth-based company paused production last October at its SR1 synthetic rutile plant, which it calls its ‘swing’ asset.

Mr O'Leary said SR1 was likely to remain offline in 2024, though the company retains the ability to restart quickly in the event of demand recovery and/or industry supply constraints.

The company’s major growth project is development of a rare earths refinery at Eneabba, north of Perth.

It announced in December that the capital cost had been revised up from its original estimate of $1.2 billion to a range between $1.5 billion and $1.8 billion.

The company said today that front-end engineering and design work undertaken to date had narrowed the range to $1.7 billion to $1.8 billion, with the final FEED study expected by the end of March.

In the meantime, it has been proceeding with bulk earthworks and camp construction.

Iluka is also developing a mineral sands mine at Balranald in NSW and undertaking a definitive feasibility study (DFS) at Wimmera in Victoria.

It has updated Wimmera’s ore resource to reflect increased geological confidence in the WIM100 deposit, while also working to address technical challenges associated with Wimmera’s zircon.

Iluka shares were up 3 per cent today at $7.425.