Iluka up on $8.6m payout and settlement

Mineral sands miner Iluka has received a boost in its share value today after it reached a settlement with engineering outfit Downer EDI and secured an $8.6 million insurance payout from last year's Varanus Island gas outage.

The settlement with Downer EDI, where Iluka will pay Downer Mining $9 million and the current proceedings in the Victorian Supreme Court will be discontinued with each party bearing its own legal costs, related to the dispute over the construction of the first stage of Iluka's Murray Basin operations, completed in early 2007.

Iluka's business service interruption service claim in relation to the pipeline explosion at Apache Energy's Varanus Island facility on June 3 last year.

The settlement amount is $8.6 million of which $2.5 million was received and recognised as income in 2008.

Downer EDI shares were 17 cents, or 2.14 per cent higher at $8.11 at AEST1443, while Iluka shares were up 35 cents, or 9.62 per cent, to $3.99.

More to come...

Full announcement below:

DOWNER SETTLES ILUKA CLAIM
28 August 2009
Downer EDI Limited (Downer Group) today advised it has reached a settlement with Iluka Resources Limited ("Iluka") in relation to the dispute over the construction of the first stage of Iluka's Murray Basin operations, completed in early 2007. Under the terms of the settlement agreement, Iluka will pay Downer Mining $9 million and the current proceedings in the Victorian Supreme Court will be discontinued with each party bearing its own legal costs.

Downer Group Chief Executive Officer, Geoff Knox said, "the company considers this a satisfactory outcome for shareholders, and we look forward to further developing our strong working relationship with Iluka Resources well into the future".