Iluka approves $275m Cataby mine

Iluka Resources has approved its $275 million Cataby mineral sands project, which is set to provide 250 construction jobs, after securing offtake agreements for 85 per cent of production from the deposit.

Cataby has an 8.5-year initial mine life and is located 150 kilometres north of Perth, with annual production of 200,000 tonnes of synthetic rutile, 50,000t of zircon and 30,000t of rutile.

Iluka estimates that construction of the mine, which is expected to take 18 months, will provide 250 jobs while the operations will sustain 160 jobs in addition to the 160 workers at the company's Capel site.

Iluka is targeting first production in the second quarter of 2019.

Managing director Tom O’Leary said the offtake agreements had been signed for synthetic rutile for a minimum of four years.

“Iluka has worked closely with customers to secure offtake agreements for a significant proportion of the synthetic rutile production associated with the Cataby project,” he said

“Entering into these agreements serves to underpin returns from the project and is consistent with Iluka’s disciplined approach to the allocation of capital and our objective to create and deliver shareholder value.

“The project ensures that our customers will have continuity of synthetic rutile supply; and also delivers significant economic benefits to two separate regions in Western Australia – Dandaragan and Capel.”

Meanwhile, Iluka has also released a statement to the ASX advising that it expects to increase the rehabilitation provision for its closed operations in the US by $US90 million.

The company said the cost of rehabilitating its Virginia operation will largely depend on dealings with the regulators.

“As the nature and extent of any change remains highly uncertain, the provision increase has been calculated on a probabilistic basis across a range of scenarios,” Iluka said.

Shares in Iluka were trading at $9.40, up 0.1 per cent.