Mineral sands producer Iluka Resources Ltd has talked up the expansion prospects of its eastern states projects, after posting a full year net profit of $51.1 million in line with forecasts.
Mineral sands producer Iluka Resources Ltd has talked up the expansion prospects of its eastern states projects, after posting a full year net profit of $51.1 million in line with forecasts.
Perth-based Iluka has approved further capital expenditure of $209 million for the development of Murray Basin Stage 2, which involves mining and concentrating operations in the Ouyen area of Victoria.
Stage 2 builds on the existing Murray Basin operation by accessing the first of several mineral sand deposits in the northern part of the basin, and involves the development of the Kulwin deposit, before progressing to the Woornack, Rownack and Pirro group of deposits.
The development and mining of these deposits is planned for the period 2009 to 2014.
Iluka managing director David Robb said the Stage 2 development remained a financially robust project.
"As the DFS (definitive feasibility study) has progressed, certain factors have moderated the level of operating profit expected in the initial years. Apart from the significant adverse impact of forecast higher exchange rates, these factors include higher capital expenditure compared with the pre-feasibility study estimate of $180 million."
The company has also confirmed its Jacinth-Ambrosia project, in far west South Australia, remains on track with an early board development decision expected in May 2008.
First production remains expected by mid 2010 with full production in 2011.
"Current DFS work suggests a more conservative capital expenditure estimate for project execution of $450 million is appropriate at this stage," Mr Robb said.
Mr Robb said the Jacinth-Ambrosia project represented a major new operation for Iluka and was expected to become a core element of Iluka's cash flow and earnings.
To help fund further growth of its projects, the company has revealed it intends to raise in the region of $350 million through a renounceable pro-rata entitlement offer, the timing and structure of which is yet to be advised.
According to its full year results released today, Iluka's NPAT for 2007 of $51.1 million was almost 60 per cent higher than the $21.0 million posted in 2006.
Higher average A$US$ spot exchange rate of 83.90 cents compared with 75.35 cents for 2006, translated to a $46.1 million adverse impact on Australian sources sales, despite higher prices.
Mineral sands EBITDA for 2007 was $230.6 million (2006: $257.3 million), while group EBIT of $123.7 million (2006: $159.8 million excluding significant items of $87.1 million).
In the context of the current group earnings, cash flows, franking credit position, and capital required to develop its projects, Iluka has decided not to pay a final 2007 dividend.
Iluka shares ended 62 cents, or 14.19 per cent, down to $3.75 each today.
