Iluka withdraws FY20 guidance

Mineral sands company Iluka Resources has withdrawn its full year earnings guidance, citing market uncertainty as a result of COVID-19, but says it will proceed with its proposed iron ore royalty demerger.

Perth-based Iluka announced last month it would demerge its royalty over BHP’s Mining Area C operation in the Pilbara into a new ASX-listed entity, called RoyaltyCo.

Iluka plans to complete the spinout through an in-specie distribution of shares, whereby Iluka shareholders will receive one share in RoyaltyCo for each existing Iluka share.

RoyaltyCo will be headquartered in Perth and hold four smaller royalty interests.

Iluka told the market today the demerger would proceed when “practicable to do so”, given the impact of coronavirus-related travel restrictions and social distancing measures on the spinout process.

The company, having foreshadowed the potential impacts of COVID-19 in its interim results, has decided to withdraw its 2020 financial guidance.

Iluka says, however, it has maintained operational continuity across all of its sites and that supply chains remain active.

It says business continuity efforts in Western Australia and South Australia, along with measures to limit the spread of COVID-19, remain focussed on “continuous improvement rather than implementing new measures”.

Iluka's rutile operation at Sierra Leone also continues to run, despite the nation closing its borders.

Iluka said the COVID-19 pandemic was at an earlier stage in Sierra Leone, which has reported fewer than 10 infections.

Company shares closed up 2.4 per cent to trade at $7.29.