Iluka Considers Spinning Off MAC Royalty
October 30 2019 - 5:54PM
Dow Jones News
By David Winning
SYDNEY--Iluka Resources Ltd. (ILU.AU) is revisiting the
possibility of spinning off an iron-ore royalty that has become
more valuable as partner BHP Group Ltd. (BHP.AU) invests more
heavily in Australia's Pilbara region.
Perth-based Iluka said the decision to consider separating the
royalty--known to investors as Mining Area C--followed a
significant increase in the current and future "materiality of
MAC's contribution to Iluka's overall valuation" as BHP progresses
the development of the South Flank iron-ore project in Pilbara.
The review will consider the demerger of MAC, among options that
include possible changes to dividend policies. Capital
requirements, business plans, management structures, and cost and
tax implications will also be examined, Iluka said.
Iluka's royalty, calculated either on each ton of iron ore sold
to customers or produced from the mining area, was secured as part
of the sale of a joint venture interest in the early 1990s.
Iluka is the world's largest producer of zircon, which makes
ceramic products opaque and is used in everything from wash basins
to kitchen tiles. The company is also a major exporter of minerals
such as rutile, used to make pigments in paint.
"Given the substantial scale of the mineral sands business and
the prospective scale of MAC, the time is right to formally review
Iluka's corporate and capital structure with the objective of fully
capitalizing on the respective features of both assets," Chairman
Greg Martin said.
An update on the review's progress is planned alongside Iluka's
annual result in February.
Write to David Winning at david.winning@wsj.com
(END) Dow Jones Newswires
October 30, 2019 17:39 ET (21:39 GMT)
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