RESULTS FOR ANNOUNCEMENT TO THE MARKET

OVERVIEW OF FIRST HALF RESULTS

Iluka recorded a profit after tax for the half year ended 30 June 2013 of $34.3 million, compared with $274.4  million for the previous corresponding period.

Sales volumes half year on half year were higher, with combined zircon, rutile and synthetic rutile (Z/R/SR) sales  volumes up 4.9 per cent at 287.2 thousand tonnes compared to 273.9 thousand tonnes in 2012. Mineral Sands  revenue for the first half of 2013 was $381.7 million compared with $662.8 million in the previous corresponding  period. The lower first half revenue, notwithstanding higher Z/R/SR sales volumes, mainly reflects lower received  prices period-on-period as demonstrated by the first half revenue per tonne of Z/R/SR of $1,178 per tonne  compared with $2,255 per tonne in the first half of 2012 and $1,655 per tonne in the second half of 2012.

Cash costs of production were $201.9 million in the first half of 2013, a 35.8 per cent decline relative to the first  half of 2012, associated with previously announced operational adjustments, which included plant idling and  reductions in workforce levels. On a unit basis, cash costs of production were $848 per tonne of Z/R/SR, a 19.6  per cent increase compared with the previous corresponding period, reflecting 46.3 per cent lower production of  Z/R/SR and higher production of heavy mineral concentrate (HMC), partially offset by a 35.8 per cent decline in  cash costs of production. Restructure costs incurred in the half amounted to $31.1 million and with operational  adjustments fully implemented, full year restructure costs will be similar. This compares to $50 million of expected  restructure costs disclosed in the 2012 Annual Report.

Inventory of finished product decreased by $20.2 million to $464.4 million due to sales of Z/R/SR exceeding  production by 49.1 thousand tonnes during the half year, offset partially by an increase in ilmenite stocks. WIP  inventory has increased by $61.0 million in light of reduced processing of material through the Mineral Separation  Plants at Narngulu (Western Australia) and Hamilton (Victoria) and maintaining production at Jacinth-Ambrosia  (South Australia) and Woornack Rownack Pirro (WRP, Victoria).

Mineral sands EBITDA for the first half of 2013 was $136.6 million, a 71.6 per cent decrease compared with the  previous corresponding period. Mineral sands EBIT decreased by 89.9 per cent to $37.8 million (2012: $375.2  million).

Mining Area C iron ore royalty earnings (MAC) increased by 9.1 per cent to $45.4 million (2012: $41.6 million),  including capacity payments of $4.0 million (2012: $3.0 million).

Group EBIT was $61.2 million, a decrease of 84.7 per cent compared to $400.0 million in the previous  corresponding period.

Profit before tax was $47.2 million (2012: $388.6 million). A net tax expense of $12.9 million (2012: $114.2  million) was recognised in respect of the profit for the period, at an effective tax rate of 27.3 per cent (2012: 29.4  per cent).

Earnings per share for the period were 8.2 cents compared to 66.1 cents in the previous corresponding period.

The number of shares on issue at 30 June 2013 of 418.7 million was unchanged during the period.

Free cash outflow of $44.5 million is in line with the previous corresponding period (2012: $44.7 million) although  the composition has changed. Operating cash flow has reduced $114.8 million to $92.4 million (2012: $207.2  million), which was been offset by a $91.0 million reduction in capital expenditure and $32.1 million reduction in  taxes paid.

Net debt at 30 June 2013 was $197.0 million, with a corresponding gearing ratio (net debt/net debt + equity) of  11.2 per cent. This compares with net debt at 31 December 2012 of $95.9 million and a gearing ratio of 5.8 per  cent. Undrawn facilities at 30 June 2013 were $588.2 million and cash at bank was $29.6 million. Net debt at 31  July 2013 was $202.3 million.

DIVIDEND

Directors have determined a fully franked interim dividend of 5 cents per share, payable on 2 October 2013 with a  record date of 4 September 2013.

Mineral sands sales volumes

Zircon sales volume for the half year of 210.9 thousand tonnes was a marked increase from the previous  corresponding period sales volume of 87.4 thousand tonnes and was approximately equal to 2012 full year sales  volumes of 213.8 thousand tonnes. First half zircon demand recovered in most markets and trended well in  excess of production, allowing a draw down in finished goods inventory.

Sales of high grade titanium dioxide products in the first half of 2013 were 76.3 thousand tonnes, significantly  lower than the first half of 2012 (186.5 thousand tonnes), which was a period when the company had greater  volumes contracted to customers and was prior to the emergence of demand weakness and inventory  adjustment activities in the pigment industry.

Mineral sands production

Overall production volumes of Z/R/SR were 205.7 thousand tonnes (46.3 per cent) lower than in the previous  corresponding period. Lower production reflected operating adjustments (announced in February) to curtail  output in response to lower demand, to facilitate a progressive draw down of finished goods inventory and reduce  operating costs.

To continue reading this noodl, please get the original version here.

distributed by