Citi notes Iluka Resources is constructive regarding the mid-term outlook for zircon, expecting a market deficit because of declining supply. The company also expects an upturn in pigment demand for feedstocks by mid-2020.
Iluka has finalised a deal with the IFC whereby IFC will invest and aggregate US$60m and take a 10% stake in the Sierra Leone assets. This leads to a -1% decrease in the company's annual earnings estimate and a slight downward revision in valuation, Citi calculates. Buy rating and $11 target maintained.
Morgan Stanley considers the potential finalisation of the acquisition of a 10% equity stake in Sierra Rutile by the International Finance Corp is a positive. This would add significant local knowledge to an operation that has suffered from an expected 40-60% increase in capital expenditure and unlawful strike actions.