Ann: Intention to demerge Sierra Rutile, page-4

Certainly all happening in min sands right now. ILU been trying to extricate itself from SR for some time and flagged demerger as one option. If third parties interested in taking up ILU's stake are offering very little value then at least a demerger extricates ILU while avoiding accusations of 'giving it away'. Interested parties can eventually make a TO offer on market at market prices or not....

This determination follows the process Iluka initiated in late 2020, seeking to identify third parties willing to invest in the next phase of Sierra Rutile’s growth. Having progressed these discussions, the Iluka Board has concluded that it is too early to crystallise an appropriate value for the Sembehundevelopment; and that a demerger, which provides shareholders with the option to retain an exposure to Sembehun, is a more appropriate outcome.

It's the capital risk to develop Sembehun is the sticking point imo. Given recent history and ILU's desperation to sell out having already almost given 20% away to world bank for free, third parties are rightfully nervous to both pay-up for the asset then have to double down with more capex to develop the asset. The problem of development capital for Sembuhun will become the new ASX companys. Obviously NewCo will be all fired up to develop Sembuhun, their only growth asset and reason for being.

I reckon it's almost certain now that Sembuehun will be developed, with support form the world bank who now own 20%. NewCo will use any cash ILU leaves them, plus free cash flow generated from existing operations, plus a CR for the difference to achieve development. Dilution and share price to raise funding equity depends on the markets obviously, how big a chunk of cash is required, finance availability and terms (could be generous with world bank) and the market's appetite to be involved. Probability is selling by most ILU holders not interested in NewCo will sell out, being cum-raise development funding buyers will be nervous and shares will be under pressure from the get go.

How much cash will ILU leave NewCo to start, or will they do a IPO funding round? Might not be a cheap exit for ILU, already flagged to chip in US$45M for future rehab obligations, how much working capital etc does NewCo need to stand on it;s own two feet...

Sierra Rutile will be financially well positioned to maximise the value of its asset base; Iluka intends to establish a US$45 million cash funded rehabilitation trust to support Sierra Rutile’s existing rehabilitation obligations.

Ultimately imo, NewCo will probably get so cheap a third party will make a TO offer at the last minute to 'bail out' fearful holders from their predicament. Maybe not and new funds get set very cheaply in the Sembehun CR funding round. Hard to see someone not developing it at any rate given it's importance to Sierra Leonne, especially now the dead hand of ILU will be taken away.

AIMHO, interesting to see how things actually pan out over the next few years.

Good luck