Mineral sands markets remain soft with little upside expected before 2014. Revenue down significantly.
Production
· Z/R/SR (zircon, rutile and synthetic rutile) production was 142.3Mt, up 12% on the June Q (127.2kt), well below capacity (~280-300kt)
· Higher Z/R/SR is the result of higher Z concentrate out of Jacinth-Ambrosia as guided by the Company in H1
· Total mineral sands production including ilmenite was down 8% Q-on-Q, as much of the West Australian mines remain closed or at reduced output
· All SR kilns (in WA) are still idled
Costs
· ILU does not report quarterly cash costs, however unit costs are expected to be on-par or slightly higher than H1 ($848/t Z/R/SR in H1)
· Total cost of production (not unit costs) is expected to be down with lower production and operational idling costs now largely sunk.
Sales
· Sept Q revenue of $147m, down 39% Q-on-Q
· Year to date revenue is $529m, down 40% on 2012
· AUD/USD decline from 99.2c to 91.6c Q-on-Q aided revenue
Market
· Zircon – after a recovery in H1, Q3 was more subdued (particularly in China), Customer confidence levels remain low
· Zircon – ILU expects a marginal increase in sales in Q4, but not enough to counter the poor Q3 result
· TiO2 – Q3 remained soft as consumer confidence remains low
· TiO2 – Prices are not 20% below the H1 average of ~US$1200/t
· Pigment plant inventories are back to nominal levels following ~6-9 months destocking
· TiO2 – Although ILU is receiving a high level of enquiries and does not expect a price recovery until late 2013/2014
· TiO2 – Q3 is entering into the annual cyclic demand low as US painting season comes to an end
· A recent statement by UK based Kenmare Resources, current and near term {mineral sands} market remain bleak. The reported Q3 zircon prices falling 40%
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