Mineral sands hopeful Iluka Resources (ILU, $6.02) rounds off our triumvirate of laggards, although the stock has recovered from its March low of $5.35 on loose takeover talk.
Iluka's woes have included capital cost blowouts and the rehabilitation cost of pulling out of operations in Florida and Georgia. Iluka is also suing its mining contractor Roche for $140 million, but we're unsure whether to catalogue this a threat or opportunity.
Goodness knows what the likes of the Packers, Robert de Crespigny and Ron Walker - members of the Kolsen consortium that snared a 7.5 per cent stake at a cost of up to $7.50 a share - are thinking.
In a positive vibe for the top end of town's wealth profile, Iluka's board yesterday approved a definitive feasibility study to further Iluka's poetic-sounding Jacinth-Ambrosia project in the Eucla Basin.
Developing the zircon-rich ground to a 300,000 tonnes-a-year project will cost about $400million. Iluka also yesterday reported promising results from a nearby prospect.
Ilukas's main game is its Douglas project in Victoria's western district, which achieved commercial production in February. Iluka late last month said it was on target to reach its targeted 110,000 tonnes of zircon and 70,000 tonnes of rutile.
Zircon and rutile are used in a range of industrial applications including ceramics. All of these are in hot demand globally, but one suspects prices will have peaked by the time Iluka gets its act together.
According to Macquarie Equities, zircon's momentum has dissipated already. Add the unfavourably rising Aussie dollar, high gearing and onerous capital commitments and Iluka deserves to stay in the dog-box for longer.
After his appointment in February, new CEO David Robb dubbed Iluka as a "good business that had to some extent lost focus".
While Robb has a recovery plan, Criterion is inclined to SELL. However, the gurus at UBS yesterday outed themselves as a 5.8 per cent holder, so there's faith in the old souffle yet.
