Iluka Resources (ILU) H2 2025 earnings summary

Executive summary

• Maintained stable pricing and secured additional zircon sales for Q1, with 41,000 tons of sand and 11,000 tons of zircon concentrate contracted.

• Cost reduction measures, including idling Cataby and SR2 and completing Balranald capital investment, have led to a significant step-down in expected 2026 cash outflows, over AUD 600 million lower than the prior year.

• Balranald mining ramp-up is on track, with first finished mineral sands products expected to enter the market in the second half of the year.

• Eneabba rare earths refinery construction is progressing well, with over 95% engineering complete, over 60% construction complete, and commissioning targeted for 2027.

• Mineral sands revenue declined 13.5% year-over-year to $976 million, with underlying mineral sands EBITDA down 37.2% to $300 million and a margin of 31% for FY 2025.

Financial highlights

• Net debt for the mineral sands business was AUD 420 million as of January and $473 million as of December 2025.

• Receivables expected to normalize in the coming months, with a current tax asset of AUD 52 million to be refunded in H1.

• FX hedging in place for $200 million of 2026 contracted sales, with a $0.63 floor and $0.685 ceiling.

• Inventory drawdown planned for 2026 to support cash generation, with finished goods at 379,000 tons.

• Free cash flow for mineral sands was negative $386 million, with group free cash flow at negative $888 million.

Outlook and guidance

• 2026 cash costs of production forecast at $420 million, down from $590 million in 2025, reflecting idling of Cataby and SR2 and cost base review.

• Capital expenditure for Eneabba remains within the AUD 1.7–1.8 billion range, with over 60% already spent or committed.

• Total cash requirements for mineral sands in 2026 expected to be $665 million, 48% lower than 2025.

• Production guidance for 2026: 130kt zircon sand, 50kt zircon in concentrate, 85kt rutile, and 265kt total Z/R/SR.

• Confident in securing offtake contracts for rare earths in 2026, with a focus on sustainable, commercial returns.