Iluka Resources Limited Provides Earnings Guidance for the Year Ended December 31, 2016; Announces Non-Cash Impairments
The company announced non-cash impairments of $201 million pre-tax ($141 million after-tax) relating to the following assets: idle and surplus equipment in the Murray Basin of $156 million pre-tax, including the Douglas wet concentrator, mining unit and other equipment, as well as the mining unit and wet concentrator utilised for the Woornack, Rownack, Pirro deposits. In the case of this equipment, some was previously considered able to be utilised for a Balranald conventional mine development, which has been passed over in favour of an unconventional mining approach; in the Murray Basin, Iluka is continuing with trialling and evaluating an unconventional, underground mining approach for Balranald following the cessation of work associated with the conventional mine development. As a consequence, $20 million of capitalised costs associated with feasibility work for the conventional method have been impaired; and $25 million related to exploration and evaluation assets previously capitalised, as well as mine reserves in the Perth and Murray Basins have been impaired. This category includes a number of areas where no further work is contemplated. The impairment in the Murray Basin leaves a remaining carrying value for property, plant and equipment of $216 million, of which $144 million relates to the Hamilton mineral separation plant. This plant processes heavy mineral concentrate from Victoria, as well as heavy mineral concentrate from Jacinth-Ambrosia in South Australia. Dependent upon a commercial development decision for the Balranald deposit, the plant will be used to process concentrate from that development.