Iluka Resources is acquiring Sierra Rutile in an all-cash transaction that values Sierra Rutile at approximately £215 million (A$375 million). Iluka will also acquire Sierra Rutile’s debt totaling about US$60 million.
Sierra Rutile produces rutile at operations in Sierra Leone and is listed on the London Stock Exchange. Iluka is a major producer of zircon and has a strong position in rutile. The company is listed on the Australian Stock Exchange and has active mining operations in South Australia and Western Australia, as well as inactive operations in the state of Virginia, United States.
Iluka produced 388,600 mt of zircon, 136,500 mt of rutile, and 164,900 mt of synthetic rutile in 2015. Sierra Rutile produced 126,021 mt of rutile and has the potential to expand production to 240,000 mt/y. Iluka’s acquisition of Sierra Rutile approximately doubles Iluka’s rutile resources.
Iluka undertook due diligence on Sierra Rutile’s operations, including on-site and other due diligence activities and comprehensive risk assessments. Based on this work, the company anticipates that it will be able to implement certain operational improvements to enhance Sierra Rutile’s production and lower unit cash costs.
Iluka Managing Director David Robb said, “The combination provides Iluka with additional, long-life (20 years plus) resources of proven quality, with further potential through resource additions, reserve optimization, and exploration. The combination enhances Iluka’s rutile portfolio position. This enhancement sits alongside Iluka’s existing position as the largest global zircon producer.”
Sierra Rutile is located on low-lying coastal plains in southwest Sierra Leone about 30 km from the Atlantic Ocean and 135 km southeast of Freetown, the nation’s capital. The company operates both dredge mining and land-based dry mining units and processes all mined material through a single mineral separation plant. Product is shipped through a dedicated port facility that is managed by the company.
Sierra Rutile has a total workforce of about 1,500 employees, including about 35 expatriates, and is the largest employer in Sierra Leone.
Iluka is the world’s largest producer of zircon, with an approximate one-third market share, and is the second largest producer of titanium dioxide minerals. The company also has a royalty over iron ore sales revenues from specific tenements in BHP Billiton’s Mining Area C in northwest Western Australia.