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Why the Iluka Resources Limited share price just rocketed to 52-week high

The Iluka Resources Limited (ASX: ILU) share price continued its great run this morning, climbing a remarkable 13% to a new 52-week high of $8.32

Today’s gain comes following the release of its latest quarterly update and means the mineral sands producer has seen its shares rise a massive 46% in just the last six months.

For the period ending March 31 Iluka reported a 44.5% increase in mineral sands production compared to the prior corresponding period to 336.9kt.

Impressively due to favourable prices for zircon and rutile and the increased production, the company posted a massive 114% rise in mineral sands revenue to $218.5 million.

This strong financial performance allowed Iluka to reduce its debt substantially during the quarter. Net debt now stands at $403 million, down from $505 million at the end of December.

Is it a buy?

Things certainly do appear to be improving for Iluka and its shareholders. Net debt is lower, market conditions remain favourable, and mineral sands demand is expected to continue to pick up following last year’s destocking.

But with its shares at a 52-week high, I wouldn’t be rushing in to invest just yet. At today’s share price I see limited upside potential for investors unless mineral sands prices continue to rise.

So for now I would suggest investors hold off an investment in Iluka. Investors wanting exposure to the resources sector may be better off taking a look at Galaxy Resources Limited (ASX: GXY) or South32 Ltd (ASX: S32) instead.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.