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Why the Iluka Resources Limited share price is heading higher

Mineral Sands explorer Iluka Resources Limited (ASX: ILU) shares are up today to $10.43 at the time of writing after the release of its full year results on February 27.

Iluka announced a net loss of $172 million for the year to December 2017, but earnings were up with underlying EBITDA increasing 140% on the previous corresponding period to $361 million.

Iluka is involved in the exploration, project development, operation and marketing of mineral sands, with projects in Australia, Sierra Leone and the US.

Although Iluka reported a net loss last year also, the company has reduced its loss by $52 million on the previous corresponding period, with a 40% up-tick in revenue to just over $1 billion a step in the right direction.

US President Donald Trump has recently called on Australia to help with a potential “global rare earths crisis”, which could give companies like Iluka a boost as worldwide demand for scarce minerals such as zircon rises.

Fundamentals look solid for Iluka going forward and if the company can capitalise on any move by Trump to leverage Australian rare earths miners and lessen China’s monopoly on minerals – used for anything from iPhones to missile guidance systems – its movements in the next year will certainly be worth watching.

The Iluka share price has risen steadily over the last 12 months, tracking up from $6.50 at this time last year with shareholders being rewarded for loyalty by a final dividend of 25c per share fully franked and the announcement of a new dividend reinvestment plan.

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Motley Fool contributor Carin Pickworth has no position in any of the 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 Scott Phillips.

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