The Motley Fool

Is the Iluka Resources share price a buy after today’s update?

The Iluka Resources Limited (ASX: ILU) share price will be on watch on Monday after the mineral sands producer released a reasonably disappointing first quarter update.

For the three months ended March 31, Iluka reported total mineral sands production of 197.2 kt. This was a 22% decline on the previous quarter and a 29.7% drop on the prior corresponding period.

All sides of Iluka’s operations underperformed during the quarter. Zircon/Rutile/Synthetic Rutile (Z/R/SR) production came in at 154.4 kt, which was down 17.3% on the previous quarter and 14.9% on the first quarter of FY 2018.

Management blamed the decline in Z/R/SR production on the planned SR2 kiln major maintenance outage, which resulted in the kiln being offline for 45 days during the March quarter.

In addition to this, ilmenite production came in at 42.8 kt, which was down 35.1% quarter on quarter and 56.9% on the prior corresponding period.

As a result of the weaker production, sales came in significantly lower than the prior quarter. Total mineral sands revenue for the second quarter was down 21.3% to $250.3 million.

What now?

When Iluka released its full year results in January, it provided its Z/R/SR production guidance for FY 2019. And whilst management did advise that production would be lower this year, its guidance implied a 1.7% decline to 720 kt.

Given that production is down 14.9% so far in FY 2019, it will certainly have to work hard over the next three quarters to achieve its guidance.

Should you invest?

I didn’t see anything in this quarterly update to make me want to buy Iluka shares right now.

In light of this, I intend to stick with fellow mining shares BHP Group Ltd (ASX: BHP) and South32 Ltd (ASX: S32) for the time being.

I think both these miners are well-positioned to continue their positive runs and deliver strong full year results in FY 2019.

But if you don't want to invest in mining shares then check out these exciting growth shares instead. Each as been tipped as a potential market beater this year.

Our Top 3 Blue Chip Shares for 2019 – NOW AVAILABLE!

You’re invited! For a limited time, The Motley Fool Australia is giving away an urgent new investment report detailing our 3 TOP BLUE CHIP SHARES to own in 2019.

So if you like trustworthy, stable, high-performing companies that pay fat fully franked dividends – we’ve got you covered!

Stock #1 is a beloved old Australian company turning its attention to high-margin businesses... and rapidly returning cash to shareholders with its hefty dividend...

While Stock #2 is an online powerhouse that’s rapidly gaining market share all around the globe... poised for years (or even decades) of tremendous growth...

Even better, Stock #3 offers a whopping 6.5% grossed-up dividend! Which beats the rates on term deposits right out of the water – and offers the potential for capital gains, too.

You can discover all three shares inside our new report right now. To scoop up your FREE copy, simply click the link below right now. But you will want to hurry – this free report is available for a LIMITED TIME ONLY!


Motley Fool contributor James Mickleboro 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.

FREE REPORT: Five Cheap and Good Stocks to Buy now…

Our Motley Fool experts have FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.7% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.