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.
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.
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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.