The Iluka Resources Limited (ASX: ILU) share price is marching higher, up 1.6% in early trade.
Iluka shares closed yesterday at $12.43 and are currently trading for $12.62
Below we look at the latest on the ASX resource explorer's demerger plans.
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What's the status of the demerger?
The Iluka Resources share price is marching higher after the company announced its intention to demerge Sierra Rutile Holdings Limited.
The demerger has been approved by the Board but remains subject to shareholder and other conditions before moving forward.
If these conditions are met, Sierra Rutile will be listed on the ASX as a separate company, focused on mineral sands in West Africa. That includes developing Iluka's Sembehun project and focusing on the remaining deposits at Area 1.
Sierra Rutile will be led by Iluka's outgoing chairman, Greg Martin, alongside other experienced management from Iluka.
Commenting on the demerger, Martin said:
After a comprehensive process, the Iluka Board considers that a demerger represents the optimal pathway for Sierra Rutile to reach its full potential. Sierra Rutile will be well equipped to implement strategies to maximise the value from the remaining producing deposits at Area 1 and to continue to progress the globally significant Sembehun project.
Noting that the demerger would simplify Iluka's structure, Martin said it will enhance the miner's "focus on its core activities and growth opportunities in Australia, particularly at this important juncture in its evolution and diversification into rare earths".
Iluka's managing director, Tom O'Leary added:
A demerger will not only position Sierra Rutile to reach its full potential, but also provides investors the opportunity to choose their desired exposure to each business based on their individual preferences for differing geographic exposures and risk-return profiles.
If the demerger proceeds, all Sierra Rutile shares will be distributed to Iluka Resources shareholders on a pro rata basis. The number of Sierra Rutile shares received will be proportional to their existing shareholding in Iluka on a record date yet to be determined.
Iluka Resources share price snapshot
The Iluka Resources share price has gained 25% over the past month, handily outpacing the 5% gain posted by the S&P/ASX 200 Index (ASX: XJO).
