Iluka likely to sign more offtakes, debt fears overblown, Morningstar says
BUZZ-Iluka likely to sign more offtakes, debt fears overblown, Morningstar says **Morningstar downplays debt concerns at Australia's Iluka Resources ILU.AX and expects additional offtake deals
** On Tuesday, critical minerals firm announced confirmation of an A$1.65 billion ($1.14 billion)government loan to fund the Eneabba rare earths refinery in Western Australia
** Alongside, co announced its first offtake agreement to supply magnet rare earth oxides to an unnamed automaker for a four-year period
** ILU shares fell ~11% on Tuesday, before rebounding over 4% the next day
** Morningstar attributes the selloff to the deal covering only 10% of the refinery's production over the contract period, and likely concerns over whether the company will be able to repay the loan and create value
** Morningstar says the global push to create a rare earth supply chain independent of China means Iluka will sign more offtakes as the refinery nears completion and ramps up, likely from mid-2027
** Raises "no-moat" Iluka's fair value estimate by 6% to A$9.50
** Shares up over 30% YTD
($1 = 1.4516 Australian dollars)
(Reporting by Shruti Agarwal in Bengaluru)
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