Iluka Resources survived the global financial crisis on the basis of its mining royalties from BHP Billiton.
The company, the world’s largest zircon producer, has been receiving royalty on the iron ore output of BHP Billiton’s West Australian operations in Mining Area C. These may be worth as much as Australian $1.5 billion based on the valuations of similar companies.
The company has been considering a ‘spin-off’ to gain from the royalties since 2009 but nothing has come of it as yet. The Managing Director of Iluka resources, David Robb said that valuations of the North American gold royalties, when applied to Iluka's royalty over about one-third of BHP's West Australian output, doubled the $700 million the market currently valued the asset at.
The figures were based on an appraisal of similar companies in North America. Franco-Nevada is a Canadian company which is a pure mining royalty company. Iluka Resources is contemplating a similar spin off company that has a life of its own.
However as per Mr Robb the review was still an in house consideration and there was no time frame for such a decision to be made. A potential listing in North America has been on the cards for almost two years now.