Illuka Resources: First rare earths offtake: Strategically validating, but a negative read for volumes

Research evidence excerpt

Illuka Resources: First rare earths offtake: Strategically validating, but a negative read for volumes

J P M O R G A N Asia Pacific Equity Research

23 June 2026

Iluka Resources Neutral

ILU.AX, ILU AU

First rare earths offtake: Strategically validating, but a Price (23 Jun 26):A$7.25

negative read for volumes ▼Price Target (Dec-26):A$7.10 Prior (Dec-26):A$7.30

Iluka signed its first binding rare earths offtake, a take-or-pay deal with a global

auto OEM for the full magnet basket (NdPr, Dy, Tb), commencing 2028 over four Australia

years. We see this as strategically significant, but negative on balance, because it Metals & Mining

implies downside to our already-conservative volume and revenue expectations AC Jonathon Sharp

through the ramp. Key takeaways: (1) the contract is 1,200t magnet REO (~10% (61 2) 9003-8312

of planned production), implying ~3.0ktpa of planned output, a stockpile-only, jonathon.sharp@jpmorgan.com

ramp-weighted figure sitting below our already-conservative numbers; (2) it is the J.P. Morgan Securities Australia Limited

first commercially set floor (NdPr anchored to the public ~US$110/kg benchmark) Lyndon Fagan

struck independent of government backing, with minimum revenue of US$155m (61-2) 9003-8648

(US$172m at Adamas pricing) and an undisclosed cap; and (3) while the offtake lyndon.fagan@jpmorgan.com

validates demand and pricing support for ex-China magnet REO supply, the J.P. Morgan Securities Australia Limited

disclosed volume provides a hard datapoint on the early stockpile-led ramp and is Branko Skocic

likely to drive Street cuts to FY28E-31E rare earth volumes and revenue. We lower (61-3) 9633-4069

branko.skocic@jpmorgan.com

our ramp assumptions, reduce our Dec-26 PT to A$7.10 and remain Neutral. J.P. Morgan Securities Australia Limited