Mining and Heavy Industries

Iluka reports alleged Sierra Rutile bribery

Perth-based mineral sands miner Iluka Resources has confirmed it is co-operating with anti-fraud offices in Sierra Leone and the UK, over alleged bribery which took place at African mining business Sierra Rutile before Iluka acquired it late last year.

Iluka confirmed various aspects of an exclusive report in the AFR on Wednesday morning.

“The media article refers to voluntary reporting undertaken by Iluka following the completion of its post-acquisition review of Sierra Rutile,” the company said on August 16.

“These are confidential matters under investigation by regulatory authorities in Sierra Leone (Anti-Corruption Commission) and the UK (Serious Fraud Office).”

Iluka bought Sierra Rutile, which owned one of the world’s largest rutile mines, for $375 million last December.

According to the AFR report, after being alerted by Iluka, anti-corruption investigators are examining Sierra Rutile’s former chief executive – and now Sierra Leone presidential candidate – John Sisay.

Sisay is alleged to have overseen bribes made out to senior government representatives, to secure mining licences that were later acquired by Iluka when it bought the business. Also implicated in the report is Sierra Leone cabinet minister Diana Konomanyi, who allegedly received $50,000-worth of international flights from Sierra Rutile.

Iluka Resources chairman Greg Martin told investors that some aspects of the pre-acquisition conduct at Sierra Rutile “were inconsistent with Iluka’s Code of Conduct”.

It is unclear what the implications would be for Iluka if the respective investigations into Sierra Rutile’s alleged misconduct firm into legal action.

Martin, and Iluka chief executive Tom O’Leary, reported a 48.8% revenue growth to $535.1 million on Wednesday, which was hampered by impairments and redundancy costs leading to an $81.5 million loss in the first half.

“These results reflect improved market conditions for both zircon and titanium dioxide products,” O’Leary said.

“Iluka’s cash flow generation was a highlight for the half, with operating cash flows up $209 million to $194 million; and free cash flow of $180 million. This enabled a significant reduction in net debt and return to moderate gearing levels of 23% following the acquisition of Sierra Rutile”.

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