Iluka shares surge, U.S. hedge fund takes stake

SYDNEY, Nov 14 (Reuters) - Shares in Australian mineral sands miner Iluka Resources Ltd (ILU.AX: Quote, Profile, Research, Stock Buzz) surged over 10 percent on Wednesday, with a U.S. asset management firm declaring a stake of over 12 percent.

In a notice to the Australian Stock Exchange, Ospraie Management LLC said it held 12.02 percent of Iluka and 10.77 percent of the voting rights. A Web page for Ospraie describes the New York-based company as an asset management firm focused on commodities. An Iluka spokesman said the fund had been on its share register for about 18 months.

Last month Iluka, which mines zircon, ilmenite and rutile, cut its 2007 profit forecast for a second time by as much as 31 percent, hit by a strong Australian dollar and tight shipping markets.

It expects net profit in 2007 to be between A$45-50 million ($40-45 million), down from a previous forecast of A$55-65 million and an earlier one of A$90-A$100 million.

Late in October the company said its chief financial officer David McMahon had resigned, after less than a year in the post.

Iluka shares had fallen to their lowest since May 2004 on Tuesday and stood at A$4.47 at 0443 on Wednesday, up 10.6 percent. They had traded as high as A$7.58 this year.

Citi said in research report dated Nov. 13 that it rated Iluka buy/speculative, based on future royalties the company would receive from allowing other miners to mine land it holds rights to. (Reporting by Jonathan Standing)