Optimising the Long Term Profit base for Consolidated Rutile Limited

Consolidated Rutile Limited (CRL) was one of the best performing mining stocks of the turbulent 1980s, having a very high payout of franked dividends. In contrast to some other mining groups, it was not highly involved in the speculative lead-up to the 1987 sharemarket crash. Its base was firmly laid through a succession of decisions that were taken in the period 1982-1985. These decisions and the rationale behind them are outlined in this paper. CRL began the 1980s in a highly favourable position. It had successfully pioneered the transition to high-throughput mining of the high dunes on North Stradbroke Island (NSI), commissioning its 2100 tph cutter suction dredge at the Bayside reserves in 1978 at the time of rising prices, such that it was able to pay off its modest bank loan within 18 months. The June 1980 results showed a record after-tax profit of $5.6M, from total assets fo $26.5M and sales tonnages of rutile and zircon of around 50,000 tonnes each.