Perth-based Iluka confirmed it approached Kenmare over a possible tie-up, which could take place via a takeover offer for the London-listed titanium producer.

“There is no certainty that any transaction will be progressed or, in particular, that an offer will be made, or as to the terms on which an offer may be made if forthcoming,” Iluka said.

“Iluka’s assessment of a potential transaction involving Kenmare is consistent with Iluka’s strategy of assessing various mineral sands opportunities, and exploring transactions where financial merit and strategic rationale may exist.

“A further announcement will be made if and when appropriate.”

Speculation in The Times overnight pushed Kenmare’s shares up 9% overnight.

Its shares have risen 25% since June 19, although they did reach a 52-week low on June 13.

Kenmare has a market capitalisation of £333.8 million ($A602 million), while Iluka has a market cap of $3.48 billion.

Kenmare operates the Moma titanium minerals mine in Mozambique.

Iluka’s mines are in Australia but it has projects in the US and Sri Lanka and, earlier this month, signed a deal with Vale to look into joint developing a titanium deposit in Brazil.

Earlier this week, JP Morgan said Rio Tinto highlighted an end to the destocking cycle in zircon during presentations.

Analysts are forecasting zircon prices of $US1163 per tonne this year and $1350/t next year, against the current price of $1050/t.

Shares in Iluka were 0.8% up to $A8.37.