Mineral Resources (MIN): This morning, the diversified miner and mining services company reported their Q4 2024 earnings update, which was ahead of market expectations in both lithium production and debt reduction. Normally we don’t comment on quarterly production results as they can be misleading, but MIN’s share price (along with the Li sector) has been under pressure as of late and they have two large capex projects underway. The HNW Growth Portfolio holds a 2.5% weight & the HNW Income a 3.5% to MIN.

Key Points:

  • Sales Up: Mineral Resources shipped over 18M tonnes of iron ore for the year, representing a 3% increase from last year as well as shipping 478K tonnes of lithium spodumene representing a +60% increase on last year. Pleasingly MIN did a good job in keeping costs under control.
  • Opening of Onslow Iron Ore Mine: During the quarter, Mineral Resources delivered its first iron ore from its new Onslow iron ore project. During the quarter, the mine delivered 850K tonnes with the plan to ramp production up to nameplate capacity of 35 million tonnes a year by June 2025.
  • Sale of the Haulage Road: During the quarter Min Res sold there 49% of the haulage road between the Onslow iron ore mine and the port in Ashburton for cash proceeds of $1.3 billion to Morgan Stanley.
  • Deleveraging: Min Res is currently at the top of its leverage with $4.4 billion as they fully commission their Onslow iron ore mine, but the debt will quickly fall once there the high-margin mine is at full capacity. Interestingly MIN have pre-sold $600M in iron ore at current prices to a Chinese buyer.  Inclusive of the haulage road MIN have reduced their debt load by $1.9 billion over the quarter. An impressive achievement in the face of sell-side analyst calls in February for a capital raise.
  • Guidance: Mineral Resources did not provide any guidance ahead of their full-year results in August, except that they are targeting 35 million tonnes of iron ore for Onslow next year.

CEP Strategy: MIN is a diversified miner and mining services with four main business segments: mining services, lithium, iron ore and gas. Lithium is the jewel in MIN’s crown, with the company now the world’s 5th largest lithium miner with two operating Tier 1 hard rock mines in Western Australia as well as downstream processing. The company has a unique business model of owning assets and providing mining services to its own and external clients. This gives investors a per-tonne annuity income stream that is not correlated with commodity prices.

MIN finished up +3.5% to $53.67.