Mineral Resources (MIN): This morning, diversified miner and mining services company reported their first half of 2023 results which were in line with expectations, though it took the market some time to digest the numbers.

Key Points:

  • Record Profits: Record net profit of $387 million, up from a narrow loss in 1H22; losses in iron ore and minimal lithium revenues impacted the prior period.
  • Around the Grounds: Mining services were steady, with the big move in lithium due to higher prices and improved margins from converting rock into battery chemicals under the tolling agreement with China’s Ganfeng, allowing MIN to capture downstream margins. Iron or swung from a loss to a small profit due to improved prices.
  • Movement in Gas: Over the half, MIN bought out their JV partner in the Lockyer Deep find near Perth, which will simplify and speed up unlocking this large onshore gas field.
  • Dividends: interim dividend $1.20 per share fully franked, up from zero in 2022 and up +20% on Feb 2021.
  • Guidance: On the long analyst call (2 hours), management confirmed guidance given in August. Iron ore production guidance is ~ 7MT (probably the equivalent ore that falls off BHP’s trains in the Pilbara each year), but more importantly, 330 KT of Spodumene at a cash cost of ~$850/t (current price US$5,300/t FOB Australia). We were very pleased with MIN’s cost control, far superior to their competitors and probably reflects MIN’s unusual background as an efficient mining services company.

Atlas Ateria is held in several of the HNW portfolios and 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 trades on an undemanding forward PE of 10x with a 4% fully franked yield that will grow in 2024.

MIN finished flat at $84.91, a good outcome with the stock down -6% mid-morning.