Several “very strong candidates” have been identified to replace Mineral Resources’ chair, some of which may be eyed for directorships after a trio tendered their shock resignations.
Several “very strong candidates” have been identified to replace Mineral Resources’ chair, some of which may be eyed for directorships after a trio tendered their shock resignations in a week.
MinRes chief financial officer Mark Wilson told analysts this morning the ongoing search for a new chairman to replace James McClements following the board’s series of governance failures had also identified potential directors to fill the diminished boardroom.
It comes after Jacqueline McGill, Susie Corlett and Denise McComish all walked away from the board within a week, a move that cast further uncertainty over the future leadership of under-fire MinRes.
The new chair is expected to lead the charge on finding a new managing director should Chris Ellison keep his word and step away from the company he founded within the next 12 to 18 months.
The trio’s resignation hollowed the ethics and governance committee created in the fallout from founder Chris Ellison’s tax evasion scandal and governance failures, including his spate of related-party transactions.
Mr Wilson said the chair appointment was expected in the next six weeks after a number of “very strong candidates” were identified for the crucial role.
“[The process has] also identified a number of directors who, whilst they are extremely interested in the opportunity, felt that they wouldn't have the bandwidth to be able to commit to the chair role as it will as it would entail at MinRes over the next 12 to 18 months, for time reasons,” Mr Wilson told analysts.
“What I'm saying is that we actually have identified other names through that process.”
In terms of the hollowed-out ethics and governance committee, Mr Wilson said he expected it to continue to run as the board prepared to discuss its future.
“In my comments I noted that a number of the existing, remaining directors who participated and attended those meetings from time to time,” he said.
“The board's meeting shortly to consider the composition of the various committees. Some of those changes will be interim until the new chair is appointed.”
Capital raise ruled out
Mineral Resources has taken the “extreme and high cost” option of a capital raise off the table with its financial chief pointing to other levers the miner could pull if needed.
Shares in MinRes were trading up 13 per cent after Mr Wilson ruled out a dilutive capital raise and instead outlined other downside scenarios.
Mr Ellison holds a sizeable 11.5 per cent stake in the company he founded, shares in which have been hammered in the fallout of the tax scandal and corporate governance failures, class action lawsuit and three directors resigning in a week.
In ruling out a capital raise, Mr Wilson pointed to alternatives such as its $800 million carry loan for the construction of Onslow Iron, or selling the remaining 51 per cent stake in its private haul road after it pocketed $1.3 billion from the sale of the other half to Morgan Stanley Infrastructure Partners.
“[An] equity raise, as we keep being encouraged to do so by aspects of the market, has a huge cost at today's price, huge impact on shareholders who don't participate,” Mr Wilson told analysts in response to questions on the balance sheet.
“I think of [a capital raise] as an extreme, high-cost alternative.
“At the other extreme, I've got precedent transactions for the road at over $1 billion for half of it that I know I could transact on if I needed to. Again, I'm not saying it's a priority or a preference, but I'm giving an example.
“We've talked previously about opportunity to do something with the carry loan, which is sitting at $800 million. So, there's a lot of capital tied up in those two assets alone.”
Mr Wilson said the iron ore and lithium miner received “inbound queries from time to time on other assets within the portfolio”.
“That's no surprise,” he said.
“We had that with the gas assets over six months ago, and we moved to transact as a result of that level of inquiry.”
During the March quarter, MinRes churned through $300 million of its cash pile, now sitting at $450 million.
Net debt climbed to $5.4 billion, up $300 million compared to the previous quarter, largely due to capital expenditure flowing into Onslow Iron through the JV arrangement.
MinRes told the market it was continuing to cut costs across the business, revealing it had cut about 1,740 jobs across its head office and various mine sites.
The job cuts came in response to depressed market conditions for commodities MinRes mines, lithium and iron ore, with it mothballing the Bald Hill lithium mine as a result.
On the critical mineral, Mr Wilson said “it’s been a while since we've had as good a performance out of lithium as the quarter we’ve just had.”
“I think demonstrated the potential of these assets,” he said on Mt Marion and Wodgina.
“I know we've had some misses along the way.
“In particular with Wodgina, it shows the impact of having access to fresh feed and continual fresh feed.”
The truck roll-over plagued private Onslow Iron haul road weighed on the miner’s iron ore division - for which it has cut its production guidance.
The miner is spending $230 million on fixing the road in the wake ex-Tropical Cyclone Sean, after it officially completed the road late last year.
MinRes said it expected to significantly ramp up haulage and shipments in May and June after it increases the number of trucks running, and can return to full speed.
The miner slashed its Onslow Iron volume guidance to 8.5 to 8.7mt, from 8.8 to 9.3mt previously, with free on board costs expected to come in at the higher end of the range.
Its Pilbara hub guidance remains unchanged.
MinRes produced 6 million wet metric tonnes of iron ore across its Pilbara and Onslow Iron hubs, and notched an average realised price of US$89/dry metric tonne.
In lithium, MinRes produced a 133,000dmt of attributable spodumene over the quarter.
Mt Marion’s volume guidance was bumped up to 185,000 to 200,000dmt, from 150,000 to 170,000dmt previously. Wodinga’s volume guidance is unchanged.
Shares in MinRes closed up 13 per cent to $20.66 apiece.
