Mineral Resources remains upbeat about its financial position as market forces and the fallout from founder Chris Ellison’s tax affairs weigh on the business.
A debt-heavy Mineral Resources remains upbeat about its financial position as market forces and the fallout from founder Chris Ellison’s tax affairs weigh on the business.
Mineral Resources on Thursday revealed its debt pile had climbed to $5.1 billion by the end of 2024.
That was up $700m in the December quarter due largely to construction at the Onslow Iron project and a softening exchange rate.
Mineral Resources chief financial officer Mark Wilson said he was confident the company was in a strong position going into the back half of the financial year.
“I would ask the market to consider what that shape of the business looks like now,” he said.
“That’s why I’m comfortable with the net debt number.”
Paying down of debt was aided by the $1.1bn part-sale of the Onslow Iron haul road to Morgan Stanley and offloading its Perth Basin gas projects to Gina Rinehart’s Hancock Prospecting for $1.1bn.
Costs have been slashed via a 1200-odd headcount reduction, roster changes, mothballing of the Bald Hill lithium mine, closing of the Yilgarn iron ore hub, and easing off on construction of the Mount Marion lithium project.
Mr Wilson said the company was still investing in its lithium mines in the expectation the price would not stay depressed at around $US900/tonne for long.
He said there was no interest in mothballing Wodgina or Mount Marion as the larger projects would be difficult to bring back online again.
Guidance for lithium and iron ore exports remains on track, albeit with some hubs at a higher cost than expected.
Another point of interest was the impact of ex-tropical cyclone Sean, which brought record rainfall to Karratha before tracking off the coast of Onslow.
The cyclone disrupted Mineral Resources’ transshipping off Onslow for eight days and damaged parts of the haul road between the port and mine.
Mr Wilson said the damage would have no impact on Mineral Resources’ iron ore exports.
“We have flexibility with our operations – we have a mine access road running parallel to the road, and we have traffic management options we can put in place as well,” he said.
“It is not a bad thing this has happened early on, because it gives us a better understanding of where the water is going to lay and run across.
“We were working off modelling previously, we are now able to analyse the impacts.”
Mr Wilson said the company would consider strengthening the roadsides to reduce maintenance costs.
Mineral Resources mining services chief executive Mike Grey said the floodways worked, damage had been planned for, and flooded areas would help the company focus on priority drainage areas.
“It was a bloody unusual rain event – there was so much water come through the catchment area,” he said.
Mineral Resources also touched on the four road trail rollovers between August and November, one of which happened on the haul road.
Mr Wilson said driver error was a factor in each incident, and training and infrastructure improvements were undertaken as a result.
Mineral Resources shares were down about 1 per cent to $35.84 at noon Thursday.
The company’s shares are down 41 per cent since this time last year.
