01/05/2019 - 10:53

MIN upgrades earnings

01/05/2019 - 10:53

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Mineral Resources has upgraded its earnings guidance for the current financial year on the back of higher iron ore and lithium prices.

MIN upgrades earnings
Mineral Resources is led by Chris Ellison.

Mineral Resources has upgraded its earnings guidance for the current financial year on the back of higher iron ore and lithium prices.

The ASX-listed company said today its underlying earnings, before interest, tax, depreciation and amortisation, was expected to be between $360 million and $390 million for the year to June 2019.

Its previous guidance, provided in November last year, was for EBITDA between $280 million and $320 million.

The major changes since then have been higher commodity prices.

In the iron ore sector, it is now assuming a benchmark price of $US83.89 per tonne, up from its previous assumption of $US68.20.

The company’s iron ore operations include Koolyanobbing, where it is aiming to lift annual production from 6 million tonnes to 8mt.

It also operates the Iron Valley mine in the Pilbara but acknowledged in a presentation today this was marginal because of the low grade and high impurities in the ore.

The company is now assuming a lithium (spodumene) concentrate price of $US682.38 per tonne for the June quarter.

It had previously (in November) assumed a price of $A900 ($US652) per tonne for the second half of FY19.

However, to compicate the analysis, it announced in February that it's Mt Marion operation would achieve an average sales price of $US791/t in the March quarter. 

MIN lifted its stake in Mt Marion to 50 per cent earlier this year, so it will benefit from a higher share of sales.

Looking ahead, it is planning to ramp up production at Mr Marion after completing an upgrade.

The company also has the Wodgina operation in the Pilbara. Construction of the lithium concentrate plant at Wodgina is 80 per cent complete and sales are due to commence this year.

MIN has struck a $US1.15 billion deal with US company Albemarle Corporation to buy a half share of Wodgina.

Construction of a lithium hydroxide plant at Wodgina is due to commence around the end of this year, upon completion of the Albemarle transaction.

MIN also disclosed today that its bulk ore shuttle system (BOSS) had been delayed over the last year due to longer than anticipated finalisation of some mechanical components, and a third-party verification process.

BOSS is a light-weight rail system designed to transport bulk commodities such as iron ore, and if successful would replace trucks.

It has been under development for several years.

MIN’s share price dipped 0.5 per cent to $15.51 in trade this morning.

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