MinRes charts different course

STANDING out from the crowd can be a blessing or a curse.

For Perth mining services group Mineral Resources, the experience has definitely been more Bill Gates than Michael Jackson.

The company remains an enigma with few obvious peers.

In fact, there probably hasn’t been a like-for-like comparison since long-departed contracting business Eltin owned half a French gold mine in the late 1990s.

MinRes was floated in 2006, when three decade-old contract crushing, minerals processing and piping-engineering businesses were consolidated under the one roof.

From there it has grown into a specialist builder-owner-operator of complex processing plants for major clients, but which also operates its own mining division with manganese mines at Peak Hill and Woodie Woodie in the Pilbara.

Its unique business model has resulted in its market worth climbing eightfold to more than $800 million since listing, as its share price has rocketed from 90 cents to current levels around $6.60.

Over the same period, turnover has grown from $105 million to almost $260 million a year, a figure likely to nudge $500 million by 2012 as it expands further into the iron ore and manganese sectors.

First cab off the rank next year will be its Poondano iron ore mine near Port Hedland, followed by the commissioning of its Nicholas Downs and Borroloola manganese joint ventures with Hancock Prospecting and Sandfire Resources respectively.

By this time next year, MinRes expects to be shipping 1.5 million tonnes of manganese and between 3mt and 4mt of iron ore in its own right annually.

At that point, its iron ore sales alone are likely to top $300 million a year, putting $500 million in group turnover well within reach, regardless of the outcome of its $140 million recommended bid for aspiring iron ore miner Polaris Metals.

Meanwhile, it also expects to become a major vanadium producer by recapitalising the stalled Windimurra mine, which needs an injection of about $60 million to be completed and commissioned.

According to MinRes managing director Peter Wade, the company’s growth has been evolutionary rather than revolutionary.

“Fundamentally, everything we are doing is still mining services, it’s just that part of those mining services is for us,” he said. “As part of that approach, we try and move up the food chain a little bit so that we not only do the physical work for other people ... but also work for ourselves and get that extra margin.”

To fund its growth plans, MinRes this week raised $52 million from institutional investors at $6.75 a share. The raising was done in conjunction with a major sell-down by its founding directors who owned well over 60 per cent of the stock.

The sell-down of 10.7 million shares was aimed at boosting the free float and qualifying MinRes for membership of Australia’s premier share index, the ASX-200.

Executive director Chris Ellison contributed around 8 million shares, or less than a fifth of his holding.

Mr Wade said with the free float now almost 50 per cent, the company should be eligible for admission to the ASX-200, enabling a greater range of institutions to buy the stock.