MinRes focused on services

Mineral Resources has highlighted its focus on its services business, including the development of innovative bulk transport solutions, after reporting interim results that were dragged down by its iron ore mining operations.

The Applecross-based company has reported a small decline in adjusted, underlying earnings to $132 million for the six months to December 2014, but a big drop in revenue and a bottom-line loss of $30 million.

The after-tax loss reflected one-off adjustments associated with abolition of the Minerals Resource Rent Tax and write-downs in the value of its iron ore and manganese stockpiles.

Despite the bottom-line loss, the company said its balance sheet was strongly cash positive, and the directors declared an interim dividend of 7.5 cents per share.

Revenue was down 22 per cent to $752 million, mainly reflecting the fall in iron ore prices.

The company said its mining operations remained cash positive, though in accounting terms they delivered an operating loss of $6.2 million, before impairments and tax.

Its mining services business performed “strongly”, with underlying earnings up 22 per cent.

Highlights included several contract extensions, completion of the Nammuldi Below Water Table process plant on schedule and within budget, and the installation of additional crushing capacity for clients.

Commenting on future plans, chief executive Chris Ellison said the company’s underlying strength remained as a mining services provider for its external clients, as well as for its internal works.

“(This reflects) the substantive value-add for our clients by utilising our proven services capability to assist them in reducing costs and limiting their capital spend,” he said.

Mr Ellison said the provision of cost-effective operations and highly efficient equipment and infrastructure was a fundamental strength of the company’s past and future.

In support of this strategy, he said the company was well advanced in the development of new initiatives, with the potential to improve mining, processing, haulage and transport operations.

These include the use of carbon fibre in dump truck bodies, and the development of ‘super quad’ road trains and an innovative ‘bulk ore transport system’.

The latter concept involves an elevated skyrail sitting atop concete pylons, likened as halfway between a railway and a conveyor.

It has also signed an MOU with Canadian Shipping Lines to develop transhipping solutions in the WA market.

Transhipping, which involves the use of small vessels to transfer ore to large ships moored at sea, removes the high cost of building wharves and dredging harbours.

Improvements in road haulage, or development of the BOTS concept, would benefits the company’s Pilbara mining operations, which involve trucking of ore to Port Hedland.

It exported 3 million tonnes through Port Hedland in the half-year period, and a further 2.4 million tonnes through Kwinana, with ore transported by rail from the Yilgarn to Kwinana.

The company said it was seeking to negotiate lower charges at the two ports.

MinRes shares were little changed today, closing 3 cents lower at $7.38.