Mineral Resources will push back growth plans amid uncertain lithium and iron ore prices, while junior ore hopefuls are reaching out about the miner's Onslow assets.
Mineral Resources will not pay a dividend for the first time in a decade and will push back growth plans as the miner seeks to sandbag its coffers amid weak lithium prices and uncertainty around iron ore.
The Chris Ellison-led miner on Wednesday night revealed a large hit to its bottom line.
Net profit was down 53 per cent to $114 million and debt up 134 per cent to $4.4 billion, despite a 10 per cent revenue boost to $5.3 billion.
That was largely a result of the company’s $3 billion investment in the Onslow iron project, which shipped its first ore in May and falling lithium prices.
The price the company attracted for its lithium dropped 76 per cent to $US1,279 per tonne.
Mr Ellison sought to assure investors the Onslow iron project would be transformational for the company.
“Our hands-on, agile and creative culture made Onslow iron possible and will enable the unlocking of an entire new mining region in the West Pilbara,” he said.
“Onslow iron will generate strong returns through commodity cycles and underpin significant growth in our services and infrastructure earnings.”
MinRes expects cash flow to increase significantly as Onslow iron ramps up to its 35 million tonnes per annum nameplate capacity.
Mr Ellison also revealed junior miners poking around the West Pilbara region had approached MinRes since Onslow opened in their search for port-and-haul options able to unlock stranded assets.
“We have had a few of the smaller junior operators approach us,” Mr Ellison said.
“At this stage … we don’t have any capability other than putting out a single product, we can’t comingle our product with anything else.
“It is not to say down the track we won’t entertain it because at heart we are a mining services company.”
In June, the company announced its Yilgarn iron ore hub would be mothballed by the end of the year.
At between $58 and $68/t free-on-board (roughly $US42), the company’s newly minted Onslow iron project is expected to be about $20/t cheaper to operate this financial year than the Pilbara Hub, and about $50/t cheaper than Yilgarn.
The current iron ore price is $US98/t.
Iron ore exports have increased 3 per cent from last financial year to 18.1mt.
Lithium shipments nearly doubled to 486,000 dry metric tonnes, led by record exports from Wodgina.
The company’s three lithium mines are expected to churn out product at between $800 to $970/t (roughly $US600) this financial year.
Mr Ellison said he hoped to see lithium prices north of $US1,000/t by this time next year.
He also said Western Australia still presented the best opportunities for lithium developments, noting a lengthy seven to nine-year permit timeframe in Canada where the company previously had interests.
A bright spot for MinRes was its mining services division, which achieved record earnings of $550 million.
