Bibra Lake-based Mineral Resources Ltd had a double dose of good news today - it expects to more than double its profit in 2007-08 and has signed of a seven-year agreement with Hancock Prospecting Pty Ltd to develop and operate a Pilbara manganese mine.
Bibra Lake-based Mineral Resources Ltd had a double dose of good news today - it expects to more than double its profit in 2007-08 and has signed of a seven-year agreement with Hancock Prospecting Pty Ltd to develop and operate a Pilbara manganese mine.
The mining services company said it expected to achieve a profit after tax of a nominal $47 million for fiscal 2008, up from the previous year's $20.2 million.
"Mineral Resources is well placed to continue to grow its earnings and is targeting to exceed the 2008 export performance in manganese and iron ore tonnages," the company said.
Meanwhile, the company has entered into a mining services agreement with Hancock to develop and operate the Balfour Downs manganese mine.
Under the agreement Mineral Resources will mine, process, transport and ship manganese ore from the project to Port Hedland for export.
Mineral Resources will build, own and operate the facilities and will be entitled to a fee based on an agreed percentage of the net profit of the operation.
Additionally, Hancock also has the option of becoming a major investor of Mineral Resources after being granted 15 million unlisted options, exercisable at $6.05 each, to subscribe for Mineral Resources shares.
Mineral Resources has also invited Hancock to nominate a director for its board.
Below are both announcements by Mineral Resources:
Mining Service Agreement
Mineral Resources Limited (ASX:MIN) and Hancock Balfour Downs Pty Ltd/Gaynor Park Pty Ltd of the
Hancock Prospecting Group have entered into a Mining Services Agreement with an initial 7 year term, and
options for extending the duration of the agreement, to develop and operate the Balfour Downs manganese
operation located in the East Pilbara region of Western Australia between Newman and Woodie Woodie,
and adjacent Hancock's Roy Hill 1 project.
Hancock Balfour Downs Pty Ltd/Gaynor Park Pty Ltd are wholly owned subsidiaries of Hancock
Prospecting Pty Ltd (HPPL) which is the Australian Group holding company for a significant number of
mineral tenements in West Australia in particular and across Australia.
The Agreement provides for Mineral Resources to mine, process, transport and ship manganese ore from
the Hancock Balfour Downs manganese deposits after all necessary approvals have been obtained. The
Balfour Downs tenement has an extremely high prospectivity for high grade ferruginous-manganese
product and exploration results indicate a non JORC ore reserve in excess of 15 million tonnes.
Initially, the project is expected to deliver up to 350,000 tonnes per annum of Balfour Downs Manganese
lump product for export with targeted future growth consistent with the available export capacity at Port
Hedland.
Under the Agreement, Mineral Resources will build, own and operate the facilities and become entitled to a
fee based upon an agreed percentage of the net profit of the operation.
Peter Wade, Executive Chairman of Mineral Resources, said that the development of Balfour Downs is an
opportunity to benefit from the strong market for manganese and Chinese demand for steelmaking
materials.
"The development and operation by Mineral Resources of its Woodie Woodie manganese fines recovery
and processing operation and the acquisition of additional resources at Peak Hill in Western Australia
means that it is well placed to bring Balfour Downs into operation benefiting from its existing resources
and infrastructure and the Company's proven supply chain from mine to port."
"Our successful track record in crushing, processing and recovery of export minerals, evidenced by our
operations at Nammuldi, Woodie Woodie and Peak Hill, will provide Hancock Balfour Downs with a
highly efficient and fast-track entry into the manganese market." Mr Wade said.
"The award of this contract recognizes the ability of our company to work closely and collaboratively with
respected clients to add value to their operations. We are pleased that the Hancock Prospecting Group has
selected MRL as a contractor of choice for this manganese operation and welcome the collaborative
arrangement that utilises the unique abilities of each of our companies".
This agreement is a significant highlight for the contracting and processing operations of Mineral
Resources and provides a substantial, long term operation that adds value for all of the company's
stakeholders.
Grant of Options and Board Representation.
Hancock Prospecting Pty Ltd (HPPL) may also become a major investor in Mineral Resources Limited
having been granted 15 million unlisted options to subscribe for ordinary shares. The options will have an
exercise price of $6.05. The share options issued to HPPL will be issued in three tranches and have a life of
up to three (3) years. The Appendix 3B dated and issued to the ASX on 8 August 2008 provides further
details of the option issue arrangements.
Mineral Resources does not need shareholder approval for the issue of the options as they fall within its
placement capacity under Listing Rule 7.1.
MRL has invited HPPL to nominate a director for appointment to the Board of MRL.
Mr Peter Wade, Executive Chairman and Managing Director of MIN said "We welcome the involvement of
HPPL on the share register and the use of share options provides a solid method of funding future
developments for the company. The investment also adds significant value to existing shareholders from
both HPPL's reputation and the synergies that can flow from development of this relationship between the
two groups."
Profit Guidance for year ended 30 June 2008
Mineral Resources Limited (ASX: MIN) wishes to provide guidance to the market and announce that it's
profit after tax for the year ended 30 June, 2008 will be a nominal $47 million subject to final audit
confirmation.
The after tax forecast of a nominal $47 million is significantly in excess of the 2007 full year profit of $20.2
million and the previous guidance supplied to the market at the 2008 Interim Results reporting period in
February, 2008 of +$40m profit after tax. It also equates to an increase of more than 135% on the previous
year results.
Executive Chairman and Managing Director, Peter Wade, said that this was a very satisfying result that
continued the outstanding year on year growth in profitability that Mineral Resources has experienced over
the past few years, initially as a privately owned group and now as a listed company.
"It is a credit to the strength of the Board and the management team that the increase in profitability has
occurred across all of the group operations and substantial further growth should continue next year", he
said.
Mr Wade has confirmed that the company policy of distributing 50% of the profit after tax as dividends to
the shareholders will continue in line with the most recent distribution payout.
Looking forward, the pipeline of projects for the integrated group is extremely strong and reflects the
continued strength of the minerals, resource and infrastructure sectors within the Australian economy. Each
of the projects undertaken over the past year have confirmed Mineral Resources reputation for safety,
performance and adding value to client operations; this brand and performance recognition is exemplified
by the significant increase in contracts and work on hand.
Mineral Resources is well placed to continue to grow its earnings and is targeting to exceed the 2008 export
performance in manganese and iron ore tonnages.
The audited annual results will be released on 21 August, 2008.
