Published On: January 26th, 2024
Fig 1. Mineral Resources Share Price Chart
Even when the mining industry saw uncertainty post-pandemic, the long-term potential of mining shares was never in question due to its sustaining global demand, especially in producing electric cars. It also continues to be a significant part of Australia’s economy. Mineral Resources is a partial owner of one of Australia’s largest hard-rock lithium mines and showed a 9% increase in its production volumes quarter on quarter at 72Mt. The Company’s shares saw a surge of nearly 7% at AU$59.39 on Thursday as the firm released its Q2 Exploration and Mining Activities Report (Oct to Dec 2023).
Solid prices in hand with robust operation? – what does the Q2 report say
Fig 2. The Wodgina Mining project
The spodumene concentrate production in Mt Marion has increased by 30% quarter-on-quarter. Against the predicted volume of 71,000 tonnes, the actual output is seen to have gone to 83,000 tonnes. 34% rise in shipments was also seen in the quarter. Similarly, Wodgina is also said to have produced 55,000 tonnes.
Moreover, both these projects are said to work at a much lesser cost in the coming year as the process of stripping at both these sites has been completed.
A similar surge in production was also seen in their Iron Ore production according to their Q2. It is said that shipments increased 23% QoQ, and the average price it was realized was US$119 per dry metric tonne, which is, in reality, a 93% realization of the Platts 62% IODEX.
Another anticipated project on the company’s shelf is the Onslow Iron Project, which is expected to deliver its first shipment in June 2024. The hike in share prices after the report release can be attributed to the fact that operations and construction are on track and within the budget. Apart from mining infrastructures, the project could achieve a fully operational airport and a transshipment wharf in the quarter.
Fig 3. Onslow Iron’s first transhipper
Infusion of funds in the quarter includes the successful restructuring of the MARBL joint venture, which resulted in a net proceeding of US$383 million realized from Albemarle Corporation.
Mineral Resources’ escapades in the energy sector are also shown in a promising light in the report, as the company has started assembling a new drill rig in the Perth Basin named the Mineral Resources Explorer. It is said to be a fully containerized, onshore unit with a capacity of drilling up to 5,000m vertical depth using an automated drill floor. It is expected to be fully operational by the middle of 2024.
Another potential sector in the basin is the Lockyer-5 gas well, which is being developed as a production well. The report further cites that key environmental approvals for the production facility are yet to be submitted and are expected to be done by Feb this year.
The firm could also secure a five-year US$1.1 billion Senior Unsecured Notes Offering at 9.25% in the previous quarter. They have also given out a projection that the 2024 first-half net debt will be between $3.47 billion and $3.61 billion.
Mining being a safety-first sector, Mineral Resources’ safety performance of 0.18 Lost Time Injuries and Total Reportable Injury Frequency Rate of 1.90 gives a secure picture.
A potential partner with 49% interest is also expected to join the Onslow Iron project when the first ore-on-ship happens.
Overall, the recent global upsurge of interest in lithium ores and a better operation record have helped Mineral Resources gain a significant buzz in the investor world.
