Mineral Resources Limited ((AU:MIN)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Mineral Resources Limited’s recent earnings call painted a generally positive picture, highlighting robust performance across several segments, particularly in mining services and lithium production. Despite some challenges, such as safety incidents and seasonal impacts, the overall sentiment was optimistic, with the highlights outweighing the lowlights.
Solid Performance Across All Segments
The company reported delivering volume cost guidance for FY ’25, showcasing positive changes across several fronts. There was a continued focus on execution, which has been pivotal in driving the company’s solid performance across all segments.
Strong Cash Flow from Onslow
Onslow continues to be a significant contributor to the company’s cash flow, maintaining a positive status at both mining services and commodity levels. The site achieved an impressive annualized run rate of 32.4 million tonnes per annum in June, underscoring its importance to the company’s financial health.
Decrease in Net Debt
Mineral Resources Limited successfully reduced its net debt to $5.3 billion for the year. This reduction was aided by a $200 million FX gain on U.S. unsecured bonds and a favorable decrease in the net debt-to-EBITDA ratio, reflecting prudent financial management.
Record Mining Services Performance
The company recorded a remarkable 83 million tonnes in the quarter, marking an increase of 21 million tonnes from the previous quarter. This record performance was largely driven by the ramp-up of operations at Onslow.
Improved Iron Ore Shipments
Iron ore production saw a total attributable output of 8.9 million tonnes, with shipments realizing an average price of USD 79. This improvement highlights the company’s effective strategies in managing its iron ore segment.
Strong Performance in Lithium
The lithium segment also performed strongly, with Wodgina and Marion generating 145,000 tonnes of spodumene and shipping 135,000 tonnes. The company maintained a positive relationship with its joint venture partners, further bolstering this segment’s success.
Safety Incident Increase
The Total Recordable Injury Frequency Rate (TRIFR) increased to 3.84 over a 12-month rolling basis, indicating a rise in recordable injury numbers during the first half of the year. This uptick highlights the need for enhanced safety measures.
Impact of Cyclone Season
Operations were affected by seasonal impacts, particularly between November and March, due to the cyclone season. This seasonality typically impacts production, presenting a recurring challenge for the company.
Higher Operating Costs at Marion
The FOB costs at Marion were reported at $900 per SC6 basis. There is potential for increased costs next year due to targeted higher grades and a focus on recovery, which the company is actively managing.
Challenges in Hedging Iron Ore Prices
The company faced challenges in hedging iron ore prices due to a soft market, with discounts impacting realized prices. This situation underscores the volatility in the iron ore market and the company’s efforts to mitigate risks.
Forward-Looking Guidance
Looking ahead, Mineral Resources Limited provided extensive guidance, meeting its FY ’25 volume cost guidance across all segments. The company ended the fiscal year with over $1.1 billion in liquidity and a net debt of $5.3 billion. For FY ’26, CapEx is expected to be around $1 billion, with significant governance changes underway, including a new chair and two nonexecutive directors. The mining services segment is expected to maintain strong performance, with EBITDA per tonne margin anticipated at the higher end of the guidance range.
In summary, Mineral Resources Limited’s earnings call conveyed a positive outlook, driven by strong performances in mining services and lithium production. While challenges such as safety incidents and seasonal impacts were acknowledged, the company’s strategic focus and financial prudence were evident. Investors can look forward to continued growth, supported by robust cash flow and strategic initiatives.