Mineral Resources (ASX:MIN)
witnessed a 7% upsurge in the value of its shares yesterday, attributed to a substantial dividend increase that counterbalanced a write-down in the valuation of select iron ore assets. The company reported a write-down that impacted its net profit after tax, while robust earnings from other segments, particularly lithium, contributed to buoyant financial results.
The reported statutory net profit after tax amounted to $244 million, inclusive of post-tax impairment charges totaling $552 million (more than $700 million pre-tax). The impairment charges primarily pertained to assets linked with MinRes' Utah Point Hub and Yilgarn Hub iron ore operations. The company clarified that these write-downs reflect revised valuations considering mineable ore, projected prices, and estimated operational costs.
Coupled with Fortescue Metal Group's $1.16 billion write-down on its Iron Bridge magnetite mine, MinRes' impairment contributed to a combined write-down value surpassing $1.6 billion for the two companies. This dual impairment suggests a cautious outlook for the iron ore sector.
MinRes managed to offset the impact of the impairment through robust performances in its lithium and other divisions. The revenue soared by 40% to $4.8 billion for the fiscal year, while underlying EBITDA surged by 71% to $1.8 billion. However, the weight of the impairment led to a decline of 305%, resulting in a statutory earnings figure of just $244 million.
To appease shareholders amidst these fluctuations, MinRes announced an increased dividend. The fully franked final dividend reached 70 cents per share, bringing the total payment for the year to $1.90, marking a notable 90% increase.
Although MinRes boasted an impressive cash reserve of $1.4 billion by June 30, this marked a 43% decrease compared to the previous year. Conversely, net debt escalated by 166% to $1.9 billion during the same period.
The company's lithium sector stood out, recording record earnings of $1.3 billion on an underlying EBITDA basis. This achievement was driven by the ongoing ramp-up of the Wodgina project (now 50% owned) and initial earnings from lithium battery chemicals.
MinRes's active year included renegotiating its MARBL joint venture agreement with Albemarle, completing the expansion of its Mt Marion plant, and making significant progress with the Onslow Iron project. Additionally, the company accomplished two onshore natural gas discoveries, finalized the acquisition of Norwest Energy NL, secured new contracts, and renewed existing ones in its mining services arm.
MinRes CEO Chris Ellison expressed satisfaction with the company's trajectory: "MinRes continued to execute our high-growth strategy, and I'm proud of what our team achieved on the major development projects that will set up MinRes for decades to come," he remarked in the ASX release.