Lithium and iron ore prices push MinRes to half-year loss

MinRes has copped a massive blow to its profit and won’t pay a dividend as lithium, iron ore prices and additional capex hit.

Chris Ellison says brighter times are coming for MinRes after a rough six months. Pic: Getty Images

• MinRes shares dive to more than four-year lows on half-year result

• Iluka maintains 4c final dividend ahead of rare earths refinery development

• Lycopodium smashed as payout cut

Mineral Resources (ASX:MIN) has again dumped its dividend as bloodcurdling lithium prices sent its half-year performance deep into the red, while guidance for its new Onslow Iron project has also been reduced for FY25 due to wet weather in the Pilbara.

Shares tumbled by close to 12% in response, hitting levels not seen since November 2020.

Chris Ellison's beleaguered miner copped a 200% turnaround, sending its interim result from a $196m profit in H1 2024 to a $196m underlying after tax loss in H1 2025.

Statutory NPAT was hit even harder, with an $807m loss comprising a $352m post tax impairment on the mothballed Bald Hill lithium mine and $232m of post tax impact on foreign currency balances.

Lithium prices crumbled last year, chopping the SC6 equivalent price received by MinRes from US$1719/dmt to US$820/dmt, with shipments up 28% to 261,000t.

Iron ore shipments rose 11% to 9.7 million wmt, with Onslow shipping 4.6Mt and hitting an 18Mtpa production rate in the month of January.

But wet weather from the Pilbara's unusually severe cyclone season and a decision to upgrade and fully asphalt the Onslow haul road will see production guidance cut from 10.5-11.7Mt for FY25 to 8.8-9.3Mt, with costs lifted from $58-68/t to $60-70/t and mining services tonnes cut from 295-315Mt to 280-300Mt.

Capex guidance for FY25 has been lifted from $1.945bn to ~$2.1bn.

Prices in iron ore also hit the bottom line, with MinRes seeing weighted average prices drop 25% to US$83/dmt. Underlying EBITDA dropped 55% to $302m.

For its part, MinRes insists it is in a strong liquidity position, with $1.1bn received upfront for its sale of 49% of the Onslow Iron haul road to Morgan Stanley and $780m so far received for its gas project sales to Hancock Prospecting.

It has $1.52bn available to draw on including $720m in cash, but net debt continues to sit at a heady $5.084bn.

Those balance sheet concerns have dovetailed with revelations of corporate governance failings over related party transactions with companies owned by MD, major shareholder and founder Chris Ellison, who has committed to exit over the next 12-18 months.

A new chair to replace James McClements, who also agreed to fall on his sword, is expected to be announced in the June quarter.

"I acknowledge investors’ focus on our balance sheet, which reflects a period of high construction spend at Onslow Iron. Capital expenditure peaked in the first half and Onslow Iron is now generating positive cash flow, which will enable us to accelerate efforts to deleverage the balance sheet. Nonetheless, the Board took the prudent step to temporarily halt dividend payments," Ellison said.

“Record underlying earnings of $379 million in the first half from Mining Services – which had another standout period – was offset by the impact of weakness in iron ore and lithium prices.

“The lithium division responded to a sustained tough global market by further reducing costs and improving performance, with the benefits of these measures coming to the fore late in the half, which coincided with a modest recovery in prices.

“We made the decision to preserve the Bald Hill orebody for when market conditions improve and placed the Yilgarn Hub in care and maintenance. At the same time, our head office workforce was reduced to align with revised operational requirements."

Ellison told analysts at a presentation today there were 'several interested parties' in the company's mothballed Yilgarn iron ore mines, which include the historic Koolyanobbing project MIN took on in 2018 after their closure by Cleveland Cliffs.

Other numbers

Maintaining its payout was Iluka Resources (ASX:ILU), which offered 4c per share fully franked for a total 2024 dividend of 8c after generating a net profit after tax of $231m.

That came off the back of $1.13bn in mineral sands revenue, down 9% YoY, at an EBITDA margin of 42%, 11% lower on the year.

Mineral sands EBITDA fell 18% to $477m, with overall underlying EBITDA down 18% to $499m and operating cash flow 27% lower at $252m.

Free cash flow was heavily negative though, with $288m going out the door, having spent $190m on the Balranald project in New South Wales, which is due for commissioning in the second half of 2025 and $162m on rare earths capex.

The company recently received more support from Canberra for its Eneabba rare earths refinery, due to be completed in 2027, with $1.65bn in loan funding from the Australian government including an additional $400m to cover cost overruns on top of the initial $1.25bn commitment made in early 2022.

Iluka MD Tom O'Leary, meanwhile, said tariffs placed on Chinese imports in Europe would benefit its rutile customers, leading to potentially improved market conditions.

"The sales contracts we have in place for synthetic rutile continued to provide a high degree of revenue certainty, underpinning production from our main synthetic rutile asset, SR2," he said.

"The implementation of tariffs on Chinese imports in Europe and other regions – considered favourable to Iluka’s customers – is expected to impact trade flows from H1 2025.

"Several pigment producers are anticipating improved market conditions in 2025, which would in turn be positive for titanium feedstock demand."

Lycopodium (ASX:LYL) also copper a near 11% hit after the services provider reported a drop in profit after tax from $30m in H1 2024 to $25.2m in H1 2025.

That saw its half-year dividend slide from 37c in H1 FY2024 to 10c for H1 FY2025.

PNG gold miner St Barbara (ASX:SBM) saw its shares lift despite a 76% expansion in loss after tax to $48m.

That came as it reported a 21% increase in group ore reserves ahead of any adjustments for drilling results from its FY25 diamond drilling program.

SBM, formerly the owner of the Gwalia gold mine in Leonora, announced plans to separate its ill-fated Atlantic gold operations under a Canadian listed company.

The operations boast a 1.4Moz reserve and 2Moz resource, but have been tortured by permitting delays.

Originally published as Lithium and iron ore prices push MinRes to half-year loss