Mineral Resources to test lithium appetite with stake sale
Mineral Resources will test the market’s appetite for lithium as it looks to sell a $700m stake in Mt Marion.
Mineral Resources will test the depth of the market’s appetite for lithium when it looks to sell a $700 million stake in the new Mt Marion lithium mine in Western Australia.
MinRes, which today announced a $24.8 million full year loss after booking a $130.3m impairment, revealed in its accounts that it would look to divest its holdings in the mine.
Mt Marion near Kalgoorlie is expected to ship its first lithium production in October and is described as the largest new hard rock lithium mine in the world.
The price of lithium and the shares of the companies that produce and explore for it have surged over the past year due to the impact of the rapidly expanding electric vehicle market, which relies on lithium-ion batteries.
While MinRes has not put a value on its 43.1 per cent stake in Mt Marion, its junior partner Neometals provides a proxy. Neometals owns a 13.8 per cent stake and has a current market capitalisation of $219.6 million, which would translate into a value of $685.8m value for MinRes’s stake.
MinRes announced a 21c final fully franked dividend, taking total dividends for the year to 29.5c compared to a year earlier.
The company has a unique corporate structure which sees it both mine in its own right, as well as running an extensive mining services business.
Managing director and rich lister Chris Ellison is the company’s major shareholder, with his stake worth around $268m at MinRes’s current share price.
The company’s normalised earnings before interest, taxation, depreciation and amortisation for the 2016 financial year was $286m, up from $283m a year earlier and at the top end of its guidance of $250m to $290m.
MinRes shares were sharply higher in early afternoon trade, rising 7.75 per cent to $10.85.
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