MinRes books record $1bn profit on iron ore prices, lithium sale

Chris Ellison’s Mineral Resources has more than doubled its annual dividend, with a tailwind from high iron ore prices.

Chris Ellison’s Mineral Resources will pay a 77c per share final dividend, after booking a record $1bn net profit on the back of strong iron ore prices and the sale of a lithium project.

The 77c final dividend takes MinRes’ total shareholder payout for the financial year to $1 a share, with the company saying its underlying mining and services businesses also performed well through the year despite the challenges posed by the coronavirus.

It more than doubled annual payouts from the prior year’s 13c interim and 31c final dividends.

The statutory result was driven by the company’s exquisitely timed sale of the Wodgina lithium project in the Pilbara to Albemarle — for $US820m in cash and 40 per cent share of an under-construction lithium hydroxide plant in WA — which delivered a $1.3bn boost to MinRes’ bottom line as the floor fell out from the market for the battery making material.

Including the transaction, MinRes booked earnings before interest, tax, depreciation and amortisation of $2bn, and a statutory profit of $1bn.

But even leaving aside the bumper proceeds of the Wodgina sale, MinRes said its underlying business recorded a good year. Excluding the Wodgina sale, MinRes said its underlying EBITDA rose 77 per cent year on year, to $765m, and underlying net profit was $334m, up 63 per cent.

Mr Ellison said it had been an “extraordinary year” for the company.

“Notwithstanding the fact that the impact of COVID-19 dominated much of the past financial year, MinRes has delivered record production and record profitability. We expanded our blue-chip client base for the mining services division and advanced our commodities division’s strategy to develop long-life projects that provide predictable volume and income streams for the mining services division,” he said in a statement.

MinRes’ core businesses booked $2.1bn in revenue for the year, up $613m or 41 per cent for the year.

Its mining services division, which provides services to both MinRes own mines as well as other companies, booked EBITDA of $359m on revenue of $1.3bn.

The company’s own mines delivered record tonnages of iron ore and lithium, with its iron ore division booking EBITDA of $479m after exporting 14.1 million tonnes of iron ore from its mines Pilbara and WA’s Yilgarn region.

And its Mt Marion lithium mine still turned a profit despite tumbling commodity prices, with EBITDA of $16m – down 78 per cent – after a 43 per cent fall in the average price received for its concentrate, to $597 a wet metric tonne.

MinRes finished June with cash and equivalents of $1.5bn, up from $265m the previous year, having generated $595m in net cash from operating activities.

MinRes shares closed Tuesday at $28.83.