Chris Ellison wheels out pitch for explorers again as Mineral Resources keeps its lithium mines afloat

Shares in Chris Ellison’s Mineral Resources are on a tear after its December quarter result soothed investor anxieties of lithium doom and gloom, while its iron ore and mining services business arms thrust forward. MinRes said its three lithium mines — Wodgina, Mt Marion and Bald Hill — were cash flow positive during the final three months of 2023, despite a tanking price for the battery commodity. The Chris Ellison-led miner finished Thursday’s trade up 7.1 per cent higher at $59.39 a piece. Mr Ellison once again touted the efficiency of the company’s mining services division, as MinRes continues to stick its fingers in a growing number of pies on the exploration side of WA’s lithium landscape. “No one in Australia can build a mine cheaper than us . . . so if you’re a junior (mining company) and have got prospective lithium land we are well and truly open for a joint venture, farm-in or to take a chunk of the company,” he told analysts on Thursday. “Who else would you want on your share register?” This echoed comments the mining billionaire made at the company’s annual general meeting last year. MinRes banked $US738 ($1122) a tonne for its spodumene concentrate at Mt Marion, down from $US1870/t in the September quarter, while production costs for the second half of 2023 were below guidance at $US548/t. It did not disclose sales figures for Wodgina, but said production costs for the half were $845/t and are expected to fall to $550/t by September in line with feed quality improving and the strip ratio declining. The miner was handed the keys to Bald Hill in November and brought on 270 workers, with more detailed results from the operation flagged in February. Mr Ellison said discussions with other lithium industry heavy hitters and key customers led him to believe stocks of the battery ingredient are running down and demand could start to turn in the latter half of 2024. However, he said the company would be cautious and “turn off any capital that doesn’t need to be spent” to weather the lithium price storm. “Those prices are going to continue to decline over the next three to six months.” On the iron ore side of the equation MinRes pumped out 4.8 million wet metric tonnes of the steel making input— 23 per cent more compared to the September quarter. The average realised iron ore price for MinRes during the December quarter was $US119 per dry metric tonne. Mr Ellison said the $3 billion Onslow Iron project is progressing “extremely well” and will be delivered “well within budget”. The company flagged it will introduce a partner to own a 49 per cent interest in the Onslow Iron dedicated haul road by the time it puts first iron ore on a ship in June. Meanwhile, MinRes’ mining services division ramped up production volumes by 9 per cent relative to the prior quarter. RBC Capital Markets analyst Kaan Peker said the December quarter result was “better than expected”. “Another strong operational performance from the lithium assets ... higher than forecast mining services volumes and iron ore sales and pricing,” he said. “Specifically for lithium, the continued improvement in production and sales volumes, and unit-cost performance was a standout.” MinRes said its net debt for the first half of 2024 is expected to reach between $3.47b and $3.6b, below analysts’ consensus of $3.7b.