Mineral Resources Limited (ASX: MIN) (MinRes) has announced its financial results for the half-year ended December 31, 2024, revealing a substantial statutory net profit after tax (NPAT) loss of $807 million, a 252 per cent decrease compared to the $530 million profit in the corresponding period last year.
This downturn is attributed to weaker iron ore and lithium prices, coupled with $352 million in post-tax impairment charges primarily related to the Bald Hill operation, and a $232 million post-tax translation impact on foreign currency-denominated balances.
Despite the overall loss, MinRes reported revenue of $2.290 million, a 9 per cent decrease from $2.515 million in the first half of FY24.
Underlying EBITDA was $302 million, down 55 per cent from $675 million in the prior period.
The company highlighted the significant progress made in ramping up production at its Onslow Iron project, which is expected to transform the quality of its earnings across commodities and mining services.
All parts of the Onslow Iron pit-to-ship supply chain are now operational, with the first three transhippers performing beyond expectations.
However, severe weather events, including Severe Tropical Cyclone Sean, caused flooding and damage to the Onslow Iron haul road, leading to a decision to repair and resurface the road with cement stabilisation and asphalt.
These weather-related disruptions and the haul road upgrade have led to a reduction in Onslow Iron attributable volume guidance for FY25 to 8.8 to 9.3 million tonnes (Mt), down from the initial 10.5 to 11.7 Mt.
The free-on-board (FOB) cost has also been revised to $60 to $70 per tonne, compared to the previous $58 to $68 per tonne.
In response to a sustained tough global market, the Lithium division has focused on reducing costs and improving performance.
The company made the decision to place the Bald Hill orebody into care and maintenance (C&M) to preserve it for when market conditions improve.
On a positive note, the Mining Services division delivered a record underlying EBITDA of $379 million, a 49 per cent increase from $254 million in the prior period.
This included the $29M inaugural Onslow Iron Road Trust EBITDA.
The company also completed the sale of a 49 per cent stake in the Onslow Iron haul road for $1.1 billion and received the first $780 million payment from Hancock Prospecting related to the sale of MinRes’ assets in the Perth Basin and Carnarvon Basin.
Managing Director Chris Ellison acknowledged investors’ focus on the balance sheet, which reflects a period of high construction spend at Onslow Iron.
He noted that capital expenditure peaked in the first half, and Onslow Iron is now generating positive cash flow, which will enable the company to accelerate efforts to deleverage the balance sheet. In light of this, the Board has decided to temporarily halt dividend payments.
Looking ahead, MinRes is focused on completing the Onslow Iron development and ramping up shipping to full capacity.
The company expects the project to generate significant cash flow and deleverage the balance sheet.
MinRes and Hancock have also agreed to exploration joint arrangements in the Perth and Carnarvon basins to derisk and accelerate future natural gas exploration programs.
