Mineral Resources Limited (ASX: MIN) has entered into a binding agreement with Morgan Stanley Infrastructure Partners (MSIP) for the sale of a 49 per cent interest in the Onslow Iron project’s dedicated haul road, securing total expected proceeds of $1.3 billion.
The Onslow Iron haul road, a 150-kilometre dual-lane road linking the Ken’s Bore mine site to the Port of Ashburton, is a key component of MinRes’ innovative transportation infrastructure solution that has unlocked stranded iron ore deposits in the West Pilbara region.
The fully sealed, fenced, and fibre-optic-equipped road will support the operation of MinRes’ autonomous road trains, ensuring seamless mine-to-ship delivery of Onslow Iron products to customers.
Transaction details
- MinRes will retain majority ownership and exclusive rights to use, operate, and maintain the Onslow Iron haul road.
- The transaction vehicle, Road Trust, will receive a life-of-mine CPI-adjusted tolling fee of $8.041 per tonne of iron ore transported, capped at 40 million wet metric tonnes per annum.
- The tolling fee will be reset at a reduced rate after 30 years, with any tolling payments for volumes above 40Mtpa fully owned by MinRes.
- The transaction values the Onslow Iron haul road (100 per cent) at $2.7 billion, representing a 9.4 times pro-forma EBITDA multiple based on the 35Mtpa nameplate capacity.
- The gross proceeds comprise an upfront consideration of $1.1 billion and a deferred consideration of $200 million, subject to achieving a 35Mtpa run rate for any quarter before 30 June 2026.
- MinRes expects total after-tax net cash proceeds of $1.2 billion.
MinRes engaged with MSIP following a competitive process involving leading global infrastructure investors.
Completion is expected in the second half of this calendar year, subject to the finalisation of project conditions and Foreign Investment Review Board approval.
The introduction of a new partner at an attractive cost of capital will enable MinRes to maintain a strong balance sheet to support industry-leading growth, release capital to redeploy toward projects that meet a post-tax ROIC target of more than 20 per cent, and access new pools of capital that optimise capital allocation and returns.
MinRes managing director Chris Ellison said: “This transaction is a strong endorsement of Onslow Iron’s world-class credentials after the project last month delivered the first ore-on-ship ahead of schedule.
“As the first transaction of its kind in the Australian iron ore industry, it showcases the considerable value of MinRes’ portfolio of infrastructure assets and our ability to unlock significant capital.
“The transaction also establishes access to a new pool of capital to further accelerate our growth and continue to deliver returns for our shareholders.”