Mineral Resources (ASX:MIN) share price sinks on activities report

The Mineral Resources Ltd (ASX: MIN) share price is on the slide today after the company released its quarterly activities report.

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Mineral Resources Ltd (ASX: MIN) shares are sliding lower today after the company released its quarterly exploration and mining activities report. At the time of writing, the Mineral Resources share price is trading 4.32% lower at $43.23. The iron and lithium miner included both positive and negative news in its update.

Let’s take a closer look at the company’s quarterly report.

What went well for Mineral Resources this quarter?

The third quarter of the 2020 financial year saw Mineral Resources accomplish a number of achievements.

The miner saw the first iron ore shipments from its Womunna Iron Ore Mine commence during the quarter. 

Mineral Resources also commissioned 3 crushing plants – a NextGen 2 plant at Mount Whaleback, the Womunna plant and another at a third-party site. According to the release, the combined capacity of these plants is 31 million tonnes per annum.

The company was awarded 2 gas exploration titles in March, continuing its strategy to power its mining operations with its own natural gas supply. Thus, replacing diesel fuel with a lower cost and lower emissions alternative.

Mineral Resources will be hoping this places it in good stead to meet its goal of zero emissions by 2050. It’s also continuing plans to install a solar and battery array that could provide 30% of the Womunna mine’s power needs.

The company’s total iron ore production and shipping hasn’t changed since the previous quarter but were 44% and 51% higher respectively than the previous corresponding period.

The quarter saw iron ore prices reach a near-record high of US$144.80 per tonne.

Finally, Mineral Resources’ employee safety continued to be strong. No employees took time off work due to a workplace injury over the last 12 months and the company’s reportable injuries were down 13% compared to last quarter.  

Not all news within the company’s quarterly report was positive

There were 2 notable pieces of not-so-positive news in Mineral Resources’ quarterly exploration and mining activities report.

The first being shipping delays due to a shortage of truck drivers caused by coronavirus-induced border closures.

The company managed to ship just 4.1 million wet metric tonnes (wmt) of iron ore throughout the quarter, around the same amount as the previous quarter.

This is significantly below the guidance set before the pandemic hit Australia. Back then, Mineral Resources expected to ship between 19.5 million and 20.5 million wmt throughout the 2020 financial year (averaging approximately 4.8 million to 5.1 million wmt per quarter).

Mineral Resources states, on an average day, it produces around 10,000 wmt of iron ore that is unable to be shipped.

As no one can predict when sporadic border closures could end, the company’s iron ore shipment guidance for the 2021 financial year has been lowered. It now expects to ship between 17.4 million and 18 million wmt of iron ore throughout the 2021 financial year. This represents a goal of approximately 4.3 million to 4.5 million wmt per quarter.

Finally, Mineral Resources reported that its Mt Marion Lithium Project’s production was 16% lower than the previous quarter. It stated the lower production rate was due to lower-yielding ore being used in production, which is part of the company’s optimised long-term mine plan. Production at the mine is still 22% higher than the previous corresponding quarter.

Mineral Resources said its shipments of spodumene concentrate from the mine are back in line with expectations. The mine remains on track to meet or exceed its shipment guidance for the financial year.

Mineral Resources share price snapshot

The Mineral Resources share price has been performing well on the ASX as of late.

The miner’s share price is up 15.4% year to date. It’s also up by around 155% over the last 12 months.

Mineral Resources has a market capitalisation of around $8.5 billion, with approximately 188 million shares outstanding.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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