The Mineral Resources Ltd (ASX: MIN) share price is climbing on Friday morning. This comes after the mining services company provided an update on the Red Iron Ore Joint Venture (RHIOJV) acquisition.
At the time of writing, Mineral Resources shares are up 3.49% to $55.15. In comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.40% to 7,515 points.
Let's take a closer look and see what's driving Minerals Resources shares higher today.
What did Mineral Resources announce?
In today's statement, Mineral Resources advised it has completed the acquisition of RHIOJV, 40% owned by Red Hill Iron Limited (ASX: RHI).
This follows yesterday's Red Hill shareholder vote, which approved the conditional RHIOJV interest acquisition.
Mineral Resources paid Red Hill $200 million in cash without tapping into its debt facilities. It will deliver a further $200 million when the first commercial shipment of iron ore extracted from RHIOJV departs the port.
In addition to the payments, Red Hill Iron will receive a royalty fee of 0.75% of free on board (FOB) revenue.
Mineral Resources expects the latest purchase to enhance its strategy on expanding its resource inventory around the Ashburton Hub. This underpins a long-term and sustainable iron ore export business for the company.
The RHIOJV tenements, located in the West Pilbara region of Western Australia, contain a mineral resource of 820 million tonnes (Mt) with a grade of 56.44% iron ore. It is estimated that the area covers around 1,900 square kilometres along the western margin of the Hamersley Province.
The remaining 60% interest of the RHIOJV is controlled by the Australian Premium Iron Joint Venture (APIJV).
Mineral Resources share price snapshot
Over the past 12 months, Mineral Resources shares have gone strength to strength, rising 80%. In 2021 alone, its shares are travelling 40% higher on the back of surging iron ore and lithium prices.
Mineral Resources presides a market capitalisation of roughly $10 billion on valuation grounds, with approximately 188 million shares outstanding.
