The Mineral Resources Limited (ASX: MIN) share price will be on watch today.
This follows the release of an announcement relating to an asset sale this morning.
Why is the Mineral Resources share price on watch?
The Mineral Resources share price will be on watch today after it decided to take profit on a very successful investment.
According to an announcement, the company has decided to exit its shareholding in high-flying lithium miner Pilbara Minerals Ltd (ASX: PLS). The mining and mining services company held a 5.4% stake prior to its sale.
The release explains that Mineral Resources has raised gross pre-tax proceeds of approximately $328 million from the sale. It notes that the sale was executed via a fully underwritten accelerated block trade offered to institutional investors.
This has been a highly successful investment for the company. For example, in just the last 12 months alone, the Pilbara Minerals share price is up 600%.
What now?
Management advised that the company intends to use the cash proceeds from the sale on its capital expenditure program.
When the market opens, the Mineral Resources share price performance will be a good indication of whether investors believe this is a good use of the cash or whether they feel the company should have held onto the Pilbara Minerals stake.
Management believes it is the former. It commented: "MRL is delighted with the share price value delivered by Pilbara Minerals' development of Pilgangoora but believes it is time to redirect this investment into the Company's own growth projects, including in the hard-rock lithium and iron ore sectors."
Mineral Resources became a substantial shareholder in Pilbara Minerals back in October 2016. This was as part of an agreement to relinquish offtake rights and a royalty that the company held over Pilbara Minerals' Pilgangoora project.
The Mineral Resources share price is up 42% since the start of the year.
