Mineral Resources Limited (ASX: MIN) received positive coverage in Livewire this afternoon from Auscap Asset Management principal and portfolio manager Tim Carleton.
Carleton told investors that the ASX 200 lithium miner was the best-performing share in its portfolio for the September quarter.
He attributed part of this success to lithium having an "incredibly strong structural demand outlook", adding that demand for the battery-making material was expected to outstrip supply for the foreseeable future.
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Competitive value and a change in strategy
Carleton also believes that Mineral Resources has a competitive valuation, despite the company trading at the top end of its 52-week range. Closing at $76.58 in today's trading session, the Mineral Resources share price has almost doubled over the past year, notching up a 99.5% increase.
Carleton said:
Current lithium prices are very favourable for existing lithium producers, resulting in the whole sector re-rating globally.
MinRes' two JV partners, Albermarle and Ganfeng, are trading at greater multiples of forecast EBITDA than MinRes. A similar multiple for MinRes' lithium business would have the stock trading considerably higher than it is today.
He also noted Mineral Resource's change in strategy for its iron ore business:
MinRes has also started its transition from a low volume, high cost and short mine life iron ore operator to a low cost, high volume, long mine life owner.
The final investment decision (FID) on the 30mtpa Onslow Iron Ore project was made to proceed in August 2022, with first ore targeted by December 2023.
'Transformational progress' across 4 divisions
And unlike some investors who focus exclusively on Mineral Resource's lithium business, Carleton sees value and potential across each business division.
While growth in the company's lithium and iron ore operations "should underpin MinRes' mining services business for many years to come", its other divisions were also significant, he said.
… MinRes has also made a significant gas discovery in the Perth basin, with the potential to supply all of MinRes and its customers' gas needs for many years, at a substantially lower cost than current contract gas prices.
We anticipate many years of transformational progress across each of MinRes' four divisions: Mining Services, Lithium, Iron Ore and Energy.
Mineral Resources share price snapshot
Shares in the company closed 0.42% lower at $76.58 this afternoon after touching a 52-week high of $80.00 in mid-morning trading.
The Mineral Resources share price is up 36.7% year to date. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) is down 8% over the same period.
The company's market capitalisation is around $14.53 billion
