The Mineral Resources Ltd (ASX: MIN) share price has rocketed more than 17% this morning after the company announced that its $1.3 billion asset sale has been given regulatory approval. The ASX mining share also gave investors a business update.
In contrast, the S&P/ASX 200 Index (ASX: XJO) is down 0.3% at the time of writing.
Three months ago, Mineral Resources revealed it had entered into a binding agreement to sell a 49% minority stake in its Onslow Iron project's dedicated haul road, which it described as a key component of an "innovative transportation infrastructure solution".
It's a 150km dual-lane road that links the Ken's Bore mine site to the Port of Ashburton. The road will be fully sealed, fenced, and equipped with fibre optic cables to support the operation of autonomous road trains.
Image source: Getty Images
Onslow iron haul road sale approved
The Australian Foreign Investment Review Board (FIRB) has provided unconditional approval for the sale of the 49% stake of the Onslow iron haul road to investment funds managed by Morgan Stanley Infrastructure Partners (MISP) for total expected proceeds of up to $1.3 billion.
All of the transaction conditions have now been satisfied, and the transaction is expected to be completed within 15 business days.
When the deal is done, Mineral Resources will receive an upfront cash consideration of $1.1 billion from MSIP.
The ASX mining share will be entitled to receive the additional deferred cash amount of $200 million once Onslow Iron achieves a run rate of 35 million wet metric tonnes (wmt) for any quarter before 30 June 2026.
Mineral Resources said it would cancel its US$750 million undrawn bridge facility once it received the $1.1 billion upfront cash payment.
Onslow operational and financial progress
The miner revealed Onslow has now shipped more than 1 million tonnes of iron ore since the first ore was put on a ship in May 2024. Mineral Resources confirmed shipments were increasing in line with the ramp-up plan. In July 2024, 134kt of material was exported, which increased to 532kt in August 2024.
The company has guided that 720kt of iron ore to be shipped in September 2024.
Mineral Resources expects the haul road will be completed in October. The project remains on track to reach its expected 35mt per annum run rate from June 2025.
Pleasingly, the company said Onslow will be cash flow positive from October 2024 at the current iron ore prices and while still ramping up. As the production volume rises, cash inflows are expected to increase "significantly", which will help rapidly reduce the debt burden on the balance sheet.
It was noted that cash inflows include mining services and haul road income, neither of which are related to the iron ore price. Mineral Resources said it would receive 80% of its project joint venture partners' share of free cash flows from Onslow iron operations as repayment for the expenditure loan.
Cost savings
The company noted that it has been monitoring the market and balance sheet while also exploring initiatives to reduce capital and operating expenditures across the business.
Approximately $180 million of FY25 capital expenditure savings and $120 million of operational cost savings have been identified, including in the lithium division.
Lithium cost savings will include reducing its operational headcount by transitioning to a two-week on, one-week off roster at Mt Marion and Wodgina. Previously, the roster was two weeks on and two weeks off.
The company said these operational changes had not affected its FY25 lithium production guidance or mining services volumes.
Management comments
Mineral Resources managing director Chris Ellison said:
I am proud of the strategic relationships we have formed with global industry leaders and pleased to welcome Morgan Stanley Infrastructure Partners as a partner in the Onslow Haul Road.
This transaction is a strong endorsement of Onslow Iron's world-class credentials, after the project last month delivered 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.
Mineral Resources share price
Despite today's rise, the Mineral Resources share price is still down around 50% in 2024.
