The Mineral Resources Ltd (ASX: MIN) share price is being sold off on Wednesday.
In morning trade, the mining and mining services company's shares are down 14% to a 52-week low of $26.30.
This follows the release of the company's half year results after the market close on Tuesday.
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Mineral Resources share price sinks on big loss
- Revenue down 9% to $2,290 million
- Underlying EBITDA down 55% to $302 million
- Underlying loss after tax of $196 million (down 200% from a profit of $196 million).
- Statutory loss after tax of $807 million
- Dividend suspended
What happened during the half?
For the six months ended 31 December, Mineral Resources posted a 9% decline in revenue to $2,290 million. This was driven by growth in Mining Services revenue from Onslow Iron, which was offset by weaker iron ore and lithium prices.
Mineral Resources reported underlying EBITDA of $302 million for the half. This was down 55% on the prior corresponding period. Management blamed this decline on a reduction in commodity prices, which overshadowed record Mining Services earnings. The latter benefited from higher ramp up rates at Onslow Iron.
Its Iron Ore division reported a small loss as operations at the Yilgarn Hub transitioned into care and maintenance (C&M) and the Lithium division was impacted by a weak price environment, resulting in Bald Hill being placed into C&M.
On the bottom line, Mineral Resources posted a statutory net loss after tax of $807 million. This includes $352 million of post-tax impairment charges, primarily related to Bald Hill, and $232 million post-tax translation impact on foreign currency denominated balances.
At the end of the period, Mineral Resources had net debt of $5.1 billion and available liquidity of $1.5 billion.
Management commentary
Mineral Resources' managing director, Chris Ellison, was pleased with the company's operational performance during the half. He said:
Across the first half we made huge progress in ramping up production at Onslow Iron, a project that will transform the quality of our earnings across commodities and mining services. I'm pleased to report all parts of the Onslow Iron pit-to-ship supply chain were operational, with the first three transhippers performing beyond expectations at this stage of the ramp up. Transhippers four and five are due to arrive at the Port of Ashburton in February and April respectively, with each vessel adding seven million tonnes per annum capacity to the project.
One negative, though, was that inclement weather has been impacting its operations just as they ramp up. Ellison adds:
January shipments were operating at an annualised run rate of 18 million tonnes, well on the way to the Onslow Iron's nameplate capacity, before we lost eight days of transhipping to Severe Tropical Cyclone Sean.
The cyclone dropped an extraordinary amount of rain on parts of the Pilbara and the deluge was exacerbated days later by a low-pressure system that dumped more heavy rain inland. These weather events caused significant flooding that damaged parts of the Onslow Iron haul road. We have decided to repair the damage with cement stabilisation and to resurface the haul road with asphalt, which will significantly reduce downtime and maintenance costs. Haulage will continue on the haul road while these works are carried out.
The good news for shareholders is that Ellison expects the company to come out of the storm stronger. The company's leader concludes:
It has been a challenging six-month period for MinRes, but our Company has a history of weathering storms and coming out stronger. It is a credit to the dedication and professionalism of the MinRes team that we remain in a strong position and well placed to deliver improved performance going forward.
