Mineral Resources Ltd (ASX: MIN) shares are on the sinking on Wednesday.
In morning trade, the mining and mining services company's shares are down 4% to $22.77.
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Why are Mineral Resources shares falling?
Investors have been selling the company's shares today in response to the release of an announcement after the market close on Tuesday.
Ahead of its investor and analyst tour of Onslow Iron, which includes a visit to Ken's Bore and the project's Port of Ashburton operations, the company released an update on the performance of the iron ore business.
According to the release, Onslow Iron volume guidance range has been revised to 7.8 million tonnes to 8.0 million tonnes (Mt) (13.8-14.1Mt, 100% basis), from 8.5Mt to 8.7Mt previously.
Management notes that this reduction in its guidance relates to lower-than-expected availability of contractor road trains for haulage. Availability was "65 vs. 85-100 target" according to the release.
In addition, below forecast daily cycles (actual 2.7 vs. 4.0 target) weighed on its performance and offset a steady ramp of haulage volumes and an as-expected performance of its jumbo road trains.
May update
Mineral Resources advised that for the month of May to date, Onslow Iron has shipped 1.7Mt.
Over the last seven days, an average 74kt/day loaded on to ocean going vessels, with several days during May above 80kt, and 100kt loaded on a single day.
In total, it is expected that 1.9Mt will shipped during May. This compares to 1.3Mt in April and represents the equivalent of an annual run rate of 23Mtpa.
Management believes that this significant month-on-month increase highlights the acceleration of Onslow Iron's ramp up, with the project remaining on schedule to achieve its nameplate capacity of 35Mtpa in the first quarter of FY 2026.
For example, it anticipates shipping circa 2.3Mt-2.6Mt in June, which is the equivalent to 75-87kt per day and a run rate of 28-31Mtpa. The fifth transhipper, MinRes Peak, is currently in commissioning at the Port of Ashburton and the imminent arrival of its tug further increases transhipping capacity.
Should you invest?
The team at Bell Potter is bullish on Mineral Resources and has a buy rating and $29.50 price target on its shares. It recently said:
We maintain our Buy recommendation on valuation grounds. We continue to hold the view that (1) Onslow will be commissioned successfully, (2) associated Iron Ore & Services volumes will enable deleveraging of the balance sheet, (3) MIN has other options to manage its debt, including re-financing, and further asset sell downs, and (4) MIN's deleveraging will co-inside with it addressing its leadership and governance issues.
Our Target Price is most sensitive to iron ore price. Long-term we apply US$95/t (62% CIF) vs the current spot of ~US$99/t. We share the view that iron ore will continue to see support in the US$80/t – US$100/t range.
