Mineral Resources Ltd (ASX: MIN) shares have hit a new 12-month high after the company struck a $1.2 billion deal with Korean giant POSCO to sell down interests in its lithium mines.
The iron ore and lithium producer said in a statement to the ASX on Wednesday that it would sell a 30% interest in a new joint venture company, which would be formed to hold its interests in the Wodgina and Mt Marion lithium mines in Western Australia. MinRes currently owns a 50% stake in each of those mines.
POSCO will pay MinRes US$765 million (about $1.2 billion) for its share in the new joint venture company, which values MinRes' existing stake in the mines at about $3.9 billion.
MinRes stated that it would continue to operate both mines under existing agreements with the other joint venture partners, which include Albemarle Corporation at Wodgina and Jiangxi Ganfeng Lithium at Mt Marion.
POSCO will also receive spodumene concentrate from the mines as part of the deal, in proportion to its 30% stake in the new joint venture.
Cash to strengthen balance sheet
MinRes said in a statement to the ASX on Wednesday that the deal was in line with its strategy of selling down equity stakes to strengthen its balance sheet.
The company said:
The transaction with POSCO Holdings, an emerging global leader in lithium chemical supply to Korean and Western markets, highlights Minres' track record of recycling capital through strategic partnerships with major global infrastructure and commodity companies to realise value and help fund future growth.
The deal will need to be signed off by Australia's Foreign Investment Review Board. MinRes said it expects the deal to be finalised in the first half of calendar year 2026.
It went on to say:
Once received, MinRes expects to use the proceeds to repay external debt, fortify its balance sheet and position the company for its next phase of growth.
MinRes managing director Chris Ellison said the deal deepens the relationship with POSCO, which was also a joint venture partner at the company's Onslow Iron project.
POSCO Holdings' investment is a testament to the long-term value of Wodgina and Mt Marion, and MinRes' reputation as a mining operator. This transaction will materially strengthen MinRes' balance sheet, giving us the financial flexibility to pursue strategic growth opportunities across our portfolio that leverage our unique development and operational capability, and further enhance shareholder value.
The Australian is also reporting that MinRes has started a sale process for its Bald Hill lithium mine, which has been on care and maintenance since late last year.
MinRes shares traded as high as $52 on the news, a new 12-month high, before pulling back to be 8.9% higher at $51.10. The company's shares have more than tripled from $14.05 over the past year.
MinRes' net debt at the end of the September quarter was $5.4 billion.
