Mineral Resources Ltd (ASX: MIN) shares are having a strong week.
So much so, since this time last week, the mining and mining services company's shares are up over 17% to $51.40.
This means they are now up over 250% from the 52-week low they reached in April.
Can they keep rising? Let's see what analysts at Bell Potter are saying about this high-flying stock.
What is the broker saying?
Bell Potter was pleased with news that Mineral Resources has signed an agreement with South Korean conglomerate POSCO.
It notes that the deal will see Mineral Resources pull in $1.2 billion for a stake in its Western Australia-based lithium assets. It said:
MIN and South Korean group POSCO have entered a binding agreement whereby POSCO will acquire a 30% interest in MIN's Wodgina and Mt Marion lithium operations for cash of US$765m (A$1.2b). The partnership will form a joint venture to hold 50% stakes in the existing Wodgina and Mt Marion JVs (alongside 50% JV partners Ganfeng for Mt Marion and Albemarle for Wodgina).
Under a separate agreement with MIN, POSCO will be entitled to its equity share of product offtake from the two operations. MIN will remain operator and mining services contractor, consistent with existing arrangements. The deal is subject to customary conditions and is expected to complete in 1H CY26.
Bell Potter believes that Mineral Resources has received a very good price for the stake and notes that it will give its balance sheet a significant boost. The broker adds:
The deal strengthens the MIN-POSCO partnership and clears a pathway for further collaboration across the lithium and iron ore businesses. The transaction implies a value for MIN's 50% Wodgina and Mt Marion stakes at $3.9b, a 27% premium to our pre-deal valuation of $3.1b.
MIN will use the proceeds for balance sheet deleveraging; we expect MIN will repay a US$625m notes issue prior to the 1H FY28 maturity date. At 30 September 2025, MIN had net debt of $5.4b; we estimate a pro-forma net debt position of ~$4.2b (assuming deal completion). On our production and commodity price outlook, net leverage will fall to 2.4x in FY27, down from 5.9x in FY25.
Mineral Resources shares tipped to rise
According to the note, the broker has retained its buy rating on Mineral Resources shares with an improved price target of $59.00 (from $57.00).
Based on its current share price, this implies potential upside of 15% for investors over the next 12 months.
Commenting on its recommendation, Bell Potter said:
The MIN-POSCO lithium transaction will accelerate balance sheet deleveraging ahead of higher cash flows from the ramp-up of Onslow iron ore sales. MIN is positioned to benefit from a recovery in lithium markets, holding around 450ktpa (SC6 attributable, pre-POSCO deal completion) of offline spodumene production capacity. MIN's mining services platform delivers a stable earnings stream that is expected to expand with internal and third-party volume growth.
