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Thoughts on Mineral Resources (MIN)

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Question asked 25/01/2025

Thoughts on Mineral Resources (MIN)

thanks for all your comments, great help for smaller investors in their decision making and makes Saturday reading essential. Regarding Mineral Resources, recent negative publicity surrounding the CEO has caused a substantial price fall in value of company's shares however amounts involved in these comments ,although noteworthy/newsworthy , aren't significant to the overall value of the company it has a diverse list of minerals perhaps only on much smaller scale to the majors BHP and RIO. In addition it is hard to see these negative comments having a significant effect on its basic extensive and well regarded contracting business net assets of the company which had respected analysts tipping share prices of $60 or even more only a few months ago are still the same apart from the very poor way all matters have been handled by the board [including the CEO] , it has not reduced materially the net assets of the company only the way it is regarded by the broader investing community, as such , a brave buyer at today's price should benefit when time diminishes memories of some of past poor actions obviously the appointment of well recognized and respected CEO and chairman and overall strengthening of the board will be welcomed. what are MM views Many thanks Morrie

Answer

Hi Morrie,

Thanks for the positive thoughts and a HNY to you!

MIN has been a thorn in our side through the second-half of 2024 but we believe MIN is extremely good value around $35, although there are a number of headwinds at play:

Iron ore (Fe): MIN are a major producer of the bulk commodity and sentiment is poor towards Fe as it struggles to hold above $US100 due to a lacklustre Chinese economy and looming increase of supply from lower cost producer RIO.
Lithium (Li): MIN are a major producer of the EV battery material which has fallen over 80% in recent times forcing the miner to scale back production. The Trump factor is a fresh headwind for Li.
Debt: MIN’s aggressive growth strategy into weak commodity prices left markets concerned that the miner may need to raise capital, these have eased of late.
The Chris Ellison factor: Questionable business practices by the CEO/Founder weighed on sentiment towards the company/stock.

Fortunately, their mining services operations have been delivering, which is supportive, however, their mining services division is influenced by on other parts of their business performing i.e. the vertically integrated model is great when things are good but creates more company specific risk when they are not.

It’s our view that most/all of the potential bad news is already built into MIN’s price, and like you, if we put the headlines to one side, we see incredible value in their business, but it’s likely to be a volatile ride over the coming months.

We can see the stock trading between $30 and $50 through 2025 hence we remain long to this leveraged commodity play.

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Mineral Resources Ltd (MIN)

LAST UPDATED 24/01/2025 15:37

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