Mineral Resources has a few different strings to its bow, and like PLS, its quarterly report in April showed no major concerns, which has helped the market regain confidence in the miner despite its large debt pile. As we said in June, if MIN gets lithium right, they are likely to deliver for investors, but if they get it wrong, the balance sheet leverage that made it dangerous in 2024 will come back into focus. The issue here clearly is that the price of lithium is outside of MIN’s control, although it’s looking more compelling after its ~23% pullback.
Onslow Iron (~40%) is currently the asset driving Mineral Resources earnings, followed by mining services (~37%), but lithium (~23%) remains the company’s biggest source of upside leverage. The mining services division provides stability, iron ore delivers the near-term cash flow, while Wodgina and Mt Marion offer exposure to a lithium recovery that could materially reshape group earnings over the next cycle.
We are a fan of MIN but would rather invest in a pure lithium miner as opposed to take on a lithium-iron ore commodity exposure mix – we already hold BHP Group (BHP), which carries a copper-iron ore mix.
- MIN is on track to test major support ~$50, where the risk/reward will look attractive.
MM is neutral towards MIN around $50
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