Could Mineral Resources (MIN) demerge moving forward?

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Question asked 01/10/2022

Could Mineral Resources (MIN) demerge moving forward?

Hi James A Fin Review article on Mineral Resources over the weekend made the following statements: - Albemarle boss has been in WA visiting the companies lithium assets; - Min Res's newly appointed lithium boss has just resigned from Min Resources; - Albemarle boss stated (in relation to the potential de-merger) that they are a 'buyer of lithium assets'. Joining the dots, is it plausible that both parties are readying themselves for a Min Resources demerger and subsequent takeout of their lithium company by Albermarle?

Answer

Hi Hylton,

This very topic was in the press last week after MIN’s lithium boss Paul Brown departed the company sparking further rumours of a split of its iron ore and lithium assets, talk has been along the lines of:

JP Morgan are apparently in the mix with a potential spin off also including a US listing.
MIN’s lithium partner $US32bn Albermarle (ALB US) did indeed say they are a buyer of lithium assets and a demerger could work in their favour.
The deal hasn’t been signed off on but it most certainly feels like its on the table.

If Chris Ellison wants to make another fortune, even quicker this time, we feel a MIN demerger executed in the correct manner would be very value accretive to shareholders:

MIN’s lithium business is trading on 3.5x valuation for FY’24 compared to Albemarle closer to 10x and there lieth the upside.

MM believes a demerger is a strong possibility and it could rapidly add 20-30% to the MIN share price.

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Mineral Resrouces (MIN)

LAST UPDATED 29/09/2022 10:43

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