Mineral Resources’ (MinRes) continued growth through acquisitions and project development has hit the company’s earnings in its latest financial report.
The company posted year-on-year reductions across the board for revenue, net profit, earnings and cash flow, with capital expenditure up by a massive 598 per cent to $494.2 million.
MinRes’ spending in the last year includes upgrades at the Mt Marion lithium plant, the acquisition of Cleveland-Cliffs’ Asia-Pacific tenements (including the Koolyanobbing iron ore project) and BCI Minerals’ Kumina iron ore deposits, as well as continued works at the Wodgina spodumene plant.
In December 2018, MinRes entered into a 50:50 joint venture with Albemarle, which purchased half of the site for $US1.15 billion ($1.6 billion).
The drop in revenue and earnings was also driven by the cessation of direct shipping ore (DSO) sales at Wodgina in favour of extracting higher value spodumene concentrate, the company said.
In addition, the company cited approval delays at Koolyanobbing and lower-than-expected pricing from its Iron Valley project in Western Australia as factors.
The company’s spending is set to continue throughout the year, with projected capex and investment for the full 2019 financial year set at $751 million. This includes a further $69 million spend at Wodgina, $28 million at Mt Marion, $73 million on exploration and development, $27 million on crushing and processing plant developments, and $64 million in intangible expenditure.
The company also announced an interim dividend of 13 cents per share to be paid out on April 17. This dividend was 48 per cent lower than the previous corresponding dividend of 25 cents per share announced in the company’s first-half results for 2018.
“This has undoubtedly been the most significant year in the company’s history,” said Mineral Resources managing director Chris Ellison.
“The financial results for the first half of [the 2019 financial year] reflect our strategic decision to invest in a number of longer term growth projects.
“These projects will assist us to maximise the value of our lithium ore bodies while the infrastructure and innovation initiatives we have been developing over the past three to five years will provide us with additional, industry changing mining services capability.”