Mineral Resources’ stock plummets to four-year low after $807 million half-year loss and guidance downgrade

Lithium price carnage and the adverse effect of a strong US dollar on its huge debt pile has dragged Chris Ellison’s Mineral Resources deep into the red. Damage caused to its troubled Onslow Iron haul road by a deluge has also whacked production guidance from its most important mining operation. Shares in MinRes on Wednesday morning plumbed depths not seen since November 2020, shedding more than 12 per cent to $26.77 by 8.30am. It also retreated 5.8 per cent on Tuesday. MinRes, after market close on Tuesday, posted its financial results for the final six months of 2024 — revealing an $807 million net loss. This compared to a $530 million net profit after tax for the same period a year prior. The gargantuan financial deterioration was pinned mostly on a $352m of “post-tax impairment charges” primarily related to the suspension of its Bald Hill lithium mine and a $232m “post-tax translation impact on foreign currency denominated balances”. Bald Hill was mothballed in December amid prolonged weak lithium demand and came just a year after MinRes scooped up the Goldfields mining operation for $260m. The $232m write-down, meanwhile, relates to the $US3.1b of bonds MinRes has issued to investors globally to raise money. The bonds are denominated in US currency, making MinRes exposed to the Australian dollar’s current period of weakness against the greenback. The bonds form part of a swelling debt pile reaching $5.1b that has put MinRes’ balance sheet under considerable strain. Weak lithium prices on top of the costs to build its new $3 billion-plus Onslow Iron project has induced the debt pain. Onslow Iron became cash flow positive in November, according to MinRes, allowing the company to start making a bigger dent in its loan repayments. But “severe weather impacts” that damaged the Onslow haul road has forced the besieged business to undertake a costly endeavour by resurfacing the entire road with asphalt. MinRes also subsequently reduced its targeted iron ore output for the financial year at Onslow from between 10.5 million tonnes and 11.7mt to a new band of 8.8mt and 9.3mt. Stripping out all the impairments still saw MinRes’ bottom line $196m in the red, while revenue was down 9 per cent to $2.3b. MinRes has $720m cash in the bank, losing $188m over the past six months. Despite the company’s financial pressure, remuneration to five undisclosed family members of MinRes’ executive team rose from $390,000 to $491,312. This revelation comes just four months after MinRes chief Chris Ellison started to be raked over the coals for a series of corporate governance failures. One of the issues raised was the work MinRes provides to two marine companies linked to one of Mr Ellison’s daughters. The revenue those two companies received from MinRes for the half-year rose sharply from $336,868 to $893,806. Mr Ellison is set to speak to the media and analysts on Wednesday morning. This will mark the first time he directly answers questions about his various dodgy dealings, which included running a tax evasion scheme and misusing company resources for his own personal benefit, since news of the scandal broke in October.