Mineral Resources Shares Surge Following AU$1.3 Billion Asset Sale

Highlights:

• Significant Asset Sale: Mineral Resources Ltd (ASX: MIN) sold a 49% stake in its Onslow Iron project's haul road to Morgan Stanley Infrastructure Partners for AU$1.3 billion.
• Share Price Surge: The company's shares rose by 4% to AU$72.49 following the announcement, reflecting positive investor response.
• Strategic Partnership and Growth: The transaction highlights Mineral Resources' strategic relationships and secures capital to accelerate future growth and deliver shareholder returns.

Shares Soar After Asset Sale Announcement

Mineral Resources Ltd (ASX: MIN) saw its shares surge by 4% to AU$72.49 on Thursday morning following a major asset sale. This uptick in stock price comes after the company announced it had entered into a binding agreement with Morgan Stanley Infrastructure Partners (MSIP) to sell a 49% stake in the Onslow Iron project's dedicated haul road.

Details of the Sale

The sale is expected to generate AU$1.3 billion in total proceeds. Mineral Resources will retain a 51% interest in the haul road and maintain exclusive rights to use, operate, and maintain the infrastructure, ensuring a seamless mine-to-ship delivery system for Onslow Iron products.

Significance of the Onslow Haul Road

The Onslow Haul Road, a 150-kilometer dual-lane road, is a critical transportation solution developed by Mineral Resources. It connects the Ken's Bore mine site to the Port of Ashburton, enabling access to previously stranded iron ore deposits in Western Australia's West Pilbara region. The road is equipped with modern technology, including fibre optic cabling, to support autonomous road trains.

Transaction Financials and Structure

The transaction includes a life-of-mine CPI-adjusted tolling fee per tonne of iron ore transported through the haul road, set at AU$8.041 on a 100% basis, capped at 40 million wet metric tonnes per annum (Mtpa). This tolling fee will be adjusted after 30 years. Any volumes above 40Mtpa will be fully owned by Mineral Resources.

The haul road is valued at AU$2.7 billion, representing a 9.4 times pro-forma EBITDA multiple based on a 35Mtpa capacity. The gross proceeds will be paid in cash, with AU$1.1 billion upfront and AU$200 million deferred, contingent on achieving a 35Mtpa run rate by June 30, 2026.

Management's Perspective

Chris Ellison, Managing Director of Mineral Resources, expressed pride in the strategic partnerships with global industry leaders and welcomed MSIP as a partner. He highlighted the transaction as an endorsement of Onslow Iron's world-class credentials and the value of Mineral Resources' infrastructure assets. This deal also unlocks new capital, further accelerating growth and delivering returns for shareholders.

Conclusion

This landmark transaction, the first of its kind in the Australian iron ore industry, underscores the significant value of Mineral Resources' infrastructure portfolio and demonstrates the company's ability to secure substantial capital for future growth.

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