• 2000 words covering 11 ASX miners on a hectic FY results reporting day
  • MinRes not keen on lithium M&A as prices scale the sea floor, while IGO beats on dividend
  • Copper, gold, nickel and iron ore miners report

 

Mineral Resources (ASX:MIN) boss Chris Ellison has counted the mining giant out of bottom of the cycle lithium M&A, tightening the screws after a chastening FY24 results drop that saw the company dump is full-year dividend.

That means its only payout last financial year was its 20c half-year dividend, 8.5x below its 190c FY23 payout.

Ellison doesn’t see a lithium price emerging at which the company, which has also recently completed the development of the 35Mtpa Onslow Iron project in the Pilbara and owns assets in mining services and gas, would shut its operations at Wodgina, Mt Marion and Bald Hill.

But he told reporters this morning that the company, which ate a 79% dive in profits largely linked to tumbling prices for the electric vehicle input, would not join its peers in chasing counter-cyclical portfolio growth.

That horn sounded this month with its neighbour Pilbara Minerals (ASX:PLS) announcing the $560 million all scrip acquisition of Brazilian hard rock lithium developer Latin Resources (ASX:LRS).

MinRes famously spent $840m buying stakes in juniors and acquiring the Bald Hill lithium mine from the administrators of its collapsed Singapore-listed parent Alita Resources when prices were on a tear in 2023.

Ellison is far more conservative now, pledging supply discipline and warning current prices below US$1000/t for 6% Li2O spodumene would knock marginal players out of the market.

“It’s highly unlikely that we’d be looking at any acquisitions of any kind over the next 12 months,” Ellison said.

“We’re basically in super conservative mode, and we’re just managing the business

“The current environment is that we’re we’re down on commodity prices, so we’ll be very flat.”

Ellison also said MinRes had abandoned investments in Canada and would focus its lithium business onshore, arguing the permitting environment was too slow, believing there was a 7-9 year runway against 2-3 years in WA.

Spodumene prices showed green shoots overnight, with Fastmarkets reporting a US$45/t lift to US$805/t from a year low of US$760/t after a deal was heard from multiple sources at US$870/t SC6.

MinRes shares fell over 10% in early trade, marking a 43% drop over the past 12 months. Net debt and cash on hand have gone the wrong way amid the lithium price crunch and massive capex bill on Onslow Iron, with net debt of $4.43bn up 134% and cash 34% down to $908m.

For more on MinRes’ intriguing annual results drop, peep below.

READ: “No one is making money in lithium”, says big dog Ellison as MinRes cuts back

Meanwhile, fellow lithium producer IGO (ASX:IGO) lifted by almost 2% after smashing consensus forecasts on dividends, generating underlying net profit after tax of $319m, down 79% YoY on lower lithium and nickel prices.

Impairments on its nickel assets chopped statutory NPAT by 99% to $3m, with a 71% drop in underlying EBITDA also to $581m.

But IGO still offered a 26c a share dividend, with payouts 50% lower for the full year to 37c a pop.

IGO’s earnings were largely powered by its ~25% stake in the Greenbushes mine, the world’s largest and lowest cost hard rock lithium operation.

Despite the choppy market conditions, MD Ivan Vella said on an earnings call IGO would continue to focus on battery metals, telling analysts lithium, nickel and copper remained its key focus despite gold (previously owned by IGO) running hot. The ~40% payout surprised to the upside (85% above consensus), with Jarden’s Jon Bishop saying the end of year divvie was over double the corporate advisor’s 12c estimate and way above consensus of 9c.

“(It was) noisy going into the result on account of very wide variance at key line items in consensus, further
complicated by the flagged and incurred write-downs for the balance of the Western Areas acquisition
and exploration portfolio,” Jarden’s Jon Bishop said.

“Nevertheless, underlying cash flow remained very robust even despite the weakening lithium and nickel prices.

“Whilst the market will now likely await the strategy day flagged for September 12th, 2024, we continue to see deep value in the stock and low capex, low risk means to materially enhance operational performance and therefore margins at Greenbushes.”

 

Copper on the cards

South32 (ASX:S32), Sandfire Resources (ASX:SFR) and Metals Acquisition (ASX:MAC) are all hoping to look past FY24 losses and grow copper production as the mining sector places a premium on the red metal.

Impairments related largely to its alumina operations in WA saw South32 report at US$203 million loss, though underlying earnings also tumbled 59% from US$916m in FY23 to US$380m in FY24.

Underlying EBITDA came in at US$1.8bn, around 29% down on FY24. But South32 has bolstered its balance sheet with the sale to Indonesia’s Golden Energy and Resources and M Resources of its Illawarra met coal mines and CEO Graham Kerr is flagging growing production levels in copper.

Notably the Sierra Gorda mine in Chile will see higher grades next year, lifting output by 15%, with a planned expansion via the addition of a fourth grinding line to increase ore throughput to 58Mtpa to reach FID in H1 FY25. Kerr told media the company would be keen to purchase the majority stake of its 45% held asset from Poland’s KGHM if it became available. An updated resource and reserve has given Sierra Gorda a 16 year mine life.

He said the company is focused on growth in base and new energy metals, having recently approved the development of the Taylor zinc mine in Arizona. Despite reporting a loss, S32 announced a US3.1c a share dividend and the start of a US$200m share buyback.

RBC’s Kaan Peker, who has a $3.80 price target on the former BHP spinoff and outperform rating, said EBITDA, NPAT and the dividend exceeded expectations.

“Moreover, the board has also re-instated the on-market share buy-back by US$200m, which is larger than expected,” he said.

“Forward guidance mixed, FY25 unit cost guidance has come in marginally higher than expected (Worsley, Sierra Gorda and Cannington), so too FY25 capex (~$200m vs RBC) namely on Hermosa capex which appears to be timing. However, production was broadly in-line with consensus.”

Peker said long-dated guidance for FY26 was slightly negative against prior expectations, with GEMCO manganese and Worsley Alumina missing, but RBC expects to see growth in aluminium, copper and manganese in the next two years.

S32 boss Kerr said the company had shifted to become growth focused with the changeout of energy, met coal and manganese earnings for aluminium, copper and zinc.

“We had no growth options (when S32 demerged from BHP),” he said.

“Now… If you look at about the next couple of years, we have the opportunity to increase our copper production by 15% in FY25, another 6% in FY26 and our low carbon aluminum coming out of Brazil and coming out of Mozambique will increase 17% in FY25 and a further 8% in FY26.

“That’s before you actually think about what can happen with the board grinding line and before, what can happen with Taylor coming online, but then if we can bring copper in on the Peake side (a prospect at its Arizona projects near Taylor), which we should have a good sense of within 12 months time.”

Sandfire saw a loss of US$5m after tax, though that beat expectations of deeper hits of $12m from RBC’s Peker and $21m on consensus, with revenue (US$935m), underlying EBITDA (US$362m) and net debt (US$396m) basically in line with forecasts.

Consensus estimates have NPAT recovering to US$180m in FY25 with the Motheo mine in Botswana – where MD Brendan Harris signalled plans to lift mine life to 15 years after a resource upgrade – now fully ramped up.

SFR produced 133,500t on a copper equivalent basis in FY24, a number expected to grow 13% this financial year to as high as 154,000t, including between 97,800t and 109,000t of copper metal. Costs are expected to clock in at US$1.51/lb on a C1 basis at both MATSA in Spain and Motheo.

MAC, which owns the CSA mine in Cobar, NSW, saw losses expand 217% to US$102.17m for the first half but also lifted underlying EBITDA by 5500% to US$90.57m after acquiring the high-grade but long-lived operations from Glencore. The mine delivered 19,650t copper and 236,254oz silver through the first six months of 2024 at an all in cost of US$2.89/lb.

S32, SFR and MAC’s shares closed at -3.0% and -3.9% respectively.

 

Goldies ahoy

A caravan of gold producers on the ticket today as well.

NSW gold and base metals producer Aurelia Metals (ASX:AMI) lifted after trimming losses by 89% to $5.7m in FY24, with underlying NPAT turning around 102% from a $37.7m loss to a slight $600,000 profit.

Higher gold prices, up 18% over the year to $3171/oz, helped. But all in sustaining costs also fell 12% to $2035/oz, with margins expanding by 198% to $1136/oz on an AISC basis.

The closure of the lossmaking Hera mine in March 2023 was a key factor, with underlying EBITDA up 45% to $81m and margins on an underlying earnings basis up from 15.1% to 26.1%.

It comes ahead of first production from the zinc-rich Federation mine this quarter and an FID on the Great Cobar project. Production guidance for FY25 has been set at 40-50,000oz gold, 2500-3500t copper, 14,000-20,000t zinc and 13,000-19,000t lead at group operating costs of $185-220m.

AMI produced 65,300oz of gold, 2200t copper, 18,700t lead and 16,800t zinc in FY24 and finished the year with $116.5m in the bank.

Westgold Resources (ASX:WGX) saw an 852% increase in NPAT to $95m, with free cash up 760% to $86m even after $273m spent on growth capex and exploration.

The company, which recently merged with TSX-listed Karora Resources, declared a 2.25cps dividend, with higher gold prices and the close of hedges upping revenue 9% to $716m despite an 11% fall in output to 227,691oz.

Tax benefits saw Genesis Minerals (ASX:GMD) report a statutory NPAT of $82.8m, with underlying NPAT after the first year of ownership of its Gwalia mine in Leonora clocking in at $27.8m.

EBITDA was $112.9m, with both earnings and profit within previously guided ranges, Raleigh Finlayson’s gold miner said. after productig ~135,000oz in FY24 it wants to eventually ramp up to 325,000oz, with a guidance update expected next month as GMD reviews the possibility of bringing its Laverton hub back to life early. Previous guidance for FY25 was set at 162,000-188,000oz at costs of $2250-2450/oz.

GMD shares fell over 4% in morning trade. Not as rough as Red 5 (ASX:RED), which copped a near 12% hit on its first results release post the merger with Silver Lake.

An underlying profit after tax of $48.5m was eaten into by acquisition costs and stamp duty, reverting to a statutory $5.5m loss. Sales guidance for FY25 has been set of 390,000-430,000oz at $2250-2450/oz.

Alex Barkley, also from RBC, said FY25 guidance missed the investment bank’s estimates, with the Deflector mine’s forecasts a concern and growth capex of $163-165m around $20m above RBC’s forecast.

He said there will now be a heavy focus on Deflector in the September resource and reserve update, though the Red 5-owned King of the Hills, comprising 62% of RBC’s NAV, was roughly in line.

 

Nickel Industries

Up 1.8% this morn was Nickel Industries (ASX:NIC), which already had its fun earlier in the week with the purchase for three new Indonesian nickel licences that could boost its mine life to 40-50 years.

Lower nickel prices and a bevy of capital investments unsurprisingly trimmed half-year profit after tax from US$49.1m to US$14m, though EBITDA remained steady at US$131.7m against US$141.8m in the first half of 2023.

While most WA nickel mines have been closed, NIC has leveraged relationships with China’s stainless steel major Tsingshan to operate or take stakes in low cost nickel pig iron, matte and HPAL assets in Indonesia, now comfortably the world’s largest producer of the battery and stainless metal.

Despite the price dive, NIC produced 63,814t from its RKEF operations and 4117t from its 10% share of an HPAL plant while upping its stake in the Excelsior HPAL plant to 44%. An interim dividend of 2.5c was declared, up from 2c last year.

Oh, and Fenix Resources (ASX:FEX) dumped its dividend, choosing to conserve cash as it targets a ramp up at its Mid-West iron ore business from 1.5Mt to 4Mt and spends $50m expanding its haulage fleet, despite the typically high-yielding junior lifting NPAT 15% to $33.6m and boasting $77.1m of cash at June 30.

It was down over 10% at 2pm AEST.

 

Making gains 🚀

Southern Cross Gold (ASX:SXG) (gold) +5.80%

Catalyst Metals (ASX:CYL) (gold) +3.81%

Ramelius Resources (ASX:RMS) (gold) +3.79%

West African Resources (ASX:WAF) (gold) +1.79%

 

Eating losses 😭

Energy Resources of Australia (ASX:ERA) (uranium) -14.3%

Red 5 (ASX:RED) (gold) -13.1%

Fenix Resources (ASX:FEX)  (iron ore) -11.2%

Wildcat Resources (ASX:WC8) (lithium) -8.2%