Mineral Resources' management among the best in the business
Mineral Resources (ASX:MIN) again surprised the market on the upside reporting FY16 EBITDA of $286.1m, at the top end of the recent guidance range. It was a high quality result characterised by strong cash conversion and the company now has net cash of $188m and several meaningful growth options. Management provided earnings guidance of $360-$400m EBITDA, implying EBITDA growth of circa 33% at the mid-point, well above consensus which forecast a 13% decline into FY17 prior to the result.
Although earnings are still sensitive to the iron ore price, the company’s cash cost has continued to decline (A$54.60/wmt in H2 FY16) and the business is strongly diversified and continues to be underpinned by the mining services division which operates largely with blue chip clients on low-cost projects and should therefore be relatively resilient through the mining cycle.
The high quality Mt Marion lithium project comes into production in the coming months with first ore expected to be shipped in October 2016.
We continue to rate MIN’s management as among the best in the business and expect them to continue to build shareholder value through their innovative low-cost solutions.
August 2016 reports
- OC Premium Small Companies Fund - Month to 31 Aug 2016
- OC Dynamic Equity Fund - Month to 31 Aug 2016
- OC Concentrated Equity Fund - Month to 31 Aug 2016