Mineral Resources Ltd

L1 Capital Long Short Fund has updated its investment thesis on Mineral Resources Ltd, maintaining its position despite recent share price weakness driven by a sharp decline in iron ore prices, broader softness across junior miners, and negative lithium sector commentary from major banks. The Fund continues to hold Mineral Resources because it believes the company remains well-positioned across its core segments—iron ore, lithium, and mining services—all of which benefit from supportive medium-term industry trends. L1 Capital Long Short Fund expects the upcoming sanction and production commencement of the long-life, low-cost Ashburton (Onslow Iron) project to be a key catalyst, potentially delivering a step-change in earnings and unlocking significant value in the mining services division. The Fund also highlights the company’s substantial lithium growth pipeline, including plans for full downstream integration targeting over 100kt of lithium hydroxide production, supported by a recent US$1.25 billion bond issue. L1 Capital Long Short Fund’s confidence in the long-term outlook was further reinforced by a visit to Mineral Resources’ new Perth headquarters, which the Fund sees as a strong reflection of management’s forward-looking approach and commitment to operational excellence.

L1 Capital Long Short Fund continues to hold Mineral Resources due to its strong performance and positive outlook. The company's shares rallied, driven by robust lithium prices and the formal sanctioning of its Ashburton iron ore project, now named Onslow Iron, which is expected to significantly boost earnings upon production in late 2023. With a controlling interest in this high-quality, low-cost iron ore asset, along with associated mining services and infrastructure tolling, L1 Capital sees a promising long-term growth trajectory for Mineral Resources. Additionally, the company is well-positioned to capitalize on the rapidly growing lithium market, with a substantial growth pipeline and plans for full downstream integration to produce over 100kt of lithium hydroxide. Given the ongoing tightness in the lithium market, driven by strong battery demand for electric vehicles, L1 Capital believes Mineral Resources' diversified business across iron ore, lithium, and mining services presents significant upside potential that is not fully reflected in current market prices.

L1 Capital Long Short Fund has updated its investment thesis on Mineral Resources Ltd, reaffirming its positive outlook on the company. The Fund continues to hold its position, citing strong performance over the quarter, driven by robust lithium prices and the announcement of a potential spin-off of the lithium business. A key development has been the formal approval of the Onslow Iron project, expected to commence production in late calendar year 2023. L1 Capital Long Short Fund believes this project marks a transformative shift in earnings, underpinned by Mineral Resources’ controlling stake in a high-quality, long-life, low-cost asset, along with related mining services and infrastructure revenue. On the lithium front, the Fund highlights Mineral Resources’ continued progress toward full downstream integration, targeting over 100kt of lithium hydroxide production within four years. Despite market volatility, L1 Capital Long Short Fund sees favourable medium-term tailwinds across the company’s core segments—iron ore, lithium, and mining services—with considerable embedded optionality that, in their view, remains underappreciated by the market.

L1 Capital Long Short Fund continues to hold Mineral Resources following a strong performance, with the company's shares benefiting from tight lithium markets driven by the demand for electric vehicle batteries. Mineral Resources is also set to finalize a joint venture agreement with Albemarle, covering their jointly owned lithium assets, which will clarify the company's lithium portfolio and support full downstream integration for over 100kt of lithium hydroxide production. This partnership lays the groundwork for the potential separate listing of the lithium business in the future. L1 Capital believes that all key areas of Mineral Resources—iron ore, lithium, and mining services—are positioned for favorable medium-term growth, with significant optionality that is not yet fully reflected in the company’s share price.

L1 Capital Long Short Fund continues to hold Mineral Resources following a strong quarter, driven by tight lithium markets and a recovery in iron ore prices, supported by China's economic reopening. The company is on the verge of finalizing its joint venture agreement with Albemarle, which will provide clarity around its lithium portfolio and support full downstream integration for over 100kt of lithium hydroxide production. This move positions Mineral Resources well for future growth and may pave the way for a potential separate listing of its lithium business. L1 Capital remains confident in the company’s outlook, noting favorable medium-term tailwinds across its core business areas, including iron ore, lithium, and mining services. The fund sees ongoing growth opportunities in these sectors and continues to view Mineral Resources as an attractive investment with significant upside potential.

L1 Capital Long Short Fund continues to hold Mineral Resources Ltd, despite a recent share price decline due to weakness in the Chinese economy affecting the iron ore price and softer-than-expected lithium production. The company also revised its guidance, reporting higher costs and lower mining services volumes. However, L1 Capital remains positive on the medium-term outlook, particularly as Mineral Resources is close to finalizing its joint venture agreement with Albemarle, which will clarify its lithium portfolio and support downstream integration for over 100kt of lithium hydroxide production. This deal also positions the company for potential future value unlocks, including a possible separate listing or sell-down of its lithium business. L1 Capital believes that the company's diversified core business—spanning iron ore, lithium, and mining services—remains well-positioned for favorable tailwinds, with shares still undervalued relative to peers in the sector.

L1 Capital Long Short Fund continues to hold its position in Mineral Resources despite a 15% decline in shares, primarily due to the ongoing weakness in lithium prices, which dropped approximately 23% over the month. The lithium market is adjusting from a supply deficit to a more balanced outlook in the short term. However, Mineral Resources is well-positioned for the future, with its lithium assets ramping up production and expected to more than double output in the coming years, exceeding 1,000kt of spodumene concentrate. The company is also making significant progress with its Onslow Iron project, which is set to transform its smaller-scale iron ore business into a larger, low-cost operation, with first production targeted for June 2024. L1 Capital remains positive on the company, believing that the key areas of Mineral Resources’ business—lithium, iron ore, mining services, and gas—are supported by favorable medium-term tailwinds, and that the shares are currently undervalued.

L1 Capital Long Short Fund has updated its investment thesis on Mineral Resources Ltd, highlighting strong recent share price performance driven by a 7% rise in iron ore prices in December, which reached a 2023 high. This strength in iron ore helped offset ongoing short-term softness in lithium markets, which are transitioning from a supply deficit to a more balanced environment. L1 Capital Long Short Fund continues to hold because it sees Mineral Resources as well-positioned to benefit from medium-term tailwinds across its core segments—iron ore, lithium, mining services, and gas. The company’s Onslow Iron project, expected to begin production in June 2024, is set to significantly scale up its iron ore operations into a long-life, low-cost business. In the lithium division, Mineral Resources is forecast to more than double production to over 1,000kt of spodumene concentrate in the coming years. The Fund believes the company’s diversified portfolio and growth trajectory remain undervalued by the market.

L1 Capital Long Short Fund continues to hold Mineral Resources (Long -25%) despite a decline in its shares, driven by softness in key commodity markets, particularly with lithium spodumene and iron ore prices falling by 16% and 7%, respectively. While these price declines have weighed on the stock, the company has made positive operational progress, including the early delivery of first ore from its Onslow Iron project and the sale of a 49% interest in the Onslow haul road for A$1.3 billion. This sale will strengthen the company’s position for future growth and shareholder returns. Despite ongoing volatility in the lithium market, Mineral Resources remains on track to significantly increase production, with plans to more than double spodumene concentrate output in the coming years. L1 Capital believes that the company’s core business segments—iron ore, lithium, mining services, and gas—are well-positioned for favorable medium-term tailwinds, and the stock continues to be significantly undervalued.

L1 Capital Long Short Fund continues to hold its position in Mineral Resources Ltd. (Long -24%) despite a decline in shares during the quarter, largely due to softness in key commodity markets, particularly with lithium spodumene and iron ore prices down 16% and 7%, respectively. This decline outweighed some positive operational updates, such as the early delivery of first ore from the Onslow Iron project and the sale of a 49% interest in the Onslow haul road for A$1.3 billion. The Fund remains optimistic about the company's future growth prospects, particularly as the Onslow transaction is expected to support further shareholder returns. While the lithium market remains volatile, Mineral Resources is on track to more than double its production in the coming years, exceeding 1,000kt of spodumene concentrate. L1 Capital believes that the company's core businesses—iron ore, lithium, mining services, and gas—have strong medium-term tailwinds, and that the company's valuation remains attractive, particularly supported by the long-life, infrastructure-like earnings from its Mining Services division.

L1 Capital Long Short Fund continues to hold Mineral Resources Ltd, despite a decline in shares due to weakness in key commodity markets, particularly the 20% drop in lithium spodumene prices. The company’s FY25 outlook reflects both lower lithium production volumes and continued elevated growth capital spend in its iron ore and mining services segments. However, L1 Capital believes Mineral Resources is approaching a favorable inflection point, with the Onslow Iron Ore project set to contribute positive cash flow by mid-FY25, and mining services volumes expected to grow substantially over the next 18 months. The mining services segment, supported by long-term contracts, is anticipated to generate around $1bn in EBITDA, providing strong earnings support. While the lithium market remains volatile, the company has significant volume flexibility, with the potential to produce over 1,000kt of spodumene concentrate when market conditions improve. L1 Capital continues to believe that Mineral Resources’ diversified operations and strong growth prospects in its key segments position the company for medium-term improvement.

L1 Capital Long Short Fund continues to hold its position in Mineral Resources following a strong rally in the company’s shares, driven by Chinese stimulus measures that helped iron ore prices rebound. The fund also increased its position at ~$30 per share, believing the stock was oversold amid concerns about balance sheet flexibility in a lower commodity price environment. With the Onslow Iron Ore project ramping up towards positive cash flow from mid-FY25 and the mining services business expected to see a significant increase in volumes over the next 18 months, L1 Capital believes the company is nearing a favorable inflection point. The mining services business alone is forecasted to support ~$1 billion in EBITDA, underpinned by long-term contracts. While the lithium market remains volatile, Mineral Resources has substantial volume optionality to produce over 1,000kt of spodumene concentrate when conditions improve. The fund remains confident that the company’s core segments will see significant improvement over the medium term, particularly as the Onslow Iron Ore project and mining services drive future growth.

L1 Capital Long Short Fund continues to hold its position in Mineral Resources, despite a 24% decline in shares, largely driven by governance investigations and leadership changes. The company has announced the Chairman's resignation and plans for CEO succession, but L1 Capital supports retaining Chris Ellison as CEO, provided stronger corporate governance frameworks and oversight are implemented. As long-term investors, L1 Capital has been involved with Mineral Resources for over 15 years and has increased its shareholding following the recent sell-off, which has reduced the company's market cap by approximately $2.5 billion. Ellison has been instrumental in building the company into a $10 billion global leader in mining services, lithium, and iron ore. L1 Capital views the sale of the company’s gas assets for $1.1 billion as a positive step, strengthening the balance sheet and highlighting the optionality in the portfolio. The Onslow Iron Ore project is set to ramp up towards positive cash flow in FY25, while the mining services business is poised for growth in volumes and earnings. Additionally, the lithium business holds significant growth potential with the capacity to produce over 1,000kt of spodumene concentrate as market conditions improve.

L1 Capital Long Short Fund continues to hold its position in Mineral Resources despite a 15% decline in shares, driven by ongoing governance issues and the announcement of a CEO succession plan. While the company faces short-term challenges, L1 Capital remains optimistic about the medium-term outlook. Mineral Resources’ Onslow Iron Ore project is set to ramp up towards positive cash flow from mid-FY25, and the mining services business is expected to see a significant increase in volumes and earnings over the next 18 months. Additionally, the lithium business offers considerable growth potential, with the ability to produce over 1,000kt of spodumene concentrate once market conditions improve. L1 Capital believes that these core segments, combined with the company’s strong asset base, position Mineral Resources for material improvement moving forward.

L1 Capital Long Short Fund has updated its investment thesis on Mineral Resources Ltd, maintaining its position despite recent share price weakness driven primarily by ongoing governance concerns and the announcement of a CEO succession plan over the next 12–18 months. L1 Capital Long Short Fund continues to hold because it sees significant medium-term upside across all core business segments. The Onslow Iron Ore project is progressing toward ramp-up, with positive cash flow expected from mid-FY25. The fund also anticipates a step-change in volumes and earnings from the mining services division over the next 18 months, underpinned by long-life contracts and expanding operations. In addition, Mineral Resources’ lithium business retains substantial upside potential, with the flexibility to produce over 1,000kt of spodumene concentrate once market conditions recover. While governance remains an area of focus, L1 Capital Long Short Fund believes the underlying business fundamentals remain robust and supportive of long-term value creation.

L1 Capital Long Short Fund has updated its investment thesis on Mineral Resources Ltd, reaffirming its position despite recent share price weakness following project delays and increased capital expenditure. The fund continues to hold because it believes the market’s reaction—wiping over $2.6 billion from the company’s market capitalisation—is disproportionate to the operational update. At current levels, L1 Capital Long Short Fund views Mineral Resources as significantly undervalued, with its enterprise value underpinned by three core business segments. These include a high-quality mining services division expected to generate close to $1 billion in FY27 EBITDA, a growing iron ore operation with the Onslow project poised to contribute meaningfully, and a lithium business with a 50% stake in Wodgina—one of the world’s largest hard rock lithium mines—which is currently being implicitly valued at zero amid cyclical lows in lithium prices. The fund also notes that balance sheet concerns should ease over the next year, as major capex winds down, earnings ramp up, and potential asset sales support deleveraging. Additionally, governance improvements are underway, with a new Chair expected to be appointed in the June 2025 quarter. L1 Capital Long Short Fund believes the current share price offers a compelling risk-reward opportunity.