Mineral Resources posted its best result in 20 years and a surprise dividend

Mineral Resources (MIN) has come a long way in 12 months, swinging back to profit on its strongest result in 20 years on the ASX and reinstating a dividend nobody was forecasting. Every division delivered record volumes, while the price MinRes got for its lithium more than doubled between the first and second halves. 

“Record operational and financial results reflect years of strategic investment,” said Managing Director Chris Ellison, adding the company enters its third listed decade on stronger foundations than at any point in its 20 years.

While FY26 was a good year, MinRes is entering a challenging period, with capex rising and debt still high. The stock jumped as much as 5.5% at the open before reversing to trade 1.9% lower at $65.61.

Mineral Resources 12-month price chart (source: Market Index)

MinRes FY26 results in focus

FY26 results, with comparisons to FY25 and UBS forecasts dated 24 August:

• Revenue up 44% to $6.5bn on record volumes across all divisions and higher commodity prices

• Underlying EBITDA up 183% to $2.6bn at a 39% margin, a record

  • Mining Services underlying EBITDA a record $976m on 341Mt of production volumes

  • Onslow Iron shipped 19.7Mt at a $52/t FOB cost for $909m of underlying EBITDA, with the Pilbara Hub adding 9.9Mt at $79/t for $98m

  • Lithium contributed $771m of underlying EBITDA, with Wodgina at 317k dmt SC6 for $470m and Mt Marion 242k dmt SC6 for $302m

• Underlying NPAT up 831% to $822m vs $743m UBS (11% beat)

• Reported NPAT up 236% to $1.2bn, including a $168m non-cash FX gain, a $134m gain on MSIP contingent consideration and a $69m Lucky Bay garnet impairment

• Fully franked full year dividend of 83 cps vs nil UBS, a 20% payout of underlying NPAT and up from nil in FY25

• Net debt down $1.1bn to $4.3bn vs $4,283m UBS (in line), with leverage at 1.7x from 5.9x and liquidity doubling to $2.4bn

Of the $1.65 billion year-on-year increase in underlying EBITDA, the company attributed $1.16 billion to volume and cost gains it controlled, and $486 million to commodity prices and other external factors. Lithium pricing was the largest single external item at $490 million, reflecting a realised price that surged from US$972 a tonne in the first half to US$2,290 in the second.

Forward guidance

MinRes is guiding higher volumes across every division in FY27. Mining Services production is forecast at 370-390Mt, growth of 9% to 14% on FY26. Onslow Iron is guided to ship more, and Wodgina is expected to lift sales 14% to 23% as clean ore feeds all three trains from the second quarter. Bald Hill should reach full capacity of 140k dmt SC6 in the same quarter. 

Total capex is forecast to hit $1.4 billion in FY27 from $1.2 billion, and most of the increase goes to lithium, which takes $625 million of the program. The largest item is $340 million at Mt Marion, where MinRes is building a flotation plant and developing an underground mine to lift recovery and capacity. 

Those figures assume MinRes keeps its current lithium stakes, though things could change as it’s agreed to sell POSCO a 30% stake in its 50% interests in Wodgina and Mt Marion. A deal expected to complete in the first half of FY27 subject to conditions. It delivers US$765 million in gross proceeds, which MinRes says will go to reducing debt, taking net debt to around $3.2 billion and leverage to about 1.2 times underlying EBITDA. The trade-off is that MinRes’ share of both mines falls to 35% from 50% on completion, cutting its share of lithium volumes and capex by 30%. 

Speaking on earnings call, Ellison said copper is high on the agenda for everyone and that MinRes would most likely partner with an owner holding a near shovel-ready project, bringing its design, engineering and construction capability to the table. He also said the company had spent the past 12 to 18 months looking at replicating its mining services model in another part of the world, and expected to make progress over the next 12 to 18 months. 

The bottom line

FY26 was the year MinRes began to repair its balance sheet, the harder question is what happens next. The company is guiding growth in almost every division and spending more to get it, with capex rising to $1.4 billion while net debt is still $4.3 billion. The result also leaned on a lithium price that only arrived in the second half. The POSCO proceeds would help, though the deal has not been completed.