Mineral Resources Finalizes $1.1 Billion Sale of Onslow Iron Haul Road Stake
MIN (MIN) Share Update September 2024 Tuesday 24th
Mineral Resources Completes Sale of 49% Interest in Onslow Iron Haul Road
Mineral Resources Limited (ASX: MIN) has successfully completed the sale of a 49% interest in the Onslow Iron haul road to investment funds managed by Morgan Stanley Infrastructure Partners (MSIP). The transaction, valued at $1.1 billion, marks a significant milestone for the company.
Instant Summary:
- Mineral Resources sells 49% stake in Onslow Iron haul road to MSIP.
- Transaction brings in $1.1 billion in upfront cash consideration.
- Additional $200 million deferred cash consideration contingent on performance.
- MinRes retains majority ownership and operational control of the haul road.
- Haul road is a critical component of the Onslow Iron project in Western Australia.
Transaction Details
Mineral Resources Limited (MinRes) has announced the completion of the sale of a 49% interest in the Onslow Iron haul road to Morgan Stanley Infrastructure Partners (MSIP). The transaction was finalized on 24 September 2024, with MinRes receiving an upfront cash consideration of $1.1 billion from MSIP.
MSIP, a private infrastructure investment platform within Morgan Stanley Investment Management, will also provide an additional deferred cash consideration of $200 million. This payment is contingent upon the Onslow Iron haul road achieving a 35 million wet metric tonnes per annum run rate for any quarter before 30 June 2026.
Partnership and Operational Control
Under the terms of the partnership, MinRes retains majority ownership and exclusive rights to use, operate, and maintain the haul road. This ensures that MinRes continues to benefit from the stable earnings generated by the haul road over the life of the Onslow Iron project.
The 150-kilometre haul road, which connects the Ken's Bore mine site to the Port of Ashburton, is a key component of MinRes' innovative transportation infrastructure solution. This infrastructure has unlocked previously stranded iron ore deposits in the West Pilbara region of Western Australia. The haul road is scheduled for completion in October 2024, with the Onslow Iron project having delivered its first ore on ship in May 2024.
Management Statements
MinRes Managing Director Chris Ellison expressed his satisfaction with the partnership, stating, 'I’m pleased to officially welcome MSIP as a partner in the Onslow Iron project. This partnership is yet another strong endorsement of Onslow Iron’s world-class credentials and showcases MinRes’ ability to unlock significant capital from our portfolio of assets.'
MSIP Managing Director Tim Cooper also commented on the partnership, saying, 'We are very pleased to partner with Mineral Resources as part of the Onslow Iron project and are proud to be the co-steward of the Onslow Iron Haul Road, a critical transportation infrastructure asset in the West Pilbara. We value MinRes’ exceptional operatorship and are excited to explore further opportunities to deepen our partnership.'
The completion of this transaction is likely to have a positive impact on Mineral Resources' stock price. The $1.1 billion in upfront cash consideration significantly strengthens the company's financial position, allowing for potential reinvestment in other strategic projects. Additionally, the partnership with MSIP provides a vote of confidence in the Onslow Iron project's viability and long-term profitability.
Investor Reaction:
Analysts are expected to react positively to this news, given the substantial cash inflow and the strategic partnership with a reputable investment platform like MSIP. The deferred cash consideration also adds a performance-based incentive, which could further enhance investor confidence in the project's future success.
Conclusion:
Investors should keep an eye on the progress of the Onslow Iron haul road and the overall performance of the Onslow Iron project. The successful completion of this transaction and the strategic partnership with MSIP position Mineral Resources for continued growth and profitability. Stay informed on further developments and consider the potential long-term benefits of this significant milestone.