Mineral Resources (ASX:MIN) Valuation

Disclaimer: This is not financial advice. Please consult your own professional advisor before making any investment decisions.

Goldrock Equity Analyst Overview

Recommendation: BUY

• Current Share Price: A$22.19

• Intrinsic Value: A$29.50 (≈ 33 % upside)

• 12-Month Target Price: A$25.00 (based on a blend of NAV and peer multiples, ≈ 13% upside)

Mineral Resources (ASX: MIN) is a diversified mining group with three main businesses: Iron Ore, Lithium, and Mining Services. Our simplified thesis is that MIN’s portfolio of low-cost assets and growing lithium exposure should drive earnings and cash flow as commodity markets recover. We arrive at a “blend” target of A$25/sh while observing a longer-term NAV of A$29.50/sh.

1. Why We Like MIN

• Low-Cost Iron Ore Producer

  • MIN owns several iron ore hubs in Western Australia (Pilbara, Yilgarn, Onslow).

  • Even if the benchmark 62% Fe price dips below US$70/t, MIN’s breakeven cost is in the mid-US$50s/t. In other words, they make money at prices well below today’s levels.

  • We expect stable shipments of ~20 Mtpa (MIN’s share) through FY 2029, with unit costs improving slightly over time.

• Rising Lithium Exposure

  • Through 50 % stakes in Mt Marion and Wodgina and 100 % of Bald Hill, MIN now accounts for ~27 % of its NAV from lithium.

  • Although spodumene prices plunged from ~US$5 000/t in 2023 to ~US$800–US$900/t in 2025–2026, we model a gradual rebound to ~US$1 200/t by FY 2028.

  • At those prices, MIN’s A$700–A$800/dmt cost base means healthy margins. Volumes ramp from ~433 kt SC6.0 in FY 2026 to ~575 kt by FY 2028.

• Mining Services & Processing

  • This division contributes ~49 % of NAV thanks to in-house crushing and contract services.

  • After a cyclical dip in FY 2025, we expect EBITDA to recover. Services volumes should remain around 280–300 Mtpa, providing stable cash flows.

• Balance Sheet & Cash Flow

  • Net debt peaks at ~A$5.4 b in FY 2025 (5.3× ND/EBITDA) as capex ramps.

  • As iron ore and lithium markets normalise, we forecast free cash flow turning positive in FY 2026, allowing debt to fall toward ~A$2.2 b by FY 2029.

  • Dividend yield should recover from ~1 % in FY 2025 to ~3–6 % by FY 2028 as free cash flow paths clear.

2. Simple Valuation Recap

• NAV (“Net Asset Value”) – A$29.50 per share

  • We break MIN into three buckets: Iron Ore (23 % of NAV), Lithium (19 %), and Mining Services (49 %).

  • After subtracting debt (A$5.4 b) and adding exploration and other assets, MIN’s NAV stands at ~A$29.50/sh.

  • At the current price of A$22.19, that implies ~33 % upside if the market fully values each business at our net asset base.

• NTM EV/EBITDA (“Next Twelve Months”)

  • We forecast consolidated EBITDA of ~A$1.60 b in FY 2026.

  • Applying a 6.0× multiple (vs. the sector median of 4.5×) to reflect MIN’s mix of low-cost iron and lithium growth gives an enterprise value of ~A$9.66 b.

  • Subtracting net debt (A$5.40 b) yields equity value of A$4.25 b, or A$21.70/sh.

• Blended 12-Month Target – A$25.00

  • We take a simple average of (1) the 100 % NAV of A$29.50/sh and (2) the EV/EBITDA-based A$21.70/sh → A$25.00.

  • Rounding conservatively and allowing for execution risk, we set A$25/sh as our target. That sits ≈ 13 % above today’s A$22.19.

3. Key Risks & Monitoring Points

1. Commodity Prices

   • Iron ore < US$65/t or prolonged lithium < US$800/t would compress margins.

   • Watch key price catalysts: Chinese steel demand and EV adoption trends.

2. Capital Expenditure & Execution

   • A$3.1 b of capex in FY 2024 (growth & sustainability) strains cash flow.

   • Any delays or cost overruns at expansions (e.g., Koodaideri downstream or Wodgina JV) could push out free cash flow timelines.

3. Leverage & Liquidity

   • ND/EBITDA peaks at ~5.3× in FY 2025. If markets weaken further, refinancing risk rises.

   • Monitor quarterly debt repayments and capex guidance for signs of cash‐flow improvement.

4. Mining Services Cyclicality

   • If commodity capital spending slows, volumes could drop below our 280–300 Mtpa assumption, pulling EBITDA lower.

4. Conclusion

Given MIN’s low‐cost iron ore assets, growing lithium footprint, and resilient services division, we believe the shares are undervalued at A$22.19. Our A$29.50/sh NAV underscores the long‐term value, while a blended A$25.00/sh target accommodates near‐term execution risks and commodity cyclicality. We rate Mineral Resources as a BUY, with a ~13 % upside to our 12-month target.

Disclaimer: This is not financial advice.
If you’d like more detail on our underlying data and assumptions, please contact us at info@goldrock.com.au.

This analysis has been prepared by Goldrock Capital for informational purposes only and does not constitute financial advice, investment advice, or a recommendation to buy or sell any security. The figures presented are based on public information, industry benchmarks, and assumptions that may not reflect the actual internal costs or commercial decisions of Mineral Resources or its joint venture partners.

Readers should treat this analysis as indicative and not definitive. Goldrock Capital and its contributors accept no liability for any decisions made based on this content. Always conduct your own research or consult a licensed financial adviser before making investment decisions.