As most here know L1 Capital have increased their position significantly as the price dropped to the low $20's and a market cap well below 5b. Today in their call they explained why they did increase their position.
Firstly the Services division of MIN is in their eyes worth more than the Enterprise Value of MIN alone (Market cap and debt) so you're getting the other parts of MIN for nothing. The service division has long contracts with world class miners and will likely make 1B EBITDA by 2027. Any reasonable multiple of this division covers todays mkt cap and debt.
MIN's lithium business which is currently valued at zero by the share price, has similar assets to Pilbara Minerals which is valued at circa 6b, so if MIN's lithium business was valued similarly, its 50% holding in Wodgina and its other lithium plays would be valued at circa 2.5b that isn't reflected in today's share price.
Finally MIN's Onslow business will generate also 1b EBITDA if Iron ore remains at $90-100 levels once it gets to capacity latter this year.
I won't even place a value on the gas business which Gina Rinehart would pay good money for today in a heartbeat.
The share price is also being suppressed by some in the market believing MIN will need to do a cap raise - L1 Capital disagree as does MIN's mgt and as do I. Their bond debt isn't due to 2027, there are no covenants on this debt, and the bonds are trading close to par so bond holders aren't anxious, and if required, the company has asset sale options any way. As Onslow ramps up, MIN's debt ratios will drop dramatically, possibly as early as late this year, and those concerned about MIN's debt will need to find other reasons to short MIN.
MIN will continue to trade in a volatile fashion i am sure ( its a traders dream but that's not my game), ... regardless buying at these values to me remains compelling, even when I do hold plenty already at $14 average cost. At these share price levels the chances of multi bagging are high within a few years.
DYOR - but I am happy the stewards of L1 Capital think along similar lines to me.
MIN Price at posting:
$25.55 Sentiment: Buy Disclosure: Held
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