Valuation impact from Moz's insight, work for Hedge funds going long

Dear all;
As previously discussed, a couple of funds looking to go long asked me to do a bit of valuation/debt reduction work on Moz's wednesday insight, and i gave them a one day exclusive on the work. Here it is.

In short, i basically previously calculated about a $500 m overall debt reduction for MIN this year; but now i think it will be about $ 1bn.

MOZ's insight: MOZ's insight is MIN Res has found a new way to do the transhipping where they can reduce the cycle times by 45 minutes per cycle. They won't be able to do this new method all the time, but MOZ thinks it increases the transhipping capacity to about 6 to 6.5 cycles per day in good conditions (i hope i'm summarizing him faithfully).

Based on all this, and my work on the crushers, i think it is now reasonable to assume the total system capacity is about 44 m t pa in good conditions. This higher rate has a big effect on overall output. I think now MIN will average about 40 m t pa in September, then 41 m t pa in the good months (Haul rd repair complete and full fleet of jumbo trucks in operation - Oct to Dec and April to end of June), and lose about 25% of the 44 m t p capacity for cyclone season = 33 m t pa in those months. This is obviously a bit of a guess and will depend on the actual weather.

On these assumptions, the overall full year production is 38 m t pa.

The rest of Mining services and Iron valley will cover the interest payments and corporate, so the Onslow and Onslow mining services free cash flow - $1140 cap ex = debt reduction for the full year, with 0 assumed for Lithium which is conservative.

Anyway, the good thing about my work, is if you disagree you can choose your own adventure, as shown in the tables below: at Iron ore average of 102 for fy 26, and prodn at 38 the MIN debt reduction is $1.1 bn (optimistic case), at Iron ore average 95, prodn 35, debt reduction is $703 m. I think anywhere between these two numbers is reasonable, and a midpoint of around $950 m debt reduction i think is reasonable = iron ore 99 average, prodn 37 m t pa.

(Note the figures don't include anything for the iron ore prepayment of $206 m this year, which i regard as part of the debt reduction). Therefore the net debt reduction figure reported by MIn at the end of the full year Fy 26 will be $206 m less than the figures below. I'm trying to calculate the actual debt reduction, not the reported end of year number, if that makes sense.

The modelling works off $350 m FCF for Onslow at 32% ownership at iron ore 95 prodn 31.5 m t as per MIN's full year Fy 25 result announcement.

The modelling also assumes $300 m contingent payments this year, = $200 m Morgan Stanley bonus, and one of either Gina gas payment and or Northern Gateway sale. You can again vary these if you disagree.

Anyway, happy to take any comment or feedback;

Best Dekka

				prodn estimate	38
			Numbers on carry loan at 350
			base case = 95 US iron ore, 31.5 m t	1093.75
Jul	29.8			1319.4	adjustment to 38 m t pa
aug	38.6		US $	7	adjustment for iron ore 102
Sep	40		Aus $	10.77
Oct	41		realisation	8.9
Nov	41		moisture	8.31
Dec	41		total extra	315.9
Jan	33
Feb	33		total	1635.3
Mar	33
Apr	41		Min res 92% share of Onslow Mineco	1504.5
May	41
Jun	41		Onslow Mining services	425	at 35
				461.4	at 38
average	38		total FCF Onslow (Mt Pa)	Iron ore 102	Iron ore 99	Iron ore 95
			38	1966	1831	1675
			37	1914	1793	1631
			36	1862	1744	1587
			35	1811	1696	1543
				Min Res debt reduction Fy 26 Assumes ($300 m contingent payments)
			Onslow prodn	Iron ore 102	Iron ore 99	Iron ore 95
			38	1126	991	835
			37	1074	953	791
			36	1022	904	747
			35	971	856	703