I have been following MIN for a while and have not pulled the trigger and still wont.
The good
- Chris Ellison, while 25% a BS'er and overhypes everything & forecasts, the other 75% is legit and he gets stuff done and is a weapon.
- Mining Services business is good and while it is also cyclical (if prices of commodities are low, there's less mining being done), its much less cyclical than upstream
The bad
- Chris went woke and decided EV's were the future, even when it was clear the transition to EV's would take decades.
- With the woke attitude & the BS that comes with it, corporate overheads balooned and now are equal to 35% of mining services EBITDA.
- Two of the iron ore assets are worth nil in nearly all iron ore price scenarios.
- Onslow is partly a pipe dream and there's big risks that it won't get close to delivering on Chris's figures. Iron Ore is a logistics game, you need rail and deep water port to be low cost. Onslow is road haul, shallow water port, then transhippers. This can never be a low cost operation. Anyone listening to the conference call can tell ramp up is not going well. The haul road is reported to have issues and he got frazzled when analyst pressed him on current output figures. Pretended he couldn't even remember August numbers which is wild when it's their main project and he's always on top of everything. To get to 50 mt he talked about needing the capesize vessels to come to port and half fill, then going out to see, then transhippers doing the balance.....very weird stuff. Would guess FOB cost is more like $85 rather than $60 and this operation will be a middle cost curve one.
- Lithium....after big bubbles comes big depressions. So much speculative money went into lithium, building so much capacity. It could take years for there to be a reasonable recovery in pricing and then with so much mothballed capacity, it is unlikely to go to bubble pricing for a long time as the infrastructure there to be turned on.
- Balance sheet stuffed, debt high and free cash flow negative in a big way next year. Only way it can de-lever is through commodity pricing much higher.
The guy is a legend and I love his hype, makes me want to buy his stock everytime I hear his passion.
However, it sounded like given his time again, he wished he'd not tried to play around with upstream iron ore & lithium operations and just run the mining services business.
The only way out of this without a capital raise are increasing commodity prices. Iron ore stays above $110+ or lithium $1500+ or a mix.
Expand
(20min delay)