The market’s way overreacted to this.The cash position isn’t great because of the haul road repairs, but they’ve got liquidity and drawdown facilities, so it’s manageable. Debt’s a concern but still in line with analyst expectations ($5b), so i am surprised there was such an uproar. That result was not a surprise to me.
Net debt is basically unchanged, plus $200M for the haul road.Results were only slightly below barrenjoeys earlier October forecasts (-$195M NPAT vs. -$165M expected).
The statutory net income hit was mostly noise—Bald Hill impairment (which should’ve been written down months ago) and unrealised currency losses, both non-cash anyway. A reasonable surprise was the $100M extra depreciation ($400M vs. $300M).
Lithium was terrible as expected. Iron ore underperformed but is ramping up, though it only accounts for about $7 of the share price (according to barrenjoey) Mining services smashed it—EBITDA was 36% above expectations ($379M vs. $307M), and revenue was 19% better ($302M vs. $222M).
Most analysts had mining services valued at ~$37 per share last year, likely higher now.The stock’s median target from s&p analyst is $36 down from $37 3 days ago , which clearly shows the analysts were partly expecting this; (range of $20–$70), but analysts are also using massive discount rates—some as high as 11-13%—to reflect cash flow/governance risk.
The only real concern from the announcement is institutional investors worrying Chris might stick around and pulling out capital / plus a cap raise threat, but I reckon they’d know that’d kill shareholder value so they’d probably refinance bonds or sell a stake in some of the underperforming lithium assets first. Market reaction seems way overdone.
MIN Price at posting:
$25.83 Sentiment: Buy Disclosure: Held
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