Mineral Resources has raised the prospect of building a $600 million lithium hydroxide plant linked to its Wodgina project in south-east Asia rather than adjacent to the mine site in Western Australia.
MinRes managing director Chris Ellison said it was not a fait accompli that the proposed plant - which would produce battery-grade lithium - would be built at Wodgina, about 120 kilometres from Port Hedland, as the company prepares to release a feasibility study on a plant with 56,000 tonnes a year capacity.
Mr Ellison also made it clear MinRes was putting a high price on the sale of up to 49 per cent of the Wodgina project in the countdown to receiving non-binding indicative offers.
He said it was by no means a fire sale but MinRes would like to bank some cash on an asset billed as the world's biggest hard rock lithium deposit, which some analysts have estimated is worth up to $3.6 billion.
MinRes expects commissioning of a spodumene concentrate processing plant at Wodgina to begin in October as it phases out direct shipping ore (DSO) from the mine.
Mr Ellison said DSO exports had served their purpose in providing cash flow but were likely to cease, with a final decision subject to talks between MinRes and any new partner or partners in Wodgina. He said the DSO operations came at a cost in terms of mine life although it was minimal in terms of the size of the Wodgina reserves.
The diversified mining services company has forecast earnings before interest, tax, depreciation and amortisation of $600 million a year from Wodgina lithium project, a figure it revealed after being rapped over the knuckles by the ASX in the fallout from a private briefing for institutional investors.
MinRes announced full-year net profit of $272 million on Wednesday, an increase of 35 per cent on 2016-17. Revenue was up by 16 per cent to $1.71 billion with EBITDA up by 9 per cent to $507 million and in line with guidance. MinRes announced a final dividend of 40¢ a share, bringing total dividends for 2017-18 to 65¢ a share.
The 2017-18 result was driven by the core mining services division, which delivered revenue of $1.065 billion and earnings of $260 million.
Sales of DSO from Wodgina were up from 720,000 tonnes to 3.5 million tonnes, while sales of lithium spodumene from the Mount Marion mine to offtake partner Ganfeng Lithium were up from 116,000 tonnes to 382,000 tonnes.
However, the boost in lithium volumes was offset by a drop in iron ore exports from the company's Iron Valley and Yilgarn operations. Iron ore exports were down by almost 3 million tonnes to 9.348 million tonnes as Yilgarn production from the Carina mine wound down.
MinRes is working on approvals to use its trains to ship iron ore from Esperance after acquiring the loss-making Australian operations of US miner Cliffs at Koolyanobbing to help offset the loss in production from Carina.
Mr Ellison said MinRes had far from abandoned its ambitions in oil and gas after its unsuccessful bid for AWE earlier this year.
"We have ended up with some extremely good, high potential assets in the Perth Basin, tenements that we acquired from Empire Oil and Gas, and we have been successful in having all of those tenements extended out for two to four years," he said.
"We are currently going through an exploration program and we intend to drill at least three holes up there all deeper than 4 kilometres over the next 18 months to two years.
"We think, as many others do, it is highly prospective for gas and we do want to secure our own gas in the medium term so we can use that as one of the core pillars of our business."
He repeated being "blown out of the water" by Hancock Prospecting in the takeover battle for Atlas Iron would have no impact on the MinRes plans to develop a light rail system and associated Cape-sized berth at Port Hedland at a cost of up to $1.6 billion.
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