Why the shorts in MINs are now even more stuffed after today!

I'll try and group this note into themes around the shorts arguments:

Argument 1: 1: MIN is an accounting fraud; the mines are crap tier 4 mines, where they continually capitalise operating expenses. If you actually expensed it properly they're not profitable.

To this argument i replied, well the Cap ex figure for Fy 26 guidance will tell the story; if its $1.5 to $2 bn of sustaining cap ex, i agree i'm wrong.

And guess what; the total cap ex looks like about $1 bn, of which $500 m is growth and $500 m is sustaining.
My guess is a lot of the growth cap ex is taking Onslow from 35 m t pa to 50 m t pa from Fy 27 onwards, eg Transhippers 6 and 7, which i'm perfectly fine with. It will add a lot of value.

With the sustaining cap ex, i had $250 m for Onslow and Mining services. I've got no idea how much Lithium is, may be $100 to $150. It seems $180 m or so is developing some new mine; the total is a bit higher than i'd like, but still perfectly fine.

Second part of Argument 1: I was even more generous with one of the short funds i was chatting with and said, look i also lose if the FOB costs come out high this quarter, eg $70 or something for Onslow. And guess what, they haven't: $57 for Onslow when its averging saying 25 m t pa for the quarter, so it seems pretty easy to get that to say $54 per tonne when its averaging at nameplate 35 m t pa. Snd then $49 when full autonomy is introduced.

And SC6 costs for Wodgina and Mt Marion this quarter were outstanding at $641 and $717.

No capital raising
The low cap ex means MIN will begin to pay down debt quite quickly from this half onwards and there will be no capital raisiing. That was the 2nd prong of the short argument. MIN couldn't pay down debt and therefore would need to raise capital by issuing stock, and that's how the shorts win, buying back in the capital raise.

BUT: Not only can MIN pay down debt now,
but 2 THEY WON"T NEED TO DO SO.
CFO Mark Wilson said on the conference call he'd have a 125 day window after the full year results to re fi the May 2027 bond, and he said he thinks he could get an 8.5% rate currently, about the same as the current payment rate; and 2: He'd hope that rate would come down even further as the cashflow and ramp up of Onslow further progresses. He sounded very relaxed on the conference call. The bonds are all trading above parity; so why wouldn't the market swoop up a further issue from MIN RES.

3: Iron ore prices crap out
They are hedging up to 1/3 rd of current production at 100 or so, so that further derisks on this issue.
Current market shows no sign of a sharp fall in iron ore prices.

4: Haul road doesn't work
Whilst the argument can't yet be completely disproven, there are no signs of it not working. Not a single analyst question about it on the quarterly. No truck rollovers since March in spite of the considerable volumes.
I think the 2nd strand of the argument is come next wet season teh Haul Road will all fall apart again.
If that's your argument, you are better off buying back MIN now, and re-initating the short at the start of January next year when the stock is trading at say $45 to $50. Why would you wear 6 months of pain in the interim?

In summary, my view is its basically game over for shorts until at least the next cyclone season, so the shorts should and will cover now, as they have slowly been doing over the last two weeks. As the MIN share price rises, the shorts pain grows.

And the MIN share price will go up a lot as this happens. 13% trying to exit a short position in MIN through a small door.

That is something i will watch with great enjoyment!

Analyst upgrades of MIN
My guess is over the next few days analyst upgrades for MIN will be coming through thick and fast. Imagine how JP Morgand and Macquarie feel with $22 and $19 price targets with the stock trading at $31!. They missed it, and will now play catch up fast.

Enjoy.