One small point seems to escaped the market amid all the enthusiasm yesterday for Mineral Resources shares after its $1.6 billion sale of 50% of its Wodgina project to US lithium giant, Albemarle and that was the quiet earnings downgrade for 2018-19.
The company quietly confirmed that it is looking at a sharp 60% plus fall in operating earnings in 2018-19. Confirmation came by way of a clarification in what was a slightly farcical situation.
But it seems not too many investors noticed as they chased the company’s shares and those of other lithium-related stocks yesterday
MinRes shares jumped more than 26% to $15.76 yesterday in the wake of the Albermale sale which was announced in New York ahead of the annual meeting held later on Thursday.
In a presentation to the meeting, Mineral Resources CEO Chris Ellison failed to include a figure for group earnings before interest, tax, depreciation, and amortisation (EBITDA) as promised when the 2017-18 results were released in August.
The EBITDA forecast for the company’s man operating arm, its mining, and services business were given as between $240 million to $260 million. Seeing mining services reported EBITDA of $260 million for 2017-18, the outlook is for a flat result this financial year at best.
A short while later MinRes issued another statement which said:
“For the purposes of clarification, Mineral Resources Limited (ASX: MIN, MRL) advises that on Page 13 of the Annual General Meeting presentation released this morning, the 2019 Financial year (FY19) Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) guidance at a consolidated group level is between A$280 million and A$320 million, with the Mining Services Division expected to contribute between A$240 million to A$260 million.”
Seeing 2017-18 EBITDA was $506.7 million the fall is a very sharp 60% plus. No net profit figure was given – MinRes earned $271.8 million in 2017-18.
The company made it clear these figures were before the impact of the sale of the 50% stake in Wodgina to Albemarle for $US1.15 billion (A1.6 billion).
As usual, the company said the bulk of earnings would be in the January-June second half of the financial year. No written copy of Mr. Ellision’s CEO address to the meeting was issued.
There was a comment that costs for the Mount Marion lithium project would be higher than in 2018, that the Wodgina project would see higher costs, that the Iron valley iron ore project was “marginal” and that the Koolyanobbing iron ore project would be hit by delayed approvals which “will impact this year’s costs and earnings.
