PERTH (miningweekly.com) – ASX-listed Mineral Resources (MRL) has reported a tough quarter on the back of falling iron-ore prices, but the company is looking to expand its lithium footprint.
MRL on Wednesday reported a 12% drop in revenue for the first half of 2022, to A$1.4-billion, while underlying earnings before interest, taxes, depreciation and amortisation were down 8%, to A$156-million.
The company reported an underlying loss after tax of A$36-million for the half-year, down 108% on the previous corresponding period, with statutory net profits after tax reaching A$20-million, down 96% on the previous corresponding period.
“This has been a challenging half, as we continued to navigate the uncertainty of a Covid-19 world and maintained our focus on protecting the jobs of all our people. I am proud of the efforts of the more than 4 800 men and women in our business for their united and disciplined approach, which so far has enabled us to keep Covid-19 out of our operations,” said MD Chris Ellison.
“It hasn’t been easy and the challenges during the first half of 2022 were amplified by the collapse in iron-ore prices. This has delivered our worst first-half financial result in three years. These results do not reflect the substantial progress in our iron-ore, lithium and gas businesses during the last six months which will create significant value for decades to come and which underpins our long-term growth for our Mining Services division.
“MRL has a proud and unrivalled history of out-performance and delivering exceptional value for all stakeholders since we listed on the ASX in 2006. This history includes prudent and well-timed investments and, at all times, a disciplined financial approach without taking our focus away from our long-term goals that we set for this business. The board’s decision to not declare an interim dividend aligns with the company’s long-term approach to building sustainable success,” Ellison said.
Meanwhile, the company on Wednesday announced that it had inked a non-binding letter of agreement with US-based lithium miner Albemarle Corporation to explore a potential expansion of the MARBL lithium joint venture (JV).
The non-binding agreement envisions ownership of the Wodigna mine, in Western Australia, to revert to a 50:50 split, rather than the 60:40 split in favour of Albemarle. MRL will also resume management of the Wodgina mine.
Ownership of Kemerton I/II will remain 60:40 in favour of Albemarle, with Kemerton to be fed by the Greenbushes lithium mine.
In addition, a new 50:50 JV will be established to own additional lithium conversion assets outside of Australia to be jointly funded by MRL and Albemarle, with Albemarle to be the operator of these assets.
Albemarle will remain the exclusive marketer of lithium products produced by both JVs.
MRL said that the principles and transactions contemplated by the agreement were subject to due diligence and the parties entering into binding agreements to affect the proposed transactions, which was expected within the next three months.
“We are delighted to have reached this non-binding agreement, which represents a practical solution to support the growth of our partnership with Albemarle,” Ellison said.
“MRL’s core competency is to design, build and operate the Wodgina site. Albemarle has a strong track record in the development and operation of downstream lithium conversion, and has an industry-leading sales and marketing capability.
“Once finalised, this arrangement will build on our strong partnership with Albemarle to generate sustainable, long-term value from our world-class assets and capitalise on growing global lithium demand.
“Through this agreement, we have a clear pathway to become one of the world’s largest downstream lithium producers by supplying significant volumes of lithium hydroxide using high-quality spodumene from our portfolio of Tier 1 hard rock mines in Western Australia.
“We look forward to finalising a binding agreement as soon as possible and stepping up our efforts to build a great, global lithium business.”
Additionally, MRL has also taken possession and control of its 51% share of the Mt Marion spodumene offtake, from February 1.
The company has entered into a toll treatment agreement for its share of Mt Marion spodumene to be converted into lithium hydroxide by Ganfeng Lithium Co in China, over a seven-month period, with the option to extend.
MRL anticipates first lithium hydroxide sales in May 2022, but earnings are not expected to be material for the current financial year.
In addition, the company has advised Ganfeng that it is undertaking studies with a view to growing spodumene production at Mt Marion through process optimisation and contact ore treatment. Each of these studies is targeting an increase in yearly spodumene production of 10% to 15%.