Mineral Resources Limited · ASX:MIN
Mineral Resources — FY2023 Earnings Presentation
47 slides from Mineral Resources's earnings presentation, Aug 28, 2023
Slide 1: FY23 Full Year Results
FY23 FULL YEAR RESULTS 2 8 A u g ust 2 0 2 3 ASXMIN
Slide 2: Disclaimer and Important Notices
DISCLAIMER AND IMPORTANT NOTICES This presentation should not be considered as an offer or invitation to subscribe for or purchase any securities in Mineral Resources Limited and its subsidiaries (“MinRes” or “Company”) or as an inducement to make an offer or invitation with respect to those securit
Slide 3: Agenda
AGENDA FY23 FY23 summary 03 INVESTING IN GROWTH People and sustainability 04 ACTING WITH AGILITY Financial performance 06 Operational performance 19 Pathway forward 23 3
Slide 4: FY23 Summary
FY23 SUMMARY MINING SERVICES • 6 new contracts • 4 contract renewals • Innovation driving new opportunities $4.8bn REVENUE 40% pcp IRON ORE • Onslow Iron FID reached $1.8bn UNDERLYING EBITDA • Major Onslow Iron approvals received 71% pcp • Pit-to-port construction under way 100% CASH CONVERSION LITH
Slide 5: Putting Our People First
PUTTING OUR Total Recordable Injury PEOPLE FIRST Frequency Rate (TRIFR) Per million hours worked 3.99 SAFETY 3.63 • Fatality during construction of Onslow Iron • TRIFR 2.08 – improved, no complacency 2.31 2.33 WORKFORCE 2.08 • Rapidly expanding workforce 5,600 employees • 22% female • 3.5% Indigenou
Slide 6: Environment and Decarbonisation
FY23 ENVIRONMENT AND DECARBONISATION HECTARES Renewables 1,217 Fuel Mix UNDER Gas REHABILITATION Diesel 4.2% WATER REUSED Greenhouse Gas Emissions Reduce emissions by 50% by 2035 Power Generation Medium-term target1 WONMUNNA LIVE SOLAR ARRAY AND BATTERY Pit-to-Port 2.8 CARBON INTENSITY Mining Equipm
Slide 7: Financial Performance
FY23 FULL YEAR RESULTS FINANCIAL PERFORMANCE
Slide 8: FY23 Underlying Profit and Loss
UNDERLYING PROFIT AND LOSS ($M) FY22 FY23 VARIANCE VARIANCE % FY23 UNDERLYING Revenue 3,418 4,779 1,361 40% PROFIT AND LOSS Operating costs (2,394) (3,025) (631) Underlying EBITDA 1,024 1,754 730 71% Underlying EBITDA margin (%) 30% 37% 7% $4.8bn REVENUE 40% pcp D&A (352) (450) (98) UNDERLYING EBIT
Slide 9: Controllable Underlying EBITDA
FY23 UNDERLYING EBITDA Commentary FY22 Underlying EBITDA 1,024 Spodumene volume & FOB Cost 36 Increased volumes shipped, offset by higher FOB Cost Controllable Commenced sale of lithium battery chemicals produced from Wodgina Battery chemicals volume & cost 279 spodumene, offset by higher costs at M
Slide 10: FY23 Impairments
FY23 IMPAIRMENTS KEY ASSUMPTIONS USED TO IMPAIRMENT EXPENSE (POST-TAX) YILGARN UTAH POINT FY23 DETERMINE RECOVERABLE ($M) HUB HUB AMOUNT Average 62% Fe Iron Ore Yilgarn Hub (311) 91 91 (CFR China US$/dmt) Utah Point Hub (240) AUD: USD foreign exchange rate 0.68 0.69 Other (1) Ore to be mined (Mt)1 1
Slide 11: FY23 Cash Flow
CASH FLOW ($ M) FY22 FY23 VARIANCE FY23 Underlying EBITDA 1,024 1,754 730 CASH FLOW Movement on working capital (404) (4) 400 Operating cash flow before interest and tax 619 1,750 1,131 • Strong working capital management - Net interest paid (72) (218) (146) cash conversion of 100% Tax paid (268) (1
Slide 12: Return on Invested Capital Excluding Investments
RETURN ON INVESTED CAPITAL EXCLUDING INVESTMENTS Operating FY23 ROIC1 Reported FY23 ROIC OPERATING INVESTED MT MARION EXPANSION ONSLOW IRON2 KEMERTON3 GAS4 INVESTED CAPITAL CAPITAL1 AND WODGINA $2,500M $1,298M $748M $561M $230M $5,337M 1. Operating ROIC and Operating Invested Capital includes the im
Slide 13: FY23 Capital Expenditure
FY23 CAPITAL EXPENDITURE RESOURCE DEVELOPMENT CAPEX ($ M) GROWTH SUSTAINING FY23 COMMENTS AND EXPLORATION Mt Marion plant expansion $145M Lithium 283 119 58 460 Wodgina development mobile fleet $131M Sustaining includes deferred strip of $82M Iron Ore excluding 36 151 51 238 Sustaining includes defe
Slide 14: FY23 Summary Balance Sheet
BALANCE SHEET ($M) FY22 FY23 VARIANCE FY23 SUMMARY Inventories Trade and other receivables 253 616 606 658 353 42 BALANCE SHEET Trade and other payables (623) (892) (269) Other Net working capital (83) 163 (146) 226 (63) 63 $1.4bn CASH Non-current receivables 665 70 (595) Financial assets and equity
Slide 15: FY23 Net Debt Waterfall
FY23 NET DEBT WATERFALL 2,000 1,500 1,000 (4) (218) (178) Sustaining (288) 500 Exploration (169) - $ million Growth (1,304) (500) (698) (1,000) 1,754 (1,500) (401) (132) (2,000) (117) (1,855) (101) (2,500) Net Debt FY22 Underlying Working Net interest Tax paid Capex Dividends Net Hire Purchase Other
Slide 16: Credit Metrics and Debt Maturity Profile
CREDIT METRICS DEBT MATURITY PROFILE1 AND DEBT MATURITY 2.5 PROFILE 2.0 CREDIT METRICS FY22 FY23 $billion 1.5 Cash $2.4bn $1.4bn Net debt $0.7bn $1.9bn 1.0 Net gearing2 18% 40% Gross gearing3 49% 54% 0.5 Net debt to Underlying EBITDA 0.7x 1.1x 0.0 Gross debt to Underlying EBITDA 3.1x 1.8x 2024 2025
Slide 17: Capital Allocation Framework
CAPITAL ALLOCATION FRAMEWORK Excess cash Priorities ORGANIC GROWTH > 20% ROIC STRONG BALANCE SHEET Liquidity > $200M < 2.0x Debt/EBITDA INORGANIC GROWTH > 20% ROIC SUSTAINING CAPITAL DEBT REPAYMENT OPERATING US$1,325M due 2027 US$625M due 2030 CASH FLOW FULLY FRANKED DIVIDENDS Covenant light 50% of
Slide 18: FY24 Guidance
FY24 GUIDANCE IRON ORE LITHIUM PILBARA HUB YILGARN HUB MT MARION WODGINA (PREVIOUSLY UTAH POINT) MinRes Share 100% 100% 50% 40%1 40%1 Iron ore Iron ore Spodumene Spodumene Lithium battery Product 20% Lump 15% Lump Grade 4.0% Grade 5.5% chemicals Volume 190 to 220kdmt 170 to 200kdmt 7.5 to 8.3Mt 9.0
Slide 19: FY24 Capex Guidance
FY24 CAPEX GUIDANCE RESOURCE CAPEX ($ M) GROWTH SUSTAINING DEVELOPMENT FY24 COMMENTS AND EXPLORATION Wodgina fleet requirements of $130M Lithium 160 165 50 375 Sustaining includes deferred strip of $110M Iron Ore excluding Onslow Iron 30 225 5 260 Sustaining includes deferred strip of $160M Iron Ore
Slide 20: Operational Performance
FY23 FULL YEAR RESULTS OPERATIONAL PERFORMANCE
Slide 21: FY23 Commodities
FY23 COMMODITIES MT MARION LITHIUM WODGINA LITHIUM YILGARN HUB UTAH POINT HUB ONSLOW IRON Shipped Shipped Shipped Shipped Final investment 149 dmt SC6 eq1 143k dmt SC6 eq1 7.7Mt 9.8 Mt decision approved FOB Cost FOB Cost FOB Cost FOB Cost All major approvals $1,105/dmt SC6 eq $917/dmt SC6 eq $99/wmt
Slide 22: FY23 Mining Services
FY23 MINING SERVICES CRUSHING AND MINING SERVICES PROCESSING CONSTRUCTION HAULAGE MARINE Production 26 crushing and Recommissioned 2 external contracts 2 of 5 Onslow 248 Mt processing plants Wodgina Train 3 transhippers launched 51 330t road trains 6 new contracts 3 new crushing plants Completed Mt
Slide 23: FY23 Energy
FY23 ENERGY PERTH BASIN • Largest acreage holder – 7,336 sq km • Completed Norwest Energy takeover • Confirmed significant gas discoveries • Lockyer 3: Net pay 13m, 12% porosity • North Erregulla 1: Net pay 28m, 17% porosity • Acquired one of the largest 3D seismic surveys CARNARVON BASIN • Expanded
Slide 24: Our Pathway Forward
FY23 FULL YEAR RESULTS OUR PATHWAY FORWARD
Slide 25: Mining Services Innovation and Value
MINING SERVICES INNOVATION AND VALUE NEXT GEN CRUSHERS • Industry-leading modular technology • Rapid above-ground construction • Carbon fibre screens • 30-year service life ROAD TRAINS • 330T payload pit-to-port haulage solution • Low capital cost compared to rail • Progressing to autonomous solutio
Slide 26: Lithium Unencumbered Producer
LITHIUM UNENCUMBERED PRODUCER DELIVER, IMPROVE AND EXPAND Optimise and expand existing hard rock assets and projects UPSTREAM GROWTH Seek opportunities to strengthen MinRes’ upstream portfolio and tenement footprint DOWNSTREAM GROWTH Grow exposure to downstream conversion assets and supply chains to
Slide 27: Lithium Upstream Strategy
LITHIUM UPSTREAM STRATEGY TARGET 1Mtpa SC6 SC61 Capital intensity2 ROIC >20% Inorganic growth Discoveries and Exploration and Resource EXPAND OUR TIER 1 1Mtpa exploration Development $50-70Mpa ASSETS Wodgina Trains 5 & 6 Mt Marion underground Trains 5+6 $300-360M (studying) FOCUS ON PERFORMANCE 800k
Slide 28: Lithium Downstream Strategy
TARGET 125Ktpa LCE LITHIUM DOWNSTREAM STRATEGY 125ktpa Capital intensity2 LCE1 ROIC >20% CURRENTLY STUDYING US or EU conversion + potential OEM partnerships US$16k to US$30k per US / EU MAINTAIN FLEXIBILITY tonne LCE market AND AGILITY Australian conversion or mid-stream MIX OF GLOBAL US$6k per ASSE
Slide 29: Iron Ore Unlocking Potential
BROOME IRON ORE UNLOCKING POTENTIAL ONSLOW IRON ORE • 35Mtpa – 30+ year mine life • $40/t FOB cost ex royalties1 • $3bn capex2 • First ore on ship – June 2024 PILBARA HUB • South West Creek with Hancock/Roy Hill • Stanley Point Berth 3 – 20Mtpa capacity TECHNOLOGY • Green pelletisation 1. As per ASX
Slide 30: Onslow Iron Progress
ONSLOW IRON PROGRESS MINE • Mine pre stripping & bulk earthworks under way • Resort bulk earthworks progressing • Airport operational HAUL ROAD • In-port haul road nearing completion • Road linking port and Onslow Rd commenced • Truck maintenance facility under construction PORT • Dredging complete
Slide 31: Energy Security and Opportunity
ENERGY SECURITY & OPPORTUNITY EXPLORATION GAS DEVELOPMENT TIMELINE Indicative, subject to approvals and rig availability • Perth Basin – additional prospective targets • Red Gully well • Carnarvon Basin – Seismic FY24 FY25 FY26 NED-1 & L3 3 wells flow test Lockyer Production PRODUCTION 2 wells 1 wel
Slide 32: Onshore Domgas Requirement Stifling Investment
Deficit remains under AEMO projections with additional 50TJ/d ONSHORE DOMGAS 1,800 Deficit REQUIREMENT 1,600 STIFLING INVESTMENT 1,400 1,200 1,000 SUBSIDISES MULTI- NATIONALS DURING 800 SURPLUS YEARS 600 400 STIFLES INVESTMENT IN ADDRESSING FUTURE 200 DEFICIT - 2023 2024 2025 2026 2027 2028 2029 203
Slide 33: Foundation for Growth
FOUNDATION FOR GROWTH OPERATIONAL EXCELLENCE DELIVERING MAJOR GROWTH PROJECTS CONTINUING EXCEPTIONAL RETURNS COMMITTED TO SUSTAINABLE BUSINESS WORLD CLASS ASSETS DISCIPLINED FINANCIAL MANAGEMENT Continuous improvement with ethical operations Opportunities to recycle capital DELIVER TO PLAN PROJECT P
Slide 34: Questions?
FY23 FULL YEAR RESULTS QUESTIONS?
Slide 35: Appendix
FY23 FULL YEAR RESULTS APPENDIX
Slide 36: Reconciliation of Non-IFRS Information
FY23 RECONCILIATION OF NON-IFRS INFORMATION RECONCILIATION OF NON-IFRS FINANCIAL INFORMATION ($ M) 1H22 2H22 FY22 1H23 2H23 FY23 Total Revenue 1,354 2,064 3,418 2,350 2,429 4,779 Underlying EBITDA 156 868 1,024 939 815 1,754 D&A (162) (190) (352) (258) (192) (450) Underlying EBIT (6) 678 672 681 623
Slide 37: FY23 Operating Segments
FY23 OPERATING SEGMENTS • Mining Services revenue growth OPERATING FY22 FY22 FY22 FY23 FY23 FY23 driven by increased activity on SEGMENTS Revenue Underlying Margin Revenue Underlying Margin ($ M) EBITDA EBITDA internal contracts. Mining Services margin of 19% was Mining Services1,2 2,116 531 25% 2,5
Slide 38: Mining Services Performance
MINING SERVICES PERFORMANCE Mining Services production-related contract tonnes1 160 146 2.4 138 140 2.2 125 128 124 2.0 EBITDA per Tonne ($/wmt) Contract tonnes (M wmt) 120 110 110 1.8 100 100 1.6 1.4 80 70 1.2 57 1.0 60 0.8 40 0.6 0.4 20 0.2 - - 1H19 2H19 1H20 2H20 1H21 2H21 1H22 2H22 1H23 2H23 Tot
Slide 39: Mining Services Key Business Metrics
MINING SERVICES KEY BUSINESS METRICS REVENUE1,2 BY COMMODITY REVENUE1 BY LENGTH OF CONTRACT Iron ore Lithium Gold Construction and Other ≤ 3 yrs 3-5 yrs 5-10 yrs > 10 yrs 1. FY23 Mining Services segment revenue (external and inter-segment). 2. MinRes’ Mining Services contract rates are not linked to
Slide 40: Iron Ore Utah Point Hub
IRON ORE UTAH POINT HUB UTAH POINT HUB (100% attributable basis, unless UNITS 1H22 2H22 FY22 1H23 2H23 FY23 otherwise indicated) TMM Mwmt 26.3 20.2 46.6 19.6 19.7 39.3 • 9.8Mt shipped in FY23, 22% Ore Mined kwmt 5,704 5,856 11,560 5,394 5,274 10,668 lump. Shipments impacted by Produced kwmt 5,399 5,
Slide 41: Iron Ore Yilgarn Hub
IRON ORE YILGARN HUB YILGARN HUB (100% attributable basis, unless UNITS 1H22 2H22 FY22 1H23 2H23 FY23 otherwise indicated) • 7.7Mt shipped in FY23, 19% lump. TMM Mwmt 31.8 27.4 59.2 20.5 17.3 37.8 Volumes lower on pcp to allow Ore Mined kwmt 3,774 3,850 7,624 3,883 4,102 7,985 for the conversion of
Slide 42: Lithium Mt Marion Spodumene Concentrate
LITHIUM MT MARION SPODUMENE CONCENTRATE MT MARION1 • 149kdmt (attributable) of (50% attributable basis, unless otherwise UNITS 1H22 2H22 FY22 1H23 2H23 FY23 indicated) spodumene concentrate TMM (100% basis) Mwmt 15.3 15.8 31.1 23.8 21.8 45.6 shipped in FY23 Produced kdmt 99 116 215 115 119 234 • Inc
Slide 43: Lithium Wodgina Spodumene Concentrate
LITHIUM WODGINA SPODUMENE CONCENTRATE Total Spodumene WODGINA1 (40% attributable basis, unless otherwise UNITS 1H22 2H22 FY22 1H23 2H23 FY23 indicated) • FOB Cost higher during ramp up in 1H23 and reduced in 2H23 TMM (100% basis) Mwmt - 0.7 0.7 4.6 7.6 12.2 with increased volumes Produced kdmt - 8 8
Slide 44: Lithium Wodgina Battery Chemicals
LITHIUM WODGINA LITHIUM BATTERY CHEMICALS WODGINA1 (40% attributable basis, unless otherwise Units 1H22 2H22 FY22 1H23 2H23 FY23 indicated) Conversion rate x - - - 7.4 7.6 7.5 Produced t - - - 4,027 7,470 11,497 Lithium battery chemicals Sold t - - - 2,290 4,996 7,286 Lithium battery chemicals Reven
Slide 45: Conservatively Geared Through Cycles
CONSERVATIVELY GEARED THROUGH CYCLES 2.1x Wodgina Lithium Onslow Iron 1.1x 0.7x 0.4x (0.0x) (0.1x) (0.2x) (0.1x) (0.3x) (0.3x) (0.4x) (0.7x) (0.9x) FY10 FY11 FY12 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 Net debt/(cash) to Underlying EBITDA 1 1. On rolling 12-month basis. FY23 FULL YEAR RES
Slide 46: Glossary of Terms
LCE Lithium carbonate equivalent GLOSSARY OF TERMS Li Lithium battery chemicals Lithium Lithium hydroxide and/or lithium carbonate Liquidity Committed undrawn bank facilities plus cash and cash equivalents 1H, 2H, FY First half, second half, full year LTIFR Lost time injury frequency rate $ Australi
Slide 47: Investor Relations
INVESTOR RELATIONS Chris Chong Investor Relations Manager T: +61 8 9315 0213 E: chris.chong@mrl.com.au OFFICE: 20 Walters Drive, Osborne Park, WA 6017 POSTAL: Locked Bag 13, Osborne Park DC, WA 6916 P +61 8 9329 3600 www.mrl.com.au ASXMIN