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Mineral Resources’ $1.3b bond offering

Five days ago, Perth-based Mineral Resources (ASX:MIN) issued a comprehensive update on its various mines and prospects in Western Australia, particularly in lithium and iron ore. On Tuesday, the company revealed plans to raise $US850 million ($A1.3 billion) through five-year bonds.

In the statement, MinRes indicated its intention to utilise the proceeds from the offering for general corporate purposes, including capital expenditures. This fundraising initiative will increase MinRes’ cash on hand to approximately $A2.7 billion while gross debt will rise to around $A4.1 billion, based on June 30 figures.

The additional funds will be allocated to the Onslow iron ore project and feasibility studies for a lithium hydroxide refinery.

Last Friday’s update appeared to be related to the proposed bond issuance, sharing with potential investors what they would hear in pre-issue briefings.

Firstly, the Perth-based mining company unveiled updated mineral resources and ore reserves at its Mt Marion and Wodgina lithium deposits in WA.

Mount Marion (50%-50% joint venture with China’s Ganfeng Lithium Group) showed significant improvement, with the total resource increasing by 26% (compared to June 2022 levels) to 64.8 million tonnes (Mt) at 1.42% lithium oxide. Importantly, Mt Marion’s estimated ore reserve surged by 107% to 35.7Mt at 1.42% lithium oxide. MinRes highlighted that these new figures for Mt Marion are based on an open-pit operation, leaving room for additional resources with further deep drilling success.

MinRes CEO Chris Ellison expressed optimism about the potential for underground mining at Mt Marion.

On the other hand, the Wodgina mine resource decreased by 16% to 217.4Mt at 1.15% lithium oxide, while its ore reserve increased by 12% to 164.6Mt, also at 1.15% lithium oxide. MinRes manages all mining operations at the Wodgina site, including a spodumene concentrate plant with three processing trains, each with a capacity of 250,000 tonnes per year.

MinRes and U.S. lithium giant Albemarle restructured their joint venture, resulting in MinRes’s ownership of Wodgina increasing to 50%, while MinRes sold its share in the Kemerton lithium hydroxide facility in WA to Albemarle. A transitional tolling agreement has been signed with Albemarle to allow MinRes to process its share of Wodgina spodumene at Albemarle’s facilities until the end of the 2023–24 financial year.

Simultaneously, MinRes was offered and subsequently declined a 50% ownership stake in two Albemarle lithium hydroxide refineries in China. MinRes plans to operate independently, having established its office in Ningbo, China, a major lithium hub.

MinRes is also in the process of conducting a preliminary study for its Australian lithium downstream plant, expected to be released shortly.

Additionally, MinRes announced a maiden resource at its Ken Bore iron ore mine in WA, with the resource estimated at 394Mt at 56.4% Fe and an ore reserve of 207Mt at 58.1% Fe.

MinRes CEO Ellison remarked, “Our maiden ore reserve and mineral resources at Ken’s Bore underpin the transformational Onslow iron project currently under construction, and together with the other joint venture resources, will see MinRes deliver low-cost, quality iron ore for decades to come.”

MinRes jointly owns Onslow with joint venture partners Baowu, AMCI, and POSCO of South Korea.

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