Mineral Resources' management among the best in the business
Mining services and processing company, Mineral Resources, again surprised the market on the upside, reporting FY16 EBITDA of $286.1m, which was at the top end of the recent guidance range. It was a high quality result characterised by strong cash conversion, and the company now has net cash of $188m and several meaningful growth options. Management provided earnings guidance of $360-$400m EBITDA, implying EBITDA growth of circa 33% at the mid-point, well above consensus which had forecast a 13% decline. Although earnings are still sensitive to the iron ore price, the company’s cash cost has continued to decline. The company also has three mineral producing divisions: iron ore, manganese, as well as lithium through the quality Mt Marion lithium project, which comes into production in the coming months. We continue to rate management as among the best in the business, and expect them to continue to build shareholder value through their innovative low-cost solutions. (VIEW LINK)
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