We revisit the upside opportunities available to Mineral Resources, including continued support in iron ore spot prices, incipient Wodgina lithium DSO, and an increased forecast dividend yield. We have rerun our model with upgraded iron ore forecasts, and we now forecast EBITDA of $635M in FY18e. We view the Wodgina 1.3% lithium DSO has the potential to add an incremental $95 million in FY18e EBITDA at a 2mtpa run rate, assuming a $48/t operating margin. First shipment is targeted for April 2017. We see this as a prudent and opportunistic path to early cash flow from the Wodgina asset. Following the recent price pullback, the dividend yield looks even more attractive. We have upgraded our forecast dividends over the coming 12 months, and forecast a 2H17 35 cps dividend and a 1H18 30 cps dividend to align the payout closer to MIN’s historical 50% payout ratio. Our forecasts imply a 6.0% 12 month forward forecast dividend yield. We maintain a Buy recommendation on MIN based on its relative valuation with an increased price target of $16.05 (previously $15.08), in line with our blended DCF and EV/EBITDA (FY18e) valuation. You can access our report here:
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