Mineral Resources Limited

Good morning, everyone. It's Mark Wilson, CFO in REZ speaking, and joining me today is Mel Bundy, Independent Non-Executive Chair, and Chris Chong, GM of Investor Relations. I'll start this morning with a few opening remarks on the quarter before we move to questions. The March quarter delivered more solid progress across the business. We navigated our operations through two tropical cyclones. Upgraded volume guidance across multiple divisions. We strengthened liquidity and reduced our net debt by $400 million. After quarter end, we also completed a US $1.3 billion notes offering. The material materially reduces our cost of debt and pushes out our debt maturity profile. Strong operating performance, high commodity prices and active balance sheet management are together driving faster deleveraging. While this improves flexibility, it does not change our disciplined approach to capital allocation. Our priorities remain balance sheet strength first, then selective high return brownfields growth. Starting with the balance sheet, liquidity strengthened to $1.8 billion at 31 March, up from $1.4 billion at 31 December. That comprised just under $1 billion in cash and a fully undrawn $800 million revolving credit facility. Net debt reduced to approximately $4.5 billion from $4.9 at the end of December, continuing our positive deleveraging trend. This quarter, our net debt number included $101 million positive foreign exchange revaluation on our unsecured bonds. We also continued to reduce legacy balance sheet items with the Onslow carry loan, reducing to $459 million from $553 million, and the iron ore prepayment amortizing to $440 million from $500 million. Post-quarter end, we issued U.S. $1.3 billion of new senior unsecured notes across two tranches, U.S. $650 million at 6% due May 2032, and U.S. $650 million at 6.25% due May 2034. This lowers our finance costs, extends duration and improves the resilience of the balance sheet. Specifically, the transaction reduces finance costs by around $48 million per year, lowers our weighted average cost of debt from 8.4% to 7.4% and extends weighted average tenor from 3.1 years to 5 years. The proceeds will refinance the US $625 million rate percent notes due November 27th fully repay the iron ore prepayment and redeem US$350 million of the US$1.1 billion, 9.25% notes due in October 28. The POSCO transaction remains subject to conditions precedent, including formal documentation and regulatory approvals. As disclosed, those proceeds are intended to redeem the residual US$750 million of notes due in October 28. This will further reduce our weighted average cost of debt to 6.9% and save another $100 million of interest per year. Looking forward, we expect liquidity and leverage to improve further in the June quarter and expect to be near or below our two times net leverage target at June. Turning to mining services, it delivered another strong quarter. Production volumes were 80 million tonnes. and we've upgraded FY26 production volume guidance to be somewhere between 320 and 330 million tonnes. Two existing external contracts were renewed during the quarter, and one external mining contract was completed. I would also like to reiterate an important point in the current fuel environment, that mining services margins are not impacted by higher diesel prices, because fuel is generally passed through to or supplied by the client. Turning to Onslow, in iron ore, Onslow Iron produced 7.8 million tonnes and shipped 7.2 million tonnes in the quarter on a 100% basis. Shipment volumes were affected by tropical cyclones Mitchell and Norell in February and March. We had water over the haul road in floodway areas designed to manage such an event. Winds, I'm told, registered over 190 kilometres nearby today. Importantly, the private haul road and other key infrastructure sustained no damage. Operations resumed safely and the project returned to nameplate capacity shortly after each cyclone. At Onslow, the realised iron ore price in the quarter was US$95 per tonne, representing a 91% realisation on the Platte 61% index. Q3 FOB cost was $53 a tonne, and year-to-date that FOB cost is sitting at $52 per tonne against our guidance, so $54 to $59 per tonne. For FY26, our attributable longslow volume guidance has been upgraded to somewhere between 17.7 and 19.4 million tonnes, with cost tracking at the lower end of guidance. Importantly, Onzo Iron is performing exactly as intended. It's generating free cash and it's reducing debt. We also continue to build optionality into the project's logistics chain. Our six-train ship are expected to arrive at the port of Ashburton in May. Commissioning for that is expected by the end of Q4 FY26. The seventh transshipper remains on track for delivery around the end of the financial year with commissioning by the end of the first quarter, FY27. In the Pilbara hub, Lamb Creek achieved first door on ship in March, just three months after we broke ground. This is a key milestone, reflecting our team's capability to move quickly from development into operation. The realised Pilbara Hub iron ore price in the quarter was US$89 per tonne, representing an 86% realisation on the PLAT 61% CFR index. We benefited from a higher lump weighting in the quarter in that part of the operations. Pilbara Hub FY26 volume guidance is maintained. Fibre cost is expected to be at the upper end of guidance with Q4 costs expected to be impacted by higher diesel prices. partly offset by the transition to the lower-cost lamb crate tons. In terms of lithium, lithium division had a much stronger quarter. The average realized price across both operations was US$2,105 per ton on an SE6 equivalent basis, up 92% quarter-on-quarter. We've continued to see prices strengthen into April, with sales being reported above $2,500 per tonne. Total quarterly attributable spot concentrate production from Mount Marion and Wajina was 127,000 tonnes SE6. Sales were 115,000 tonnes SE6 due to timing of shipments. FY26 volume guidance for Wajina has been upgraded to 270,000 and to 290,000 tonnes SE6 and Mount Marion upgraded 210 to 230,000 tonnes SE6 with FOB costs guidance maintained across both operations. Stripping at Wojnar is progressing well. We have line of sight to clean ore to feed all three processing trains by the December quarter, which will further improve recoveries and project economics. At Mount Marion, detailed design for a flotation plant to improve recoveries is nearing finalisation. Separately, we've commenced the tender process for an underground mining contractor and the underground study is expected to be completed this quarter. We also continue to evaluate the potential restart of Bald Hill, keeping an eye on that in the current geopolitical environment, which is taking a considered approach. These are the sorts of opportunities we like in this phase of the cycle. Existing assets, known operating teams, modest capital requirements that won't stretch the balance sheet, the potential for attractive returns. On safety, I also want to flag that the company has completed a comprehensive review of its injury and illness classification procedure. Following this review, the procedure has been revised to align with global industry standards. Adoption of the revised procedure may result in higher reported metrics reflecting broader classification of recordable injuries rather than a change in underlying safety performance. We expect to report healthy IFR and TRIFA under the revised procedure from 1 April 2026. This reflects a maturing in the business with our strong focus on safety and wellbeing unchanged. In terms of fuel, just a few words on this. I know it's a topic of great interest. We've experienced no disruption to contracted diesel supply or operations as a result of the Middle East conflict. That diesel is sourced from a major Australian fuel supplier. Due to a one-month pricing lag, the March quarter was unaffected by movements in the diesel price and the cost impact will be realised from April. If diesel prices remain at current elevated levels, which have doubled since the commencement of the Middle East conflict, we estimate FOB costs increases of approximately $4 per tonne for Onslow, $7 per tonne for the Pilbara hub and around $60 per tonne SE6 for our lithium sites. Despite this, FY26 FOB cost guidance is maintained across all divisions. And as I said earlier, it's important to note that mining services margins aren't impacted. Just in closing, in summary, we're entering the June quarter with strong momentum. We've upgraded FY26 volume guidance across multiple divisions. We've reduced net debt to approximately $4.5 billion and increased liquidity to $1.8 billion. We've also materially improved our debt maturity profile, our capital structure and our cost of debt. Oneslow Iron remains our key free cash flow driver, but lithium has improved materially and the balance sheet continues to strengthen. Our focus on the remainder of FY26 is clear. We're going to deliver on guidance, continue to deliver. We're going to maintain disciplined capital allocation and we're going to progress brownfields opportunities selectively and as justified by return and risk profiles. With that, I'll finish back now and hand back to Josh for questions. Thanks.

Thank you, Mark. If you have not yet submitted your text question or joined the live audio queue, please do so now. I will introduce each caller by name and ask you to go ahead. You will then hear a beep indicating your microphone is live. Our first question today comes from Rahul Anand from Morgan Stanley. Rahul, please go ahead after the beep.

Hi, good morning, Malcolm, Mark, Mike and team. Thanks for the call. Congratulations on a strong quarter. Look, from my perspective, the first question, you provided a pretty clear diesel impact there. I guess my question is that if you do have higher prices persist and they do kind of look like they're going to persist throughout FY27, then in that scenario, Do you have any near-term levers you can pull in terms of perhaps mine plan, in terms of great profile, et cetera, to help yourselves improve your work index, at least in the near term, to cushion some of that impact in your earnings? That's the first one, and I'll come back with the second.

Hi, Raoul. Good morning, and thanks for the question. You can imagine that we're constantly evaluating and reassessing mine plan options on our operations to optimise against cost. Clearly, with diesel being where it is, that's something that we're working on, but I'm not in a position to provide any guidance on possible impact at this point.

Got it. Okay. And look, second one, Good recovery increase at Mount Marion. I just wanted to touch upon whether there's been a genuine underlying recovery increase with a stable grade profile or is that largely driven by the fact that you've mined better parts of the ore body? I'm just trying to think about my forecast going forward for the asset given where the grades might look like they're going. Thanks.

Yeah, we've talked about Malmarion a bit, haven't we, in terms of its source out of various pits, and the recoveries tend to fluctuate depending on where we are in each pit and how deep we are in each pit. So I think we're very pleased with the performance through the quarter. It did perform well. It might come off a little bit this quarter, and I think we're still expecting it to be a little bit softer next year, but again, we haven't finalised that planning. We're going through the budgeting process at the moment.

Our next question today comes from Rob Stein from Macquarie. Rob, please go ahead after the beep.

Hi, guys. Sorry, just noting this trip ratio for Onslow in the quarter went up a fair bit, but costs basically hugged what they've been year to date and your guidance is down the bottom end. So I guess the question is, Are you realising any productivity benefits across the operation as you start to ramp it up to full utilisation, get that fixed cost solution? And how should we be thinking about that in terms of longer term cost guidance for the asset? Noting you're probably going to be taking a bit of a harder look given the diesel price environment on making savings elsewhere and what your trade-offs will be. Thank you.

G'day, Rob. I think you can assume we've been at that asset now for a little while. It's been at steady state at nameplate probably for more than six months now. I think you can assume we're continuing to chip away at the cost, continuing to drive efficiency. We were up there yesterday doing a site visit to check on it and talking to the guys, even in things like the truck maintenance facility, the way that they're able to optimise drive-down cycle times is incredibly impressive. So all those little things add up to greater efficiency across the operation. So very pleased, and that's why we're comfortable where we are with the cost and the cost guidance.

Okay, thanks for the call there, Mark. And then just, sorry, follow-up. Third-party contracts, the services volumes were a lot larger than what I had and what I think what ConsenSys had. Can you sort of give us a flavour for how the demand for that segment of the business is changing in this current environment? how are we to think about obviously the increased guidance for this year but how do we think about what guidance looks like for you know next year and not trying to front run it but just trying to get a think about the run rate yeah I've said for a while that there's you know there's strong inquiry and demand for that for that service you know we've got

industry-leading capabilities in a number of areas. We've got three decades of experience. We're talking to a number of clients around a range of opportunities. Some of them are smaller and some of them are larger. We continue to work through those. So very pleased with the way that's looking for the next few years.

Our next question comes from Lachlan Shaw from UBS. Lachlan, please go ahead after the beep.

Yeah, morning, Mark and Chris. Thanks for the call and taking my questions too from me. So just a quick one on Onslaught to start. Obviously, well done with the guidance upgrade. I just wanted to ask and confirm, though, in terms of the March quarter and the seasonality in production, but particularly shipments, was that in line with how you're thinking about, you know, sort of budgets and, I suppose, anticipated downtimes?

Hi, Lachlan. The answer is yes. We've talked previously about that March quarter being the most challenging in a weather sense with the cyclone season. So we expected it to be our softest of the year. And I think I might have foreshadowed that in some of my previous comments. So no great surprise with that. with the impact of the weather. The one thing that maybe surprised me a little bit was just the number of days that those cyclones impacted us. We had to send the transshippers out a little bit further because of where the cyclones were tracking. But apart from that, overall, their quarter was pretty much in line with where I thought it was going to be, Toronto.

Great. That's great, Keller. Thank you. And then the second question, just to move to So maybe just reflecting on the strip ratio there, and obviously you're still stripping and looking to get to steady-state three-train operations in 2027. Can you just remind us of how we should think about what that pathway looks like to getting a lower strip and obviously increased oil feed into the concentrators, and then maybe a little further out, just to remind of the critical path in terms of standing up studies, potential FID and builds for trains, you know, what might come next, trains four and or five. Thanks.

Yeah. So timing hasn't really shifted that much. We've been saying for a while it'll be Q4 this calendar year when we get towards clean or enough clean feed to support three trains consistently. We've been running at two to two and a half for some time now. and we expected to have and will have this quarter some lower-grade feed coming through as we continue to run and produce tonnes. So over the next six months, we should really start to see that shift, and we'll start to see the strip come down, and then we'll see the mine open up, and we'll be able to access that feed continually for quite some time, for many, many years. In terms of studies and the other opportunities up there, that's something that we continue to talk with our very good partners, Alvamal, about. We're continuing to evaluate a range of options for growth up there. And when we're in a position to comment, we'll bring more back to the market.

Our next question comes from Khan Pekka from RBC. Con, please go ahead after the beep.

Good morning, Mark and Chris. Two questions from me. Just the first one, maybe if I can push you for a bit more detail about the possibility of the Bald Hill restart, particularly given the industry-wide inflation. I mean, does this change or reduce your enthusiasm around that? And I'll circle back for a second.

Hi, Khan. We've been talking about the possibility of Bald Hill coming back online for a little while now. We said we wanted to see a bit more stability in the lithium market. That's shown to be quite resilient. The market outlook is very strong. We're seeing a lot of demand coming through now and suppliers struggling to keep up with that demand. As I said in my comments earlier, we're just being considered in the broader geopolitical environment at this point, so it's something we're actively monitoring. I won't be able to say anything more than that though.

Sure, thank you. And then secondly, maybe if we can, an update on expectations for Mount Marion for the float plant and then again timing.

Yeah, we're just working through the finalisation of that detailed design, talking with our JV partners, making sure we get it optimised. You know, that's something we're working towards. It fits well with the underground work as well. You know, they work off each other. And the underground work is going to be finished this quarter. So, yeah, we need to go back to the board and take them through it. But... You know, the benefits of the float are significant in terms of providing us with a single product at 5% and ultimately giving us an extra 100,000 tonnes of production from 500 to 600,000 tonnes on a C6 basis. So, you know, I think as we take the board through both the projects together, I hope to be able to come back to the market over the next three or four months.

Our next question comes from Paul Young from Goldman Sachs. Paul, please go ahead after the beep. Paul, you are live. Please go ahead.

Yeah, morning, Mark. Hope you're well. First question is on diesel, just on the supply visibility. What assurances is your supplier giving you on supply? Where are they sourcing their crude from? Any information you can provide on that? What visibility do you think your major supplier has on crude supply?

Morning, Paul. Look, we've had a very strong relationship with our supplier for a couple of decades. We're talking with them daily. We think they've got as good insight as any in terms of access to product. We've got visibility of shipments that they have coming into the country. We know when they're landing, how much is coming out. So very happy with the way that relationship has worked with us through this period. And... You know, beyond that, I'm not sure that we have any more visibility than any of the majors, but, you know, comfortable that we are where we are in terms of serving the supply.

Okay, thanks, Mark. And then a second question on all realized pricing, particularly around, I understand... the Pilbara and the additional lump and that will continue. So that explains that. But just on Onzo, really the outcome on price realizations, you're actually outperforming some of the other producers that produce similar sort of 58% product. So I just want to ask around, you know, how that's being achieved. Was there any provisional pricing sort of tailwind here? Or is it the fact that, you know, your partners – are actually paying a little bit more, so to speak, versus a certain index. I'm just trying to understand how you're outperforming some of your peers on Onsla specifically.

Yeah, no kicker from a price adjustment or anything like that. It is just as it was through the quarter. Again, I've said for a while that this product's been very well received in China. It's been very well accepted by the mills that are using it. We've got a strong brand identity for the product and there's a lot of demand for it. And so I think that's translating now into the sorts of realisations that you're saying. So I think it's reflective of the quality of the product and market awareness of it.

Our next question comes from Matthew Friedman from MST Financial. Matthew, please go ahead after the beep.

Yeah, thanks. Morning, Mark and Chris. Look, firstly, thanks for the detail on the diesel cost impacts at the iron ore hubs. I'm wondering if there's any commentary you can provide on recent shipping cost impacts, PTCFR costs, and, you know, whether you can give that feedback in the context of at the group level or at the asset level, because I imagine it's a little different between the two assets, obviously due to the vessel sizes. But I'm just thinking the quantum of the impact may actually be a bit bigger than the diesel impact in isolation. Thanks.

Yeah, so diesel represents about 30% of the cost of shipping, as I understand it. And so if 30% of the cost of shipping is doubled... um you get it you get an impact the the price is being felt more in the panamax sizing than the cape sizing um cape sizing might be five or six dollars a ton um panamax bit more and just generally sorry on the on the diesel we've tried to be as helpful as we can with uh with the commentary on it because we know it's everybody's looking at it from slightly different basis based on $10 a barrel and all this sort of stuff. We're just trying to make it very granular and give you the impact on FOB.

No, thanks, Mark. I think that's pretty clear. Maybe secondly, at Mount Marion, obviously great to see you moving forward with the underground restart and the float plant. And I'm just trying to think ahead as to how these kinds of decisions might work under the POSCO JV, obviously, once that closes. And I guess probably more interest in in Wojnar and you know you've already talked through some of the future growth options you've got there but I guess can you talk us through the mechanics of how it would work to make these sorts of capital investment decisions at Wojnar or Mount Marion and you know whether that would be first seeking approval at a POSCO JV level and then elevating to the Marble JV or the Ganton JV level. I guess I'm just trying to understand the mechanics of things like investing in a processing plant upgrade or additional training in the future and how quickly you can move on those kinds of decisions under the POSCO JV. Thanks.

The starting point for us remains capital allocation frameworks. We're thinking about these opportunities in that context and just to remind people we need to be at or with a clear pathway to net leverage of two times for us to be considering any sort of growth capex. So that's a gate that we want to step through. As I said earlier, we need to take the board through the combined project and get final endorsement and sign-off. I think the benefits we've talked about previously are pretty well understood. But, you know, again, we'd need to take the board through the whole process in detail. In terms of the process going forward, you know, the key thing with the POSCO arrangement, and they're a wonderful partner, right? POSCO's a great company. They're a wonderful partner for us at Onslow. And, you know, when we get this deal done on the lithium, I've got no doubt it will be the same deal. The most important thing is we remain the operator of each of those mines. We still lead. We work closely. Gangping and Eldemarle have the primary, the largest economic co-interest with us. So they're going to be the key stakeholders as we sit through things.

Our next question comes from Mitch Ryan from Jefferies. Mitch, please go ahead after the beep. Yep.

Morning. Thank you for taking this question. The 90 cent a tonne port of Ashburton levy dispute with Pilbara Ports and Chevron has clearly escalated to the point where it's going to civil trial. At what point do you need to start carrying a liability on your balance sheet for that and can you quantify what it would be if it was applied retrospectively?

Hi, Mitch. It's currently before court at the moment, and we've been accruing that amount all the way through. So it's in our numbers, as if we're just being conservative in our numbers. It doesn't mean that we expect that to be the outcome, but that's the approach we've taken. Okay.

Thank you for that. And then just the $240 million of CapEx during the quarter, can you just provide a bit of a breakdown of what assets that was? Can you sort of spread that across the assets for us, all the projects?

I might have to take that offline and come back to you on that. Broadly, CapEx is tracking generally in line with where we thought it was going to be at the start of the year. So it's still spreading the same sort of... Well, let me put it differently. We haven't started and re-embarked on any major capital spend items that you don't already know about.

Our next question comes from Glyn Lawcock from Baron Joey. Glyn, please go ahead after the beep.

Morning, Mark. Just two questions from me. Firstly... As they say, it's always about the art of the deal. I mean, Min managed to change the Wojnar sell-down deal with Albemarle, I think, three times from memory. Is there any potential to alter the terms on the POSCO deal or even get out of it? Thanks.

Morning, Glenn. I'm not going to comment on the POSCO deal. Obviously, we'll tell you when we're in a position to do so if there's any change or any update on the status of that.

Okay. Okay. And then just secondly on the cost, if I look at year-to-date and the guidance you've given on fuel, I mean, that's two questions in one. Firstly, the fuel guidance you gave of 47 and 60, that's based on what you currently saw, diesel doubling, and just finding is diesel even more expensive now, so the rate could be higher. And then as a second part, as we exit Q4, it would seem like with the guidance you've given, you're going to be exiting Q4.

above the guidance rates for 26 is that a fair given where diesel is thanks the diesel pricing uh is struck with a with a lag as i said there's been a fair bit of volatility with the pricing and at one point the price had more than doubled so when i talk about doubling for the quarter i'm taking effectively an average over the over the quarter um At the moment, it's possible that we'll finish the quarter lower than double, but the average for the quarter we're expecting to be double. I don't know if that answers the question in terms of... Glenn, if I haven't answered your question, hit me again.

Glenn, you are live, if you wish.

Oh, sorry. Yeah, Mark, sorry. I just was curious, like, what spot diesel is looking like now. Ah, okay.

I mean, essentially it's running at around $2 a litre at the moment.

And that's roughly double what you use? Roughly double, yeah. Okay.

Okay, thanks.

Before we continue, just a reminder of the instructions. To ask a text question, select the messaging icon, type your question in the box towards the top of the screen and press the send button. To ask a live audio question, press the request to speak button at the top of the broadcast window. If you have any issues using the platform, dial in details can be found on the homepage under asking audio questions. Our next question today comes from Lachlan Shaw from UBS. Lachlan, please go ahead after the beep.

Thanks very much for taking my follow-up. I just wanted to, I suppose, Mark, you touched on capital management. Just observing, given that the business is deleveraging, that's on track and operational performance is improving. I'm just wondering if board conversations around balancing growth versus returns are changing and maybe how should we think about those sorts of conversations and those balances going into FY27 and 28? Thank you.

Thanks, Lachlan. We spent a lot of time with the board over recent months talking about a whole range of things. I think we foreshadowed that we're having a couple of days with them on strategy. So we did that a month or so ago, which was a great couple of days. And you can imagine that part of that conversation was around growth and the prospects for growth into the future and what the company would look like. This company's got a very strong, proud track record of over 30 years delivering growth, 20 years as a public company. And, you know, I think the pipeline of opportunity for it remains significant. And we've talked previously about the Brownfields expansion opportunities and We've slowed down in the past years investing in some of those whilst we focused on delivering Onslow and getting the cash flow coming out of Onslow. Now that the cash is coming out of Onslow and the deleveraging is happening, we've got options under our capital allocation framework, which could include further deleveraging, could include some sort of return to shareholders, and it could include growth. So they're the sorts of things that we're talking about with the board actively in terms of choice. And, you know, we'll be continuing to do that in the coming months as we get into 27.

Great. Thank you.

We have a written question from Ben Lyons from Jordan Securities Limited. Ben asks, given the imminent arrival of TSV-2, 6 and 7 at Onslow, can we please revisit the strategy of using them, i.e. when is the first dry dock required for TSVs 1 through 5 using TSV-6 as a substitute, and when can TSV-7 start to provide incremental tonnes above the 335 MTPA rate? Remind us of the requirement to dredge the channel and incremental expansions to the loadout facilities. Thanks.

Okay. Thanks, Ben, for the question. So the sixth transshipper will be here imminently in the next few weeks, and we'll spend some time commissioning it. We expect then that transshipper will help us deliver incremental tons through FY27. We've talked about taking those tons up towards 38 as a result of that transshipper coming online. The seventh transhipper provides us with the flexibility, or I guess more accurately, the ability to maintain that sort of run rate for a full year as we cycle the six operating transhippers through maintenance periods, which run to a number of days per month for each transhipper. In terms of dredging and so on, that's something that we just, it's a constant thing that we'll be managing and navigating. That's just ordinary course in the same way that we maintain our assets generally. And in terms of expansion and so on, we don't need to be thinking about that with the sixth and seventh transshippers. The existing infrastructure is sufficient to allow us to operate with those.

Thank you very much. There are no further questions, and that concludes today's call. Please reach out to the Minres team if you have any follow-up questions. You may now disconnect.