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.