Mineral Resources shares rocket on $1.2b POSCO deal
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More news: Mineral Resources led gains on the ASX 200 in early trade after agreeing to sell 30% of its lithium operations to South Korea-based POSCO Holdings in a $1.2 billion deal.
MinRes shares were up 8.5% to $50.93 at 11:05am AEDT. The stock is up 35% over the last 12 months.
RBC Capital Markets analyst Kaan Peker said the deal "unlocks clear value and reduces gearing for MinRes while leaving its core cash engine untouched".
The agreement implies a $3.9 billion valuation for MinRes' combined 50% interests in the Wodgina and Mount Marion mines, compared to consensus valuations of $2.7 billion. MinRes therefore struck a deal 45% above consensus net asset value, Peker said.
What they said: "The POSCO deal validates the quality of MinRes’ lithium assets, locks in a premium valuation, strengthens the balance sheet and secures a downstream Korean link, all while preserving high-margin services income, in our view," said Peker.
"The deal should also represent a positive read-through for the broader ASX lithium sector."
MinRes sells 30% stake in lithium business to POSCO for $1.2b
The news: Mineral Resources has agreed to sell 30% of its lithium business as part of a new joint venture with South Korean steel manufacturer POSCO Holdings.
The numbers: POSCO will acquire a 30% interest in the joint venture for an upfront cash consideration of USD765 million ($1.2 billion). MinRes will retain a 70% interest in the new entity.
MinRes' lithium operations comprise 50% ownership of the Wodgina and Mount Marion lithium mines in Western Australia. The joint venture will see POSCO take a 15% interest in each project, and receive spodumene concentrate in proportion to its stake.
The agreement values MinRes' existing 50% interest in its Wodgina and Mount Marion lithium mines at $3.9 billion.
The context: MinRes will continue as operator of both mines under agreements with its existing joint venture partners Albemarle and Jiangxi Ganfeng Lithium at Wodgina and Mount Marion respectively.
MinRes and POSCO have previously partnered through their Onslow Iron joint venture. The new agreement has been approved by the boards of both companies and remains subject to long-form documents and customary conditions, including from the Foreign Investment Review Board.
MinRes expects the deal to complete in the first half of the 2026 calendar year. The miner will use the proceeds to repay external debt and strengthen its balance sheet.
What they said: "This first-of-its-kind investment by a major Korean company into Australian lithium is a milestone for our industry," said MinRes chair Malcolm Bundey.
"It signals the growing global demand for Tier 1 hard rock lithium assets and the confidence international partners have in Australia's ability to meet that demand."
The source: ASX
