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Mineral Resources Ltd (ASX: MIN) shares experienced a sharp rally on Thursday morning, soaring by 4% to AU$72.49 following a significant development in the company's infrastructure portfolio. However, the stock last traded on Thursday at AU$69.350, tumbling by around 0.28%.
Investor enthusiasm has been ignited by the announcement of a binding agreement between Mineral Resources and Morgan Stanley Infrastructure Partners (MSIP) for the sale of a 49% interest in the dedicated haul road of the Onslow Iron project. This strategic move is expected to inject substantial capital into Mineral Resources, with total proceeds anticipated to reach AUAU$1.3 billion.
The Onslow Haul Road stands as a critical component of Mineral Resources' innovative transportation infrastructure solution, facilitating the transportation of iron ore from the Ken's Bore mine site to the Port of Ashburton in the West Pilbara region of Western Australia. Spanning 150 kilometres, this dual-lane road plays a pivotal role in unlocking previously stranded iron ore deposits and supports the operation of autonomous road trains. With full sealing, fencing, and advanced fibre optic cabling, the road ensures efficient and seamless mine-to-ship delivery of Onslow Iron products to customers.
Under the terms of the agreement, the transaction vehicle will receive a life-of-mine CPI-adjusted tolling fee per tonne of iron ore transported through the Onslow Haul Road, capped at 40 million wet metric tonnes per annum (Mtpa). The transaction values the Onslow Haul Road at AU$2.7 billion, representing a robust 9.4 times pro-forma EBITDA multiple based on the 35Mtpa nameplate capacity.
The proceeds from the sale comprise an upfront consideration of AU$1.1 billion and a deferred consideration of AU$200 million, contingent upon achieving a 35Mtpa run rate for any quarter before 30 June 2026. This influx of capital is expected to bolster Mineral Resources' financial position and provide access to additional growth opportunities.
Chris Ellison, Managing Director of Mineral Resources, hailed the agreement as a testament to the world-class credentials of the Onslow Iron project. He expressed pride in the strategic relationships forged with global industry leaders and welcomed Morgan Stanley Infrastructure Partners as a partner in the venture. Ellison emphasised the significance of the transaction as a pioneering move in the Australian iron ore industry, showcasing Mineral Resources' ability to unlock substantial value from its infrastructure assets and accelerate growth.
