Mineral Resources : Annual Report to shareholders

ANNUAL REPORT

MINERAL RESOURCES LIMITED

2018

About this report

This annual report is a summary of Mineral Resources Limited's operaons and financial results for the financial year ended 30 June 2018. All references to 'MRL', 'the Company', 'the Group', 'we', 'us' and 'our' refer to Mineral Resources Limited (ABN 33 118 549 910) and the enes it controlled, unless otherwise stated.

References in this report to a 'year' are to the financial year ended 30 June 2018 unless otherwise stated. All dollar figures are expressed in Australian dollars (AUD) unless otherwise stated.

All references to 'Indigenous' people are intended to include Aboriginal and/or Torres Strait Islander people.

CONTENTS

CHAIRMAN'S LETTER ....................................................................................................................... 3

MANAGING DIRECTOR'S REPORT .................................................................................................. 5

FINANCIAL HISTORY ........................................................................................................................ 6

OUR COMPANY ............................................................................................................................ 8-12

OPERATIONAL REVIEW ................................................................................................................. 14

HEALTH AND SAFETY ............................................................................................................... 15

MINING SERVICES ............................................................................................................... 16-17

COMMODITIES .................................................................................................................... 18-20

ACQUISITIONS AND PROFIT SHARE PROJECTS ...................................................................... 21

INNOVATION ........................................................................................................................ 22-23

SUPPORT SERVICES .................................................................................................................. 24

SUSTAINABILITY .................................................................................................................. 24-25

INDIGENOUS ENGAGEMENT .................................................................................................. 27

PEOPLE ...................................................................................................................................... 27

COMMUNITY ............................................................................................................................ 28

FINANCIAL REVIEW .................................................................................................................. 29

ANNUAL FINANCIAL REPORT - 30 JUNE 2018 ............................................................................. 30

DIRECTORS' REPORT ........................................................................................................... 32-37

REMUNERATION REPORT ............................................................................................. 38-62

AUDITOR'S INDEPENDENCE DECLARATION ........................................................................... 63

FINANCIAL STATEMENTS ......................................................................................................... 64

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME ................... 65

STATEMENT OF FINANCIAL POSITION .............................................................................. 66

STATEMENT OF CHANGES IN EQUITY ............................................................................... 67

STATEMENT OF CASH FLOWS ............................................................................................ 68

NOTES TO THE FINANCIAL STATEMENTS ................................................................... 69-110

DIRECTORS' DECLARATION .............................................................................................. 111

INDEPENDENT AUDITOR'S REPORT ............................................................................... 112-115

SHAREHOLDER INFORMATION ............................................................................................ 116-117

CORPORATE DIRECTORY ...................................................................................................... 118-119

Dear MRL Shareholders

CHAIRMAN'S LETTER

On behalf of the Board, I am pleased to present the Annual Report for the 2018 financial year.

Our overall performance this year reflects the successful outcome of strategically targeng growth in both the mining services and commodity producon sectors since we listed in 2006. We have achieved this by capitalising on the innate technical skills and experience of our people, whose commitment and endeavours connue to be supported by an exceponally strong balance sheet.

Total shareholder return has been $19.07 per share, which is equivalent to an annualised increase of 42.9%, when averaged over the 12 years since lisng. I am proud of the financial performance achieved by the Company and I am absolutely confident that the Board and execuve management will connue to deliver outstanding value to our shareholders into the future.

The global economic and polical climate of 2018 has been turbulent and is likely to throw up challenges for the mining sector, and the Australian economy generally, over the next few years. The Board is cognisant of the current and expected headwinds in terms of minerals pricing and has focussed extensively on supporng management in broadening its focus towards creang 20 and 30-year business horizons, through both geographical and operaonal expansion. Strategically, we will target substanal growth across the mining related infrastructure sector through mine to port logisc supply chain and export facility operaon, addional profit share opportunies and, where appropriate, the opportunisc monesaon of our exisng mineral assets, while retaining life-of-mine services roles.

Notwithstanding the external influences that have impacted the business this year, the financial results for 2018 financial year (FY18) have again been outstanding with a record reported Net Profit Aſter Tax (NPAT) of $272 million, a return on invested capital (ROIC) of 18.3% and further strengthening of an already strong balance sheet. Mineral Resources (MRL) is a capital intensive business; thus the outstanding ROIC this year is truly a tribute to the Company's capital allocaon policies, including its ability to diligently manage capital and operaonal expenditure and the capital discipline that the Board and execuve management connue to exercise.

MRL's assets and its mining services operaons have tradionally generated significant amounts of cash across the mineral commodity cycle. The carefully considered deployment of our capital is the key determinant of how much shareholder value is created. The Board plays an integral role in establishing and managing the capital allocaon framework that has successfully facilitated corporate growth to date and, jointly with execuve management, we connue to focus on opportunies and ideas through innovaon, producvity, cost management and technology that will connue to maximise value creaon for our shareholders.

The Board is cognisant of the importance that the majority of shareholders place on cash returns. In recognion of this, we have strived to maintain a strong historical dividend distribuon policy that has seen approximately 50% of net profit aſter tax being distributed as a fully franked dividend each year. I am pleased to confirm that the Company's financial performance for FY18 has again enabled the Company to declare a fully franked dividend of 65 cents per share, being firmly in line with this policy,while at the same me maintaining our targeted strength in the balance sheet to support the Company's growth iniaves.

This year's strong financial performance is complementary to successes across key environmental, social and corporate governance areas, which are a strong endorsement of both the Board's and management team's focus on ensuring MRL connues to be a good corporate cizen.

Our safety performance through the year sees us remain in the top 5% of ASX listed companies from a safety perspecve, and really is a world class achievement for a mining sector operaon.

From an environmental perspecve, we have invested in renewable energy iniaves to supply clean power to our own corporate headquarters as well as various workshop and mine site locaons, thereby substanally reducing our carbon footprint across our mining and processing sites.

We are also proud of the me and money we have commied to philanthropic support as a Company, as well as from individuals within the Company.

I want to convey my appreciaon and congratulaons to the whole of the MRL team who, under the leadership of Managing Director, Chris Ellison, have again delivered outstanding returns that allow us to maintain our targets of performance and support for all of our stakeholders. It is only by connuing to grow and reinvent our business to meet the changing global impacts that we can support our employees, our clients and the communies in which we live and work, while all the me connuing to deliver returns for our shareholders. This year we have, again, shown our commitment and capability to achieve such outcomes.

In September 2017, we welcomed a new Board appointment, Ms Xi Xi. Xi has added diversity, commercial astuteness, wisdom and knowledge to the Board and its deliberaons. I am proud of the valuable contribuon that each of our Directors have made through the year and recognise the me and skill commitment which each Director dedicates to fulfilling their roles. The diverse range of skills on the Board provides the solid foundaon for future strategic and governance iniaves to make the Company stronger and ensure we remain fully aligned to our culture, our core values and to achieving successful performance across the Board.

I wish to thank all of our shareholders for having placed their trust in us to effecvely, efficiently and profitably manage their investment. We look forward to meeng with you at the AGM in November and to answer any quesons you may have about performance, opportunies and our future growth strategies.

Yours Sincerely,

Peter Wade Chairman