Mineral Resources : 25/01/2023 - FY23 Q2 Results Conference Call Transcript

	TRANSCRIPTION
Company:	Mineral Resources
Date:	25 January 2023
Duration:	48m 10s
Reservation Number:	10027324
	[START OF TRANSCRIPT]
Chris Chong:	Ladies and gentlemen, thank you for standing by and welcome to Mineral
	Resources December 2022 quarterly call. My name is Chris Chong, Manager of
	Mineral Resources Investor Relations. Shortly I'll hand over to James Bruce,
	EGM Corporate Development, to provide a short introduction before opening
	the lines for analyst questions. A little bit of admin before we kick off; please be
	aware that today's call is being recorded and a written transcript will be
	uploaded to our website.
	This call is a Q&A with our sell side analysts to discuss our quarterly production
	reports. If you wish to ask a question via the phones, press the star key
	followed by the number one on your telephone keypad. The moderator will then
	open your line and invite you to speak. Please start with your name and
	company for the record. If you wish to ask via the weblink, please type your
	question into the Ask A Question box. This is meant to be an interactive and
	free-ranging discussion.
	With that, I'll pass the call over to James.
James Bruce:	Thanks very much, Chris and good morning everyone or good afternoon, thank
	you for joining us. This has been another busy quarter for MinRes. All four of
	our businesses are going well and the market for our products and services is
	strong. Our safety and performance continued to be strong. We had no LTIs
	during the quarter. Our mining services business is on track for guidance, so a
	predictable business and there was another predictable quarter.
	In iron ore, our production and shipments are in line with our plans and we're on
	track to meet our guidance. Iron ore realisations are strong at 98% and just to
	note that net of any prior period adjustment, the realisations would have been

84%. Shipments for our iron ore business have moved from a two-month lag to a one-month lag and we've successfully completed this program.

In lithium, spodumene, Mt Marion production was in line. I'll talk a bit more about the expansion a little bit later. And at Wodgina, it's ramping up well and all three trains are now online and we're producing to product spec. In lithium hydroxide and carbonate, at Mt Marion converted and sold 4300 tonnes of lithium hydroxide, up 15% quarter on quarter. At Wodgina we sold our first lithium hydroxide carbonate, 2200 tonnes, so that was pleasing. And our average realised pricing of US$65.99 a tonne, excluding VAT, was a good outcome.

On Mt Marion, the expansion to 900,000 tonnes has been delayed by a couple of months due to supply and process equipment and labour shortages. Our FY23 guidance therefore reduced to 250,000 to 280,000 tonnes, down from previously 300,000 to 330,000 tonnes. We're maintaining 40% will be high- graded product, that's unchanged. Our FOB guidance is also similarly increased as a result of the delay in the expansion and so costs will be $540 to $590 a tonne, previously was $460 to $510 a tonne FOB.

The capex for the expansion remains at $120 million of 100% basis and pleasingly during the quarter we also completed an extension to the Ganfeng toll treating agreement to the end of 2023 with an option to extend this further to 2024. Just note within our results and I think we've talked to you before about this, but there is a working capital build-up as we build our hydroxide business and conversion capacity. There's a lag of about a six-month period from shipment of spodumene to lithium hydroxide and so you should just be aware of that as you model the Company going forward.

So, at Kemerton, Train 1 is commissioning and the product remains subject to qualification. We continue to work on the Albemarle transaction and as the terms are set out in the 2022 results presentation, so that's continuing. In our gas business, it was a very busy quarter. We've made an off-market scrip offer for Norwest Energy in December and we revised that offer yesterday and then Norwest directors have recommended that offer. We've also contracted a drill rig to drill Lockyer-2 and North Erregulla Deep, that rig is now mobilising from the Northern Territory. In addition, we took a 19.17% stake in Warrego Energy.

	In the Carnarvon Basin we picked up an additional acreage with our JV partner,
	Buru.
	So, with that, they were some of the highlights in the quarter. So, I might pass it
	over to everyone and see if you'd like to ask a question. Darcy, can you please
	queue the questions?
Operator:	Thank you. If you wish to ask a question via the phones, you will need to press
	the star key followed by the number one on your telephone keypad. If you wish
	to ask a question via the weblink, please type your question into the Ask A
	Question box. The first question comes from Kaan Peker from Royal Bank of
	Canada. Please go ahead.
Question:	(Kaan Peker, Royal Bank of Canada) Good morning, James and Chris. A few
	questions from me, if that's okay. Just wanted to get a bit more detail around
	what's driving carbonate conversation or production from the MARBL JV. It
	seems like it's linked to qualification or accreditation and long-term lengthy
	contracts with Albemarle, which is temporary, is that correct?
James Bruce:	Yes, hi Kaan. Yes, look there is a process to go through with qualification, you
	know, as we ramp up our hydroxide and carbonate sales, that's ongoing. We're
	pretty pleased about those outcomes and it's in line with our expectations.
Question:	(Kaan Peker, Royal Bank of Canada) Should we expect more conversion of
	carbonate going forward?
James Bruce:	Well, it will be a combination of both carbonate and hydroxide. We will make the
	best value decision at any point in time, whether it's carbonate or hydroxide,
	we're not guiding on either one and with our partners in Albemarle, we will
	make those decisions on a go-forward basis.
Question:	(Kaan Peker, Royal Bank of Canada) Sure. I'm just wondering if there's a toll
	charge on the spodumene that's different if it's carbonate or hydroxide.
James Bruce:	The very short answer is there's no difference, Kaan.
Question:	(Kaan Peker, Royal Bank of Canada) Okay, sure. Just last one, just sticking
	with Wodgina. I think you mentioned that all three trains are online. Is there any
	constraints to ramping that up? Have all the approvals been receipts?

James Bruce:	Yes, so as we've previously stated, we are going through approvals this half
	that we're in right now and our guidance contemplates those approvals. So right
	now, we have in place - we will be producing from two trains on a 100% basis
	and a third train will be available, but we're not able to lift our mining volumes
	until July of this calendar year. So actually, Wodgina is going extremely well
	and those approvals we expect to have in place by mid-year.
Question:	(Kaan Peker, Royal Bank of Canada) Perfect, thanks, I'll pass it on.
	Appreciate it.
James Bruce:	Thanks, Kaan.
Operator:	Thank you. Your next question comes from Austin Yun from Macquarie. Please
	go ahead.
Question:	(Austin Yun, Macquarie Group) Morning James and Chris, just two questions
	from me. The first one is on the Mt Marion expansion. Noted there is a delay,
	which is not uncommon in the tender market. I'm just curious about these $120
	million capex, how much has been spent, how much is yet to be expensed in
	future quarters? Based on the recent update, it seems like the inflation is quite
	a common amount used in lithium peers. I'll come back with a second one,
	thank you.
James Bruce:	Thanks Austin. No, so we build, own and operate everything ourselves using
	our mining services business and I think that's why we're able to keep costs
	under control. While there has been a delay because of the noted items, it
	hasn't led to cost increases for us and we'll disclose the capex for the half that
	we spend at our financial results in February.
Question:	(Austin Yun, Macquarie Group) Thank you, James. The second question is
	around the iron ore price realisation, noted that there has been a change from
	two-month lag to one month. Just wanted to confirm that in the March quarter
	the realisation will the back to normal, more kind of reflective of the iron ore
	ecology or if there's any other adjustment, we need to be aware of? Thank you.
James Bruce:	Yes, so Austin we're pretty pleased at what's happening in our iron ore
	business, we are and we have started producing more lump, especially at our
	Yilgarn operations and the guidance is the 20% lump on a go-forward basis. As
	you noted, our quotation period is also down from two months to one month, so
	there should be less variability on a quarterly basis on our realisations.

	Then we're pretty pleased with how customers are receiving the product and
	demand for the product right now. I can't really guide you to the next quarter
	because it's subject to what happens to iron ore prices over that quarter. But
	needless to say, we're quite constructive on where the iron ore market is right
	now.
Question:	(Austin Yun, Macquarie Group) Thank you James. So also it's better quality
	coming through as well - OK?.
James Bruce:	That's right.
Operator:	Thank you. Your next question comes from Rahul Anand from Morgan Stanley.
	Please go ahead.
Question:	(Rahul Anand, Morgan Stanley) Hi guys, happy new year. I just had a couple
	of…
James Bruce:	Happy new year to you, Rahul.
Question:	(Rahul Anand, Morgan Stanley) I had a couple of things to say. Thank you,
	thank you. Look, a couple from me, in terms of the Wodgina spod price
	achieved, just looking at - my understanding was that you got basically the
	previous quarter for the present six months. That was sitting at about a
	US$6700, the price flagged today seems to be more around US$6000. Is there
	any other adjustments in there? Obviously, there's the shipping to get to the
	FOB, but that's minimal. I just want to understand that part first and the second
	on the spod side, the ownership, if there's an update there.
James Bruce:	There's just on, on Wodgina, so in term of the spod price, we achieved 95% of
	the average three-month trailing set of the three indices: past markets, Asian
	metals and benchmark minerals so you, that's the formula, if I can guide you to
	that. In terms of our discussions with Albemarle, they're continuing on, in terms
	of ownership.
Question:	(Rahul Anand, Morgan Stanley) Okay, no worries. And then if we talk about
	the conversion side then, in terms of the achieved price, the $51,000 per tonne,
	what was the product quality there? Was there any sort of adjustments because
	you're still ramping up and qualifying, and was that technical-grade product or
	was that battery grade and how should we think about pricing for that side of
	the business?