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Carlton told investors that ASX 200 Lithium Miner was the best performing stock in its portfolio for the September quarter.
He attributed some of that success to lithium, which has an “incredibly strong structural demand outlook,” adding that demand for the battery material is expected to outpace supply for the foreseeable future.
Competitive value and strategy change
Carlton also believes that Mineral Resources is competitively valued despite the fact that the company is trading at the top of its 52-week range. Closing at $76.58 in today’s trading session, Mineral Resources’ share price has nearly doubled over the past year, gaining 99.5%.
Current lithium prices are very favorable for existing lithium producers, which is leading to a review of the entire sector worldwide.
MinRes’s two JV partners, Albermarle and Ganfeng, are trading at higher multiples of forecasts EBITDA than MinRes. A similar multiple for MinRes’s lithium business would see the stock trade much higher than it is today.
He also noted Mineral Resource’s change in iron ore strategy:
MinRes has also begun a transition from a low-volume, high-cost, short-life iron ore operator to a low-cost, high-volume, long-life mine owner.
The final investment decision (FID) for the 30mtpa Onslow iron ore project was made in August 2022, with first ore expected to be produced by December 2023.
“Transformation Progress” in 4 chapters
And unlike some investors who are focused solely on Mineral Resource’s lithium business, Carlton sees value and potential in each business unit.
While the company’s lithium and iron ore growth “should underpin MinRes’ mining business for many years to come”, its other divisions have also been strong, he said.
… MinRes has also discovered a significant gas field in the Perth Basin, with the potential to supply all of MinRes’s and its customers’ gas needs for many years at significantly less than current contract gas prices.
We anticipate multi-year transformational progress in each of MinRes’ four divisions: Mining Services, Lithium, Iron Ore and Energy.
Mineral Resources share price snapshot
Shares of the company closed 0.42% lower at $76.58 this afternoon after hitting a 52-week high of $80.00 in mid-morning trading.
Since the beginning of the year, the value of Mineral Resources shares has increased by 36.7%. Meanwhile, S&P/ASX 200 Index (ASX: XJO) is down 8% over the same period.
Companies market capitalization is about $14.53 billion