Shares of the ASX-listed Mineral Resources Limited (AU:MIN) rallied over 7% on Thursday following a favourable production update for the second quarter of FY24. The company also maintained its volume and cost guidance for the full year.
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Mineral Resources is a prominent diversified resources company with operations in lithium, iron ore, energy, and mining services throughout Western Australia.
Key Highlights of the Quarterly Production Update
During the quarter that ended on December 31, 2023, Mineral Resources’ production volumes reached 72 million Mt (metric tons), reflecting an increase of 9% from the previous quarter. The iron ore shipments surged by 23% to 4.8 wMt (wet metric tonnes) on a quarter-over-quarter basis.
For lithium, the company reported a 30% increase in spodumene concentrate output from its Mt Marion operation for the second quarter.
The company expects to post a net debt between AU$3.472 billion and AU$3.612 billion for the first half of FY24.
What Are Analysts Saying?
Post-update, Citi analyst Kate McCutcheon reduced her price target on the stock from AU$72 to AU$71, while maintaining a Buy rating. The new price implies an upside of 21.2%. Citi also adjusted its EBITDA estimate downwards to AU$630 million for the first half, mainly due to rising FOB (free on board) costs for iron ore assets.
On Monday, Mineral Resources shares fell around 9% after Jefferies analyst Mitch Ryan downgraded his rating on the stock from Buy to Hold. Ryan also reduced his price target from AU$70 to AU$65, implying a growth of 9.5%. Ryan believes the falling lithium price and persistent cash outflows could burden the balance sheet despite the company’s stronghold on iron ore production.
Over the last 12 months, the stock has lost over 35% in trading.
Is Mineral Resources a Good Share to Buy?
According to TipRanks’ consensus, MIN stock has been assigned a Hold rating, backed by four Buy, three Sell, and two Hold recommendations. The Mineral Resources share price target is AU$64.32, which is 8.3% above the current trading price.
