Stock of the day: Mineral Resources
Mineral Resources' share price jumps 17% after announcing $300 million in savings and the $1.3 billion sale of its haul road.
(AI video summary)
This video was created on 11 September for IG audiences by ausbiz.
Stock of the day: Mineral Resources (ASX:MIN)
Mineral Resources has seen its share price surge after announcing significant cost-cutting initiatives, especially within its lithium division. The company reported $180 million in capital expenditure (CapEx) savings and $120 million in operational cost savings after the market close, sending positive signals to investors.
Key cost savings and operational updates
The cost reductions include changes to employee hours at its Mount Marion and Wodgina lithium operations, helping streamline costs without affecting production guidance. Additionally, the company secured approval from the Foreign Investment Review Board (FIRB) for the sale of its haul road, which will net $1.3 billion, boosting its financial position.
Investor response and share price jump
Following these announcements, Mineral Resources' shares rose by 17%, marking a strong rebound after months of declines due to weakness in the lithium market. This sharp rise reflects improved investor sentiment as the company focuses on cost management.
Strong liquidity but high debt
Mineral Resources' balance sheet shows liquidity reserves of $2.8 billion, which will be further strengthened by the $1.3 billion from the haul road sale. The company has been focused on cost control, as seen with a recent dividend cut. However, the company still carries significant net debt of around $3 billion, which raises concerns for some analysts.
Short squeeze and market dynamics
Mineral Resources also has a high short interest, with 8% of shares shorted—an unusually high figure for a company of its size. The 20% increase in morning trade, along with similar moves in other lithium stocks, is partly due to a short squeeze after news that a major Chinese lithium producer had halted production, which could lift prices.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Explore the markets with our free course
Learn how shares work – and discover the wide range of markets you can trade on – with IG Academy's free ’introducing the financial markets’ course.
Put learning into action
Try out what you’ve learned in this shares strategy article risk-free in your demo account.
Ready to trade shares?
Put the lessons in this article to use in a live account – upgrading is quick and easy.
- Trade over 16,000 popular global stocks
- Protect your capital with risk management tools
- React to breaking news with out-of-hours trading on 70 key US stocks
Inspired to trade?
Put your new knowledge into practice. Log in to your account now.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
