Mineral Resources (ASX:MIN) has finally sold a minority stake in its WA iron ore haul road for a significant $A1.3 billion.
The Perth-based miner revealed the sale late Wednesday evening and stated that it expects to receive around $1.2 million after costs, which will be used to reduce the company’s very large debt burden of $3.6 billion (as of last December).
The company also had $1.4 billion in cash at the same time, much of which is needed to help finance the company’s ambitions in iron ore, lithium, and oil and gas, as well as contracting mining for a wide range of customers.
The buyer of the 49% stake in the road is an arm of the US investment bank – Morgan Stanley Infrastructure Partners.
The asset is Onslow Iron’s dedicated haul road, which links MinRes’ West Pilbara project with a port on the WA coast.
The 150-kilometre dual-lane road connects the Ken’s Bore mine site to the Port of Ashburton. It will be fully sealed, fenced, and equipped with fibre optic cabling to support the operation of MinRes’ autonomous road trains.
MinRes will retain majority ownership and exclusive rights to use, operate, and maintain the Onslow Haul road.
“As the first transaction of its kind in the Australian iron-ore industry, it showcases the considerable value of MinRes’ portfolio of infrastructure assets and our ability to unlock significant capital.
“The transaction also establishes access to a new pool of capital to further accelerate our growth and continue to deliver returns for our shareholders,” said MinRes CEO, Chris Ellison.
The transaction vehicle (a trust) will receive a life-of-mine inflation-adjusted tolling fee per tonne of iron-ore transported through the Onslow Haul road of $8.041 (100% basis), capped at 40-million wet metric tonnes a year. The tolling fee will be reset at a reduced rate after 30 years. MinRes said it would own any tolling payments for volumes above 40-million tonnes a year.
According to MinRes, the transaction values the Haul Road (100%) at $2.7 billion, based on the 35 million tonnes a year capacity.
MinRes said the gross proceeds are payable in cash and comprise upfront consideration of $1.1 billion and a deferred consideration of $200 million that is subject to achieving the 35 million tonnes a year run rate for any quarter before June 30, 2026.