Mineral Resources shares charge higher on lithium guidance upgrade

Mineral Resources Ltd (ASX: MIN) shares are pushing higher on Thursday morning.

At the time of writing, the mining and mining services company’s shares are up 3% to $65.79.

Why are Mineral Resources shares pushing higher?

Investors have been buying the company’s shares after it delivered a strong quarterly update that included a meaningful upgrade to its lithium production guidance to capitalise on higher prices.

According to the release, for the three months ended 31 December, Mineral Resources produced 138,000 dry metric tonnes (dmt) of attributable spodumene concentrate (SC6) and sold 143,000 dmt.

This comprises production of 85,000 dmt at Wodgina and 81,000 dmt at Mt Marion.

Management revealed that the Wodgina operation achieved a notable processing milestone during the quarter, with recoveries averaging 70% following ongoing optimisation work. This helped offset the impact of lower-grade ore being processed under the mine plan.

At Mt Marion, higher feed tonnes and improved plant utilisation drove an 11% lift in quarterly production, despite some wet weather disruptions.

Mineral Resources’ average achieved lithium price jumped 29% from the prior quarter to US$1,094 per tonne CIF, reflecting stronger market conditions.

Off the back of this performance and stronger prices, management has upgraded its FY 2026 lithium volume guidance at both of its operating assets.

At Wodgina, expected production has been lifted to 260,000 to 280,000 tonnes of SC6, up from 220,000 to 240,000 tonnes previously. Whereas at Mt Marion, its guidance has been increased to 190,000 to 210,000 tonnes, from 160,000 to 180,000 tonnes. Importantly, cost guidance at both sites has been maintained.

Iron ore

While lithium grabs the headlines today, Mineral Resources’ iron ore business also delivered a solid result.

Onslow Iron shipped 8.7 million tonnes during the quarter and 17.3 million tonnes in the first half, with FOB costs of $50 per wet metric tonne in the quarter. Costs continue to track toward the bottom end of its FY 2026 guidance, underlining the benefits of Onslow Iron operating at nameplate capacity.

Balance sheet improvements

The company’s balance sheet continued to strengthen during the quarter. Liquidity increased to more than $1.4 billion during the first half, while net debt was reduced to approximately $4.9 billion.

This is down from $5.4 billion three months earlier and reflects strong cash generation and ongoing deleveraging as major projects move through their ramp-up phase.

Mineral Resources also highlighted progress on its strategic partnership with POSCO, which has agreed to acquire a 30% interest in the company’s lithium joint venture covering Wodgina and Mt Marion for upfront cash consideration of around $1.1 billion, subject to conditions precedent.

The post Mineral Resources shares charge higher on lithium guidance upgrade appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.