In a volatile day for the stock, Mineral Resources Limited [ASX:MIN] share price fell immediately upon opening, following confirmation of the company’s most recent acquisition.
At time of writing however, shares in the company are trading at $15.31 — up 22 cents from its opening price.
It has been a rough year for the mining company’s share price, down 31% from a high of $22.14 on 5 January 2018.
If you’re interested in which ASX mining stocks are worth keeping an eye on, check out our analyst Jason Stevenson’s free report here.
Mineral Resources’ newest acquisition
This morning MIN announced that it has entered into a binding sale and purchase agreement with BCI Minerals Limited [ASX:BCI] to acquire its Kumina Iron Ore Project.
The Kumina project is located in the West Pilbara, with a JORC Inferred Mineral Resource of 78.3 million tonnes at 59.1% Fe at a 57% Fe cut-off.
The acquisition will cost the company an initial $27 million, followed by a further $4 million once the first export of iron ore from the Kumina project is achieved. And another $4 million will be paid 12 months after the first export.
Chris Ellison, Managing Director of Mineral Resources, said that the company is very selective with its assets and was not interested in acquiring BCI’s entire iron ore portfolio.
‘However, an opportunity arose late in BCI’s divestment process for MRL to acquire Kumina Project on its own, and I am very pleased with the agreement we have announced today.
‘The Kumina Project transaction builds on our successful relationship with BCI, our partner in the Iron Valley Iron Ore Project.
‘The location of the Kumina Project will enable the Company to leverage its existing workforce and logistics supply chain in the Pilbara, with the ore to be exported out of Port Hedland.
‘MRL retains its exclusive right to operate the Iron Valley Iron Ore Project and purchase all iron ore produced.’
Should you invest in Mineral Resources?
This is the second iron ore acquisition for the Perth-based miner in the past two months.
As the share price has declined over a 10-month period it has become a potentially attractive buy.
There are various reasons for this.
Perhaps the primary reason is that since Mineral Resources provides a lot of support services in addition to traditional mining operations, it stands to benefit from rising iron ore prices and rising commodities prices more generally.
Markets & Money has continuous coverage of iron ore prices available here.
Additionally, there are balance sheet factors, which include strong profitability, reasonably low debt and a great dividend yield of 4.1%.
Mineral Resources could be one to watch.
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