Why Mineral Resources Share Price Jumped 27.47% Today

At the time of writing, shares of Mineral Resources Ltd [ASX:MIN] are up by 27.47%, to $15.87 cents per share.

Why did Mineral Resources Ltd shares do this?

The company announced favourable financial performance results for the financial year ended 2018:min resources graph

Source: Mineral Resources

The company’s net profit was up 35% to $271.8 million. The dividend declared was also up 20% to 65 cents.

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What now for Mineral Resources Ltd?

The share price reacted strongly to the favourable news:min resources commsec graph

Source: Commsec

Mineral Resources has been in a downward trend all year. The earnings announcement brought a sigh of relief for shareholders. That said, there’s a chance the worst may not be over for the company. Take a look at the earnings guidance for the financial year ended 2019:min resources FY19 guidance

Source: Mineral Resources

The company expects to generate $280–320 million of EBITDA (earnings before interest, tax, depreciation and amortization, a useful measure of performance) during the 2019 financial year. That seems like a lot of money. But it’s lower than the approximately $506 million generated during the 2018 financial year. The company also plans to spend $490 million on capital costs.

Where’s that money going to come from?

Most likely the company will need to borrow money to meet the shortfall. Mineral Resources held a net debt (debt less cash) position of roughly $98.9 million on 30 June 2018:min resources

Source: Mineral Resources

The bottom line: Shareholders should remain cautious. Today’s earnings announcement was positive. However, considering the anaemic resources environment and the earnings guidance set by the company, Mineral Resources’ share price might make fresh lows during 2019.

Jason Stevenson,
Resources Analyst, Markets & Money

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Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


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