Mineral Resources has sold its 5.4 per cent stake of Pilbara Minerals in an effort to focus on its hard-rock lithium and iron ore assets.
Mineral Resources has been a shareholder in Pilbara Minerals since October 2016 as part of its offtake rights and a royalty held of the Pilgangoora lithium-tantalum project in Western Australia.
Its 8 per cent stake in Pilbara Minerals at the time was valued at $50 million, with the $328 million divestment representing strong value.
(“Mineral Resources) is delighted with the share price value delivered by Pilbara Minerals’ development of Pilgangoora but believes it is time to redirect this investment into the company’s own growth projects, including in the hard-rock lithium and iron ore sectors,” Mineral Resources stated.
The $328 million divestment was completed through an underwritten accelerated block trade to institutional investors.
Pilbara Minerals share price on the ASX is $2.26 at the time of writing.
The transaction will support Mineral Resources’ $650 million capital expenditure program for the 2021-22 financial year.
Mineral Resources expects costs to increase by 5 to 10 per cent at its Yilgarn Hub in Western Australia, with exports of 10.5 million to 11 million tonnes of iron ore.
This includes the Koolyanobbing iron ore mine and Carina mine, which is currently under care and maintenance.
The company also operates the Utah Point hub, which is expected to ship 10.5 million to 11 million tonnes of iron ore.
Mineral Resources hard-rock lithium projects include the Mt Marion and Wodgina spodumene projects, owning 50 per cent and 40 per cent, respectively.
The company is expecting to ship 450,000 to 475,000 tonnes of spodumene from Mt Marion in the 2022-23 financial year, while Wodgina remains on care and maintenance.
Wodgina is one of the largest hard rock lithium deposits globally, and is operated under a joint venture with Albemarle who owns the remaining 60 per cent interest.
Mineral Resources is also constructing the Kemerton lithium hydrogxide project in Western Australia with Albermarle, owning a 40 per cent interest.