Shares in Mineral Resources Ltd closed sharply lower on Friday, declining 5.3% to A$51.25, positioning the company among the session's weakest blue-chip performers. The sell-off occurred even as the mining group unveiled record financial results for the first half of its fiscal year, underscoring a market reaction more attuned to future challenges than past achievements.
The company reported a 33% surge in revenue to A$3.1 billion for the six months ending December 31. Underlying EBITDA, a key measure of operational cash profit, reached A$1.2 billion. Net profit after tax stood at A$573 million, a significant turnaround from a loss of A$807 million in the prior-year period. The miner also generated A$293 million in free cash flow and reduced its net debt position to A$4.9 billion.
Despite these robust figures, the board elected not to declare an interim dividend, a decision that likely contributed to the negative investor sentiment. The market's focus has firmly shifted to the company's balance sheet strategy and its ability to manage the substantial debt load accumulated during a period of aggressive expansion.
Mineral Resources has tied its near-term credibility to the performance of its Onslow iron ore hub. The company is targeting a nameplate run-rate of 35 million tonnes per annum from the operation, with ambitions to lift capacity toward 40 million tonnes. Maintaining cost discipline at Onslow is viewed as critical for generating the steady cash flow required for debt reduction.
On the lithium front, the company is banking on processing improvements at its Wodgina and Mt Marion assets. Its guidance remains framed around spodumene concentrate (SC6) pricing. The timing of a planned US$765 million transaction with POSCO for a stake in its lithium assets is also a key variable, with proceeds expected in the second half of the financial year and crucial for accelerating deleveraging.
The half-year report contained notable footnotes. Directors indicated the statutory profit included several post-tax gains and an impairment item. Market participants are now scrutinizing the quality and sustainability of earnings as much as the headline numbers.
The broader lithium sector faced pressure during the session, with peers Pilbara Minerals and Liontown Resources also falling 4.6% and 6.4%, respectively. This suggests overarching sector concerns, potentially related to lithium price volatility, influenced trading beyond company-specific news.
Looking ahead, several risks loom. The POSCO deal remains subject to conditions, and any delay would impede debt repayment plans. Operational risks, including weather disruptions in the Pilbara region, persist. Furthermore, the recent rebound in lithium markets could prove fragile, adding another layer of uncertainty to forward projections.
Investor attention will now turn to analyst commentary and broker notes, which will assess assumptions for cash generation, lithium pricing, and the pace of balance sheet improvement. Mineral Resources reaffirmed its full-year 2026 guidance, putting the onus on execution. The company's next scheduled market update is its third-quarter operational report, due on April 30.