ASX Price $55.76 7.00%

MinRes sells minority stake in Onslow Iron haul road

Mineral Resources (MinRes) has entered into a binding agreement with Morgan Stanley Infrastructure Partners for the sale of a 49% interest in Onslow Iron’s dedicated haul road for $1.3 billion.

The haul road is a key component of an innovative transportation infrastructure solution developed by MinRes which has unlocked stranded iron ore deposits in the West Pilbara region of Western Australia.

The 150km dual lane road, which links the Ken’s Bore mine site to the Port of Ashburton, will be fully sealed, fenced and equipped with fibre optic cabling to support the operation of MinRes’ autonomous road trains.

MinRes will retain majority ownership and exclusive rights to use, operate and maintain the haul road. The arrangement will ensure seamless mine-to-ship delivery of Onslow Iron product to customers.

MinRes Managing Director Chris Ellison said: “I am proud of the strategic relationships we have formed with global industry leaders and pleased to welcome Morgan Stanley Infrastructure Partners as a partner in the Onslow haul road.

“This transaction is a strong endorsement of Onslow Iron’s world-class credentials, after the project last month delivered first ore on ship ahead of schedule.

“As the first transaction of its kind in the Australian iron ore industry, it showcases the considerable value of MinRes’ portfolio of infrastructure assets and our ability to unlock significant capital.

“The transaction also establishes access to a new pool of capital to further accelerate our growth and continue to deliver returns for our shareholders.”

The introduction of a new partner at an attractive cost of capital is consistent with MinRes’ focus on long-term shareholder value creation and agile approach to capital management.

MinRes engaged with Morgan Stanley Infrastructure Partners following a competitive process involving leading global infrastructure investors. MinRes expects total after tax net cash proceeds of $1.2 billion.

The transaction vehicle will receive a life-of-mine CPI-adjusted tolling fee per tonne of iron ore transported through the Onslow haul road of $8.04 (100% basis), capped at 40 million wet metric tonnes per annum (Mtpa).

The tolling fee will be reset at a reduced rate after 30 years. Any tolling payments for volumes above 40Mtpa will be fully owned by MinRes.

For more information, refer to the ASX announcement.