Mineral Resources (MinRes) has received unconditional approval from the Foreign Investment Review Board for the sale of a 49% interest in the Onslow Iron haul road to investment funds managed by Morgan Stanley Infrastructure Partners for total expected proceeds of $1.3 billion.
All conditions precedent are now satisfied and completion of the transaction is due to occur within 15 business days, when MinRes will receive the upfront cash consideration of $1.1 billion from MSIP.
The additional deferred cash consideration of $200 million will be paid to MinRes subject to Onslow Iron achieving a 35 million wet metric tonnes per annum run rate for any quarter before 30 June 2026. Upon receipt of the $1.1 billion upfront cash payment, the company’s US$750 million undrawn bridge facility will be cancelled.
MSIP is a private infrastructure investment platform within Morgan Stanley Investment Management.
Onslow Iron has now shipped more than one million tonnes of iron ore (100% basis) since first ore on ship was achieved in May 2024. Shipments are increasing in line with the ramp-up plan, with 134,000 tonnes exported in July 2024, 532,000 tonnes in August 2024 and 720,000 tonnes expected to be shipped in September 2024.
The project will be operationally complete upon completion of the haul road in October 2024 and remains on track to reach its nameplate 35Mtpa run rate from June 2025.
At current iron ore prices and while still ramping up, MinRes’ operations at Onslow Iron will be cash flow positive from October 2024. As outlined in the FY24 Full Year Results announcement, Onslow Iron remains on time and fully funded to completion. As production volumes rise, cash inflows will increase significantly, facilitating a rapid deleveraging of the balance sheet.
Cash inflows include mining services and haul road income, neither of which are correlated to the iron ore price. In addition, MinRes will receive 80% of its project joint venture partners’ share of free cash flows from Onslow Iron operations as repayment of the carried expenditure loan.
MinRes Managing Director Chris Ellison said:
"Our partnership with Morgan Stanley Infrastructure Partners will release $1.3 billion of value from the haul road, highlighting the quality of earnings Onslow Iron is set to achieve.
“Importantly, under this unique partnership, MinRes maintains majority exposure to the stable earnings the haul road will deliver over the project’s life.
“Onslow Iron is scheduled to be operationally complete next month, with the ramp-up progressing to plan and the project cash flow positive for MinRes from October 2024."
