No rest for MinRes

Hey Superheroes,

Did you know the RBA cut rates for the first time since 2020 on Tuesday? Yeah… you’ve probably heard. But for those who don’t check any form of media (aside from Spotlight of course!), the RBA cut rates by 0.25%, bringing our cash rate down to 4.10%.

Reporting Season in Australia was in full swing this week with BHP, Rio Tinto and Guzman y Gomez among the big names reporting half-year earnings. 

It’s a busy week – here are your biggest stories.

MinRes shares plummet after half-year earnings report 

Mineral Resources (ASX:MIN) – aka MinRes – has had a tumultuous half-year.

Last October, it came to light that MinRes’ founder and managing director Chris Ellison had set up an offshore company back in the early days of MinRes to lower his tax bill. 

That discovery led to a string of investigations that opened Pandora’s box – Ellison’s failure to disclose related-party transactions (e.g. Ellison was leasing properties he personally owned to MinRes), making personal gains at the expense of other shareholders (i.e. Ellison was charging MinRes exorbitant rental fees for those properties) and even directing MinRes staff to work on his personal properties and a private boat.

Unsurprisingly, all that news led to huge volatility in MinRes’ share price in the last six months. 

And yet despite that, the biggest one-day drop MinRes has seen since then happened this Wednesday – when its share price plummeted by over 21%.

💸 Massive half-year loss 

In contrast to H1 FY24’s net profit of A$530M, MinRes ended H1 FY25 with a massive A$807M net loss. Here are some of its key numbers: 

• Revenue: A$2.29B in H1 FY25 vs A$2.515B in H1 FY24 (↓9%)
• Profit/Loss from operations: (A$972M) vs A$629M (↓255%)
• Total profit/loss after tax: (A$807M) vs A$530M (↓252%)

MinRes cited higher impairment charges (A$503M vs A$20M) – mainly due to its writing down of its Bald Hill assets – and foreign exchange losses to be the biggest contributors to its net loss this half. 

According to the company’s calculations, its Underlying EBITDA (EBITDA adjusted for one-off gains/losses) for the half was positive at A$302M.

Despite that, MinRes’ cash flow statement showed it used up A$656M in cash for operating activities. Interesting, given that impairment expenses and foreign exchange losses don’t usually impact operating cash flow.   

💳 Heavy balance sheet

Another area that’s flashing warning signs to both analysts and investors is MinRes’ disproportionately large long-term debt balance.

The miner ended the half with ~A$5.5B in long-term borrowings. For reference, fellow iron ore miner Fortescue Metals has long-term debt of around ~A$8.6B but is ten times the size of MinRes based on market cap.

Additionally, the majority of MinRes’ long-term debt is composed of bonds paying out between 8% to 9.25% a year. As if that interest rate wasn’t bad enough, the bonds are also denominated in U.S. Dollars – leaving MinRes, which earns revenue in AUD, at a disadvantage due to the USD’s strength this year.

🤔 Momentary or long-term weakness?

Last week, MinRes confirmed that Chris Ellison is exiting his role by mid-2026. 

That, plus the disappointing earnings results, all combined to propel the company’s share price to its lowest in five years.

Ellison has since defended MinRes’ long-term prospects stating that all its previous issues had been solved and it was now well-oiled to run operations efficiently.  

Only the future will tell. But in the meantime, Mineral Resources ended up becoming Superhero’s most traded ASX stock this week.

🔦  Some other things we’re shining the Spotlight on:

JEFF BEZOS AS JAMES BOND?: Amazon, which acquired MGM Studios in 2022, already owned distribution rights to the James Bond franchise, but its new agreement with the series’ producers means Amazon will now also own creative control of the movies. Yup, it means Amazon gets to choose the next James Bond.

COSTAR’S DOMINANT OFFER: U.S. property giant CoStar, which currently owns a 20% stake in the Domain, has now offered to fully acquire the real estate company. Domain shares surged 50% following the offer. Nine Entertainment, Domain’s parent company, also saw a 22% increase in its share price today.

RATES RAIN ON NAB’S PARADE: National Australia Bank’s shares fell by as much as 8.6% following a decline in its Q1 earnings – largely due to increased competition and a hit to margins.

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