Good luck with the valuation @Solvetheriddle - as you have to factor in:

1. Iron Ore Prices
2. Lithium Prices
3. Share prices of the numerous other companies that MinRes hold shares in
4. The value of their mining services business
5. What value to attribute to MinRes' non-producing assets such as the Yilgarn hub which will be shut down this calendar year - https://www.mining-technology.com/news/minres-shut-yilgarn-iron-ore/
6. The liklihood of further asset sales - which is reasonably high according to what I'm reading today about further deleveraging options being explored - and what price those will fetch since sentiment is low for both iron ore and lithium assets at this point. In prior years Chris Ellison has added a heap of value by buying assets at their lows and selling them at much higher multiples (such as PLS shares) but that may not be an available option in the near term
7. And all of that is without having any idea what direction Chris will take this company in next, as in what he will try to invest in, who he will partner with, and where he sees the best bang for the MinRes buck going forward.

Analysts have a problem with Chris Ellison's abrasive style, but they also have a problem with him being unpredictable; they really don't know what to expect him to do next, which makes this business hard to model into the future. I have always liked them based on past performance being an indicator of future potential, but, again, that's hard to put into a spreadsheet.

And I think they have headwinds right now. They won't always have those headwinds. Commodity prices move in cycles and we're probably close to the bottom of the lithium cycle, but perhaps not the bottom of the iron ore cycle yet.

MoM on MinRes report and current predicament:

How Low Will MinRes Go?

[Money of Mine podcast, Thursday 29th August 2024]

Plain Text Link: https://www.youtube.com/watch?v=kWNEtMq-7ic&t=81s

They talk about MinRes for 35 minutes and it's worth listening to, the short version is that this time Chris Ellison has been caught out by the cycle; he's been very good at buying at cyclical lows and selling at or near the highs but this time he's loaded up on lithium assets (including investing in a number of ASX-listed lithium hopefulls) at the top of the lithium cycle - or close to it, and lithium prices have since tanked, and iron ore prices are declining as well, and MinRes are not a low cost iron ore producer, so the company has a heap of stuff going against them right now,.

MinRes is now highly leveraged with only their mining services business firing and everything else providing decent headwinds. Worth a listen.

[Not holding MIN]

@Bear77

Cheers for the MoM podcast. Found the investor call transcript so I am going through that first.

After reading through the transcript I sort of got the view that MIN are good capital allocators!

Will provide summary later.

I have not had time to view the MoM podcast but I'm guessing they put lots of preemptive statements out there.

Will also clarify that Ellison is not going to do any more asset sales although he acknowledges there is lots of "options" to stabilise the balance sheet

@Bear77 Those factors are true of many commodity companies and why I'm not a big fan of them as a generalisation. sensitivity analysis is vital for resources, then roll the dice. etc. As an aside, what method do you use to paste photos etc, i have tried a few that don't work, and use Snipping tool, which works but doesn't look as good as your photos. if i tried to paste as many photos as you do it would take me a very long time lol thanks

@Solvetheriddle Yes, DCF and similar valuation techniques are fraught with danger (the danger of thinking you have some idea of what a company will be worth in the future) with commodity companies and when the company is a hybrid miner plus mining services company + investing company that regularly does deals, mostly at a profit but sometimes creating losses, then it gets way worse.

"DCF to us is sort of like Hubble telescope - you turn it fraction of inch & you're in differnt galaxy" (Third Ave. CIO & PM, Curtis Jensem)

Source: https://x.com/jsiegel88/status/540347124760977408

In terms of your question about including images, I usually copy and paste pictures, where the websites allow that, and for others I use MS Paint 3D, but don't use the 3D aspect of it, just 2D, however that is about to be discontinued and no longer supported by Microsoft and currently it is causing me a heap of problems where files will not save and I have to keep resetting the program from the "Settings" menu in Windows 10 and clear all of my cache and stuff - stems from me having an older computer which needs more memory now. So my plan is to swap to my son's old games computer that has much better specs than my office computer, use Windows 11 (currently still using 10) and use MS Paint (not Paint 3D) - that changeover is planned for the weekend.



@edgescape - two points:

1. They have lots of deleveraging options, but they are all going to involve either raising more capital (to pay off debt) or selling assets (to pay off debt), and none of them look like great options right now. CE's strength has been to load up on assets at low point in cycles and turn those into profits at higher points in cycles, but this time he has NOT picked the bottom in lithium - he's loaded up well above the bottom and now we're a lot lower and most of the assets he would probably like to sell are worth less than what he paid for them.
2. Capital allocators. MinRes (so, Chris Ellison) have been great capital allocators in the past. He's just got the lithium cycle wrong - so far, or it has taken longer to rebound than he had thought it would, so if he scrapes through without having to offload too much at a loss then he may well look like a genius once again, however he has headwinds right now that he has to navigate through.

The MoM podcast crew did ask if it's a similar situation to Twiggy Forrest when he was building up FMG and his debt levels got even worse than what MinRes' currently are, however it was pointed out that Twiggy had the emergence of China as the world's largest buyer and user of iron ore as the thing that made all of Twiggy's behaviour at that time seem like genius' moves with the benefit of hindsight, because it all worked out really well in the end. By contrast, Chris Ellison is facing the opposite scenario where he has significantly increased his own iron ore infrastructure and asset base at a time when the world seems to be needing less iron ore and there are more suppliers for that demand.

And lithium has also tanked and may stay lower for longer as well.

And Twiggy built his own rail - which is a LOT less expensive to operate than trucking ore down a massive haulroad = being the option that CE has gone with - and that haul road isn't actually finished yet, even though he's already sold around half of it - the trucks are using a service road for part of the journey and they've already had a big rollover (they show the still image of the accident site with the truck still on its side and blocking part of the road) so they are ploughing ahead with the Onslow Iron Ore project even though the infrastructure still hasn't been completed. Just another headwind. If iron ore prices go lower, that's the big risk for MinRes, because of the debt repayment obligations.

Fair points

My point on capital is that they are planning to wind some of the work down on lithium till they see more favourable price. But not sure how you can do that when the Chinese has control on the battery supply chain and pretty much everything. Luckily min did not invest downstream as mentioned in the call

I agree they got it wrong. Totally overspent on buying stakes in spec miners during the period was not a good look.

MS paint thanks ill look into it

Yes I generally do a screenshot using the "PRINT SCREEN" button on my keyboard then paste that screenshot into Paint and then crop it, and often edit it as well if I want to highlight stuff @Solvetheriddle - trouble is that my version of Paint doesn't allow me to copy my finished image - I have to save it and then insert that saved file into my posts, Vals or straws here using the insert image icon here (the tool above the text box here that looks like a picture in a frame) - but Paint crashes every second or third time I try to save a file - which I believe is specific to my own system as Google hasn't given me any recent answers that suggest it's a widespread recent problem for which people are currently seeking solutions. So I'm thinking it's NOT a widespread problem. Changing to a different PC with more memory and more disk space (and a faster processor) should fix all of that - I hope!

And regarding that Paint stuff, it does take time. And I'd never try to do it from a smaller device like a phone, as I'd get too frustrated.

Regarding Gaurav's view on MinRes, I also respect him and his views but at heart he's a value investor, so he's prepared to be wrong for a period of time (in the market's view at least) before being right, so he has a 5 year plus timeframe, and as long as you're happy for MIN to drop further before they recover (and they WILL recover at some point) then buying or holding them here makes sense. I just have a different risk tolerance right now, and I'm probably more bearish on iron ore and lithium than Gaurav is as well in the near term - or to be clearer - I don't have a strong view on where either of them go from here or over what timeframe but I'm concerned that they could both go lower, especially iron ore. So I'd rather not be directly exposed right now.

I also know from experience that MIN trends well, often for months at a 45 degree angle, both up and down, so once they get moving up over a period of a week or more, I'd become more interested. I'm happy to miss the bottom. Neither MIN nor FMG are going broke. They will both be around in ten and twenty years from now, and based on their history I believe they will be bigger and better than they are today, especially MIN which has more room to grow than FMG does (because FMG is already so big - being an ASX 20 company) so there's certainly a bull case there. It's just about timeframes.

I am less than two years from 60, and I've had to quit my job due to OA (osteoarthritis) and I'm now living on my investments, so I have to worry about the short term as well as the medium and long term, and I need income, and I was rightly concerned about the MIN dividend being cut (no final dividend was declared) - so I have to try to put all of my investable capital into my best ideas NOW rather than take 10 to 15 year views on beaten down companies. Just where I'm at right now.

@Bear77 you are a real trooper on the MS paint process, ill stop complaining. lol

No dividend!

Will be interesting to see what the analysts say tomorrow.