Shares of Mineral Resources Ltd (ASX: MIN) have surged to a new 12-month high after finalizing a $1.2 billion agreement with POSCO from Korea, which involves selling part of its interest in lithium mines.
The company, known for producing iron ore and lithium, announced in an ASX statement that it plans to divest a 30% stake in a forthcoming joint venture. This entity will oversee its assets in the Wodgina and Mt Marion lithium mines, both located in Western Australia. Currently, MinRes holds a 50% stake in each.
POSCO is set to invest US$765 million (around $1.2 billion) for its share in the new venture, valuing MinRes's current stake in these mines at approximately $3.9 billion.
Despite the deal, MinRes will continue managing both mines in accordance with existing agreements with other partners, including Albemarle Corporation at Wodgina and Jiangxi Ganfeng Lithium at Mt Marion.
As part of the agreement, POSCO will receive spodumene concentrate from the mines, reflecting its 30% stake in the new joint venture.
MinRes emphasized that this transaction aligns with its broader strategy of divesting equity to bolster its financial standing.
The company stated:
The agreement with POSCO Holdings, an emerging leader in lithium chemical supply to Korean and Western markets, underscores MinRes's strategy of capital recycling through strategic alliances with global infrastructure and commodity firms to extract value and support future expansion.
The completion of this deal is contingent upon approval from Australia's Foreign Investment Review Board and is expected to be finalized in the first half of 2026.
MinRes intends to utilize the proceeds to reduce external debt, strengthen its financial health, and prepare for the next growth phase.
Managing Director Chris Ellison remarked that the deal strengthens ties with POSCO, already a collaborator in MinRes's Onslow Iron project.
POSCO Holdings’ investment reflects the enduring value of Wodgina and Mt Marion, and reaffirms MinRes's reputation in mining. This transaction will notably improve MinRes's balance sheet, providing financial agility to pursue strategic expansion opportunities, enhancing shareholder value.
Reports also indicate that MinRes has initiated the sale process for its Bald Hill lithium mine, which had been under care and maintenance since late last year.
MinRes shares reached up to $52 following the announcement, marking a new 12-month high, before retreating to $51.10, up 8.9%. The shares have more than tripled from $14.05 over the last year.
As of the end of the September quarter, MinRes's net debt stood at $5.4 billion.
