RBC Capital lowers price target for Mineral Resources stock

RBC Capital lowered its price target for Mineral Resources (MIN) to AUD39.00 from AUD40.00, maintaining an Outperform rating, following updates from a site visit to the Onslow operations. While the Onslow haul-road is projected to reach 35 Mtpa capacity by mid-fiscal year 2026, higher operating costs and ramp-up costs have led to reduced EPS estimates for fiscal years 2025-2027; RBC Capital anticipates Mineral Resources will begin debt reduction in fiscal year 2026, contingent on further lithium asset cost reductions.

Analysis

RBC Capital has adjusted its outlook on Mineral Resources Limited (MIN), lowering the price target to AUD39.00 from AUD40.00 while reiterating an Outperform rating. This revision follows insights from a site visit to MIN's Onslow operations, where the haul-road is projected to reach a 35 million tonnes per annum (Mtpa) capacity by mid-fiscal year 2026. However, this capacity expansion is anticipated to be accompanied by increased operating costs. Mineral Resources is reportedly making systematic progress on the haul-road's remediation and upgrade, with completion targeted for September 2025. Despite these developments, RBC Capital has incorporated higher ramp-up costs into its financial models, leading to reduced earnings per share (EPS) estimates for fiscal years 2025, 2026, and 2027. The analysts maintain expectations that Mineral Resources will begin debt reduction in fiscal year 2026, but this hinges critically on the company achieving further cost efficiencies in its lithium assets. The overall sentiment is cautious, reflecting the balance between operational progress at Onslow and the financial impact of heightened costs.

Key Decisions for Investors

• Investors should acknowledge the maintained Outperform rating from RBC Capital, which suggests underlying confidence despite the AUD1 price target reduction to AUD39 and the identified operational cost headwinds.
• Monitor Mineral Resources' progress on the Onslow haul-road, particularly the September 2025 completion timeline and the management of associated higher operating costs, as these are crucial for achieving the 35 Mtpa capacity target by mid-FY26.
• Closely track the company's ability to implement further cost reductions in its lithium assets, as this is a key pre-requisite for the anticipated debt reduction commencing in fiscal year 2026 and for validating the analysts' positive long-term view.
• Consider the impact of reduced earnings per share estimates for fiscal years 2025 through 2027, which signal increased near-term financial pressure and execution risk before the benefits of the Onslow expansion fully materialize.