MinRes nets $1.3bn for 49pc of haul road

Mineral Resources has sold a 49 per cent stake in the haul road linking its Ken’s Bore iron ore mine to the Port of Ashburton in a deal expected to be worth $1.3 billion.

Morgan Stanley Infrastructure Partners will buy the minority stake in the private road infrastructure, which MinRes says has unlocked stranded iron ore deposits in the West Pilbara.

The 150km dual lane road links Ken’s Bore to the port, and will be fully sealed, fenced and equipped with fibre optic cables to support MinRes’ autonomous road trains from mine to ship.

MinRes will retain majority ownership and excusive rights to use, operate and maintain the haul road.

The transaction vehicle, called road trust, will receive a tolling fee per tonne of iron ore of $8.04, adjusted for CPI over the life of the project, and capped at 40 million wet metric tonnes per annum.

The fee will be reset at a reduced rate after three decades, and any tolling payments for tonnage above the 40Mtpa parameter will be fully owned by MinRes.

The deal values the entire haul road at $2.7 billion.

A $1.1 billion upfront cash consideration is payable by Morgan Stanley, with a deferred $200 million subject to achieving a 35Mtpa run rate on the project in any quarter before June 30, 2026.

MinRes expects its after tax net cash proceeds to come in at $1.2 billion.

Managing director Chris Ellison said the transaction was a first-of-its-kind deal for any project in Australia, and an endorsement of the company’s vision for the region.

“This transaction is a strong endorsement of Onslow Iron’s world-class credentials, after the project last month delivered first ore on ship ahead of schedule,” he said.

“As the first transaction of its kind in the Australian iron ore industry, it showcases the considerable value of MinRes’ portfolio of infrastructure assets and our ability to unlock significant capital.

“The transaction also establishes access to a new pool of capital to further accelerate our growth and continue to deliver returns for our shareholders.”

A US$750 million undrawn facility held by MinRes with JP Morgan is expected to be cancelled once the deal is complete – a milestone expected in the second half of the year subject to conditions precedent and Foreign Investment Review Board approval.

MinRes had around $1.4 billion cash in hand at the end of December, with net debt of $3.6 billion.

MinRes said the transaction would support it to maintain a strong balance sheet, release capital for redeployment towards other projects, and access new pools of capital.

The miner was advised by JP Morgan as financial adviser and Herbert Smith Freehills as legal adviser on the deal.

Morgan Stanley was engaged after a competitive bidding process.