Chris Ellison’s Mineral Resources slows down the drill bit to save some extra cash amid cost crunch

Chris Ellison’s Mineral Resources is tightening its belt on exploration spending, marking the latest leg of a cost-cutting crusade to combat commodity price pressures. MinRes workers tasked with either finding new mining deposits across WA or breathing life into the soon-to-be mothballed Yilgarn iron ore hub have bore the brunt of a trimmed exploration budget announced internally this month. A wind down of mining operations at Yilgarn by the end of this year was flagged in June, but exploration looked set to continue at the hub — 116 holes were drilled at three targets according the company’s most recent quarterly report. “Consistent with our focus on costs in the current commodity price environment, the exploration team has recently been informed of a reduction in personnel,” a MinRes spokesman told The West Australian. “Near-mine exploration and resource definition work is continuing at our iron ore and lithium operations, including at Central Pilbara Hub, Wodgina, Mt Marion and Bald Hill.” The spokesman said fewer than 45 jobs were no longer required as part of the dial back in exploration. He declined to disclose an exact figure. MinRes reining in a hunt for more paydirt also shows the top end of town has not been immune from a general lull in exploration spending. Recent research from BDO found explorers in the State had pulled right back on searching for the next big thing, with spending dropping to a two-year low in March this year. There was a slight recovery in the June quarter — exploration dollars of $826m were up 10 per cent on the March trough but still well below historical averages. MinRes has been stung by a downturn in its two key commodities, lithium and iron ore, triggering mass a cost-cutting exercise as the business grapples with a debt-heavy balance sheet. Hundreds of roles have been culled from the company’s Osborne Park headquarters and WA mine sites since the middle of this year. On September 10, MinRes told the market it had managed to find $300 million in savings, aided in part by changing up the rosters of some 800 workers from two weeks on, two weeks off, to two weeks on, one week off. A fortnight later it pocketed $1.1 billion after three months prior auctioning off a 49 per cent stake in a privately-owned Pilbara haul road. Improving lithium and iron ore sentiment, plus banking the $1.1b after rumours swirled the sale would not receive Foreign Investment Review Board approval, has been the catalyst for MinRes’ share price to stage a recent rebound. The stock is up nearly 70 per cent over the past month, despite short sellers piling in over this period. Australian Super — the nation’s largest super fund — believes MinRes can fend off the detractors and maintain its recent resurgence. ASX filings on Thursday revealed the super fund has become a substantial shareholder. The market will get another look under the MinRes bonnet when its September quarterly results are lodged later this month.