MIN--some ponderings

 Now that I have some time, I am just about done for the year and have all company results complete (I think). I will put down my thoughts on MIN. I will not try to repeat what has been said.

as an overview, this is clearly a commodity company with all that entails, ie, the main one being large uncertainty of outcomes and wide valuation ranges, so it is not my core area of investment interest., not by a long way. i have said before this is about as risky i will go.

below are the main issues, IMO, and my opinion on them

1. Balance sheet, MIN has done a good job but has not killed the monster and therefore not killed the risk. The duration of debt and the sale proceeds of the infrastructure and energy assets delay the issue. it now depends on Onslow cashflows to pay the debt down as a de-risking exercise. the MinServ cashflows are very sound, much better than other MS businesses i have seen, but while they will keep debt at bay, they cannot extinguish it alone at a rate I find appealing.
2. that brings us to the saviour, the iron ore price. every day that Onslow produces and iron ore stays above $100/t is a big positive. At $100/t MIN will de-gear and de-risk very quickly. all appears to be going well operationally here which is a tribute to the company. Despite the poor Chinese economic performance over the last year, IO has held around $100/t, which is a big positive surprise (to me). MIN remains exposed to an iron ore decline while the debt remains high, IMO this is the biggest risk. the de-risking will see valuation certainty increase, bringing about a positive spiral, also the reverse is possible.
3. Lihtium, Although I have analysed almost all commodity markets, Lithium isn't one of them. it is a new market. the movement of the industry cost curve, supply responses, effects of substitution and elasticity of demand have not been properly tested yet, IMO. That is not necessarily a bearish argument, although historically it has usually been so in commodities. The consensus view is that we are at the bottom of the cycle, I have no reason to doubt that given the supply closures etc, but uncertainty remains high. the industry outlook and MIN's position in it from here is reasonable but it's hard to have a strong view (even in a commodity sense where strong views are rare or foolish). I view the Li assets as potential and could bring about much higher valuations in time but changes to the industry structure have to be closely monitored.
4. Chris Ellison factors. Ive never met CE but have met hundreds of CEOs and analysed their behaviour. maybe that has dulled me to bad behaviour as I have come across many undisclosed in the past, of varying degrees. i am more surprised that these issues have seen the light of day rather than they have occurred. CEO's are human and you either get pedestrian caretakers or aggressive builders. Please don't believe that you see everything about these characters get up to, and all is in the public domain, usually stories only come out when disaster strikes, but not so here. Interesting. please don't read this as forgiveness, I'm just not surprised as many appear. Going forward, my conclusion is that MIN without CE loses, perhaps, the main reason for owning it. in this specific case, the capital is deployed and that will play out and offers a reasonable upside under most base scenarios but the range is wide and uncertain. CE has shown the ability to allocate capital well in an industry that has an exceptionally poor record. I see MIN without CE gravitating towards this mediocrity, reducing the appeal as an investment.

Conclusion--my base case is the commodity prices hold, Lithium -neither here or there, we get b/s de-risking and SP recovery. however, if CE departs, I think when value is realised, I depart as well. Commodities is a tough game, even for good managers.