The Mineral Resources Ltd (ASX: MIN) share price is under pressure on Thursday morning.
At the time of writing, the mining and mining services company's shares are down 6% to $33.94.
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Why is the Mineral Resources share price sinking?
Investors have been selling the company's shares today after it released its second quarter and half year update.
For the six months ended 31 December, Mineral Resources reported iron ore shipments of 9.7Mt and lithium shipments of 261kt.
A total of 4.4Mt of iron ore was produced over the December quarter, representing annualised production of 17.6M wmt. It notes that January production is expected to be 1.6Mt, equating to an annualised rate of 19.2M wmt.
Its average realised price across all three iron ore production hubs was US$84 per dry metric tonne (dmt) for the second quarter. This represents a 3% increase quarter on quarter and an 81% realisation of the Platts 62% IODEX.
In respect to the company's mining services business, management revealed that quarterly production volumes were 68 million tonnes (Mt). This is flat quarter on quarter. Volumes benefited from the ramp up of Onslow Iron and new work but were offset by lower volumes at the Yilgarn Hub and Bald Hill as those operations transitioned to care and maintenance.
Lithium
Lithium production decreased 15% quarter on quarter to 58kt. This was consistent with its guidance to align spodumene production with current market conditions and to deliver a higher-grade product. This has seen the Bald Hill lithium operation put on care and maintenance.
The company achieved a weighted average quarterly lithium realised price across all three production sites of US$827 per dmt of SC6 equivalent (SC6) and US$699 per dmt on mixed grade basis. This is a 1% and 10% increase, respectively, quarter on quarter.
First half FOB costs on a SC6 basis are expected to be $1,076 per dmt. While this is run-rating higher than guidance, management's FY 2025 SC6 cost guidance of $870-970 per dmt has been maintained. This is because it expects cost reduction measures to flow through along with an expected improvement in recoveries.
All other FY 2025 guidance has been maintained for its continuing operations. Importantly, it notes that the Onslow Iron operation is progressing towards its nameplate 35 million tonnes per annum (Mtpa) run rate.
How does this compare to expectations?
The consensus estimate was iron ore shipments of 5.7Mt, lithium shipments of 263kt, and mining volumes of 73Mt.
Whereas it reported 5.2Mt, 143kt, and 68Mt, respectively, for the period. This means it missed on all three.
This may explain why the Mineral Resources share price is under a lot of pressure today.
High debt levels
At the end of the period, the company's net debt stood at $5.1 billion. However, liquidity is expected to be $1.5 billion, comprising more than $700 million in cash and a fully undrawn $800 million revolving credit facility.
The Mineral Resources share price is down 45% over the past 12 months.
