Mineral Resources has acquired a 12.8% stake in Aquila Resources ((AQA)) for $200m and has expressed an interest in being involved in the development of the West Pilbara iron ore project.
Macquarie thinks the combination of Mineral Resources and an offtake partner such as Baosteel could create significant shareholder value with the added benefit of not being as dependent on the iron ore price as a traditional miner.
The broker retains an Outperform rating. While there may be short-term pressure on the share price until further clarity is obtained, Macquarie thinks this is a material opportunity to create value. The price target is steady at $13.97.
Sector: Commercial Services & Supplies.
Target price is $13.97.Current Price is $9.70. Difference: $4.27 – (brackets indicate current price is over target). If MIN meets the Macquarie target it will return approximately 31% (excluding dividends, fees and charges – negative figures indicate an expected loss).