In just about every interim or annual report, in all investor or analyst presentation, among the very first data points management teams of Australian mining companies touch on are those related to safety.

It’s a huge part of reporting, and it’s a huge part of how mining and mining services companies are evaluated in the market and by the public in general.

On Aug. 15 AE Portfolio Aggressive Holding Mineral Resources Ltd (ASX: MIN, OTC: MALRF, ADR: MALRY) announced that a worker at the Christmas Creek mine site had been fatally injured.

Mineral Resource’ Crushing Services International (CSI) unit operates the two iron ore processing facilities at Christmas Creek. CSI delivers 50 million metric tons per annum (Mmtpa) of crushing output to Fortescue Metals Group Ltd (ASX: FMG, OTC: FSUMF, ADR: FSUGY) on a build-own-operate basis.

CSI has total installed capacity of 130 Mmtpa at Christmas Creek.

On Sept. 24 Fortescue, the world’s fourth-biggest iron ore producer, announced it would exercise its “step-in” right and immediately assume management and supervision to “ensure the safe and hazard-free operation of the ore-processing facilities” without referring to the recent fatal accident.

In a separate statement, Mineral Resources said it expected Fortescue to take over command of the processing facilities “for such period of time as necessary to address its concerns.”

Fortescue said the action would disrupt processing at the sites but wouldn’t impact its full-year production targets.

The announcement that Fortescue was exercising its right to “step in” and take operational control of the project on a temporary basis sent Mineral’s share price spiraling from a close north of AUD12 on the Australian Securities Exchange (ASX) as of Sept. 23 to AUD10.89 by Oct. 2.

The temporary move will likely have a small financial impact. Output will be limited during what will be a short ramp-down and ramp-up of the ore processing facilities as management is transitioned to Fortescue. And there will be a loss of management fees paid by Fortescue for the length of the step-in period.

But CSI retains ownership of the ore processing facilities and will continue to be paid for volumes crushed.

The greater concern is the potential damage to CSI and Mineral Resources.

CSI has a solid operational track record to date. But Fortescue’s decision to exercise its step-in rights to manage the ore processing facilities, even on a temporary basis, does nothing to enhance its standing.

Safety is a key indicator across the Western Australia iron ore sector, and any issues arising from the investigation of this fatality will need to be addressed promptly in order to avoid further damage.

There is a very remote possibility that Fortescue would seek termination of the build-own-operate contract based on this single incident. And in that event it would have to acquire the ore processing facilities from Mineral Resources. This is a worst-case scenario, an unlikely one at that.

On a positive note, and although it was announced after the Aug. 15 announcement of the Christmas Creek fatality but before Fortescue’s Sept. 24 step-in move, on Sept. 6 Mineral Resources announced that CSI won an engineer, procure and construct (EPC) contract for Rio Tinto Ltd’s (ASX: RIO, NYSE: RIO) ore processing facilities at the Nammuldi Below Water Table Mine Project in Western Australia.

CSI will design and build a plant capable of crushing, wet screening and beneficiating 25 Mmtpa of iron ore. CSI will specifically design the facility to accommodate the characteristics of the Nammuldi below water table resource, and its general arrangement will allow for the subsequent optimization of overall production.

It’s an important development for CSI, not only because of the timing, as it signals continuing confidence in the business, but also for the fact that many of the future greenfield iron ore developments in Western Australia will be required to handle below water table ore as the existing, long-serving mine sites begin to reach the end of their commercial lives.

CSI’s Nammuldi project will be the first of these “new age” developments.

Mineral Resources, with core mining services operations that are tightly tied to iron ore production as opposed to exploration and development as well as a growing iron ore production capability, posted solid results for fiscal 2013.

Management declared a final dividend of AUD0.32 per share, up from AUD0.30 a year ago. Total dividends declared for fiscal 2013 were AUD0.48, up from AUD0.46 for fiscal 2012.

Company policy is to pay dividends equal to approximately 50 percent of NPAT.

Mineral Resources reported company-record revenue of AUD1.097 billion, as earnings before interest, taxation, depreciation and amortization (EBITDA) surged 29 percent to AUD385 million. Statutory net profit after tax (NPAT) was up 2 percent to AUD180.4 million.

Earnings improved in the second half of the year over the first, on better mining services business performance as well as a recovery in iron ore prices, higher iron ore output and a weaker Australian dollar.

Contracting volumes have increased for Mining Services & Processing, with six crushing contracts commencing operations during fiscal 2013. The unit posted fiscal 2013 earnings before interest and taxation (EBIT) of AUD247.6 million, up 19 percent year over year.

EBIT margin for the unit surged to 37.1 percent from 28.3 percent for fiscal 2012, as CSI posted strong growth. CSI crushed 110 million metric tons during the year, up from 80 million for fiscal 2012.

The PIHA pipeline engineering and construction unit also posted a solid contribution, while the company broadened its service base into accommodation and materials-handling activities. The key highlight was the expansion of PIHA beyond resources and infrastructure pipeline construction into the Australian gas sector.

Mining operations produced a solid result despite low iron ore prices in the first half of the financial year.

Total iron ore exports rose 44 percent in fiscal 2013 to 5.4 million metric tons, driven by the ramp-up in production volumes at the Carina mine in the Yilgarn region and the start of early sales from Phil’s Creek in the Pilbara. These sales were made to customers in China and Korea.

The Carina project is on track to reach optimum output on schedule, and the new

Phil’s Creek mine is beginning to contribute to export volumes.

Mining costs were well ahead of estimates, but price realization improved. Mining generated fiscal 2013 EBIT of AUD29.7 million, 19.7 percent lower than a year ago and about 18 percent short of consensus forecasts. EBIT margin slipped from 19.3 percent in fiscal 2012 to 6.9 percent in fiscal 2013.

The start-up of operations at Phil’s Creek impacted results, and Mining did achieve pricing within the 12 percent to 15 percent expected discount. Management’s key task going forward will be to execute on its capital expenditure (CAPEX) and production ramp-up plans while reducing costs.

Mineral Resources’ balance sheet in good shape and is capable of supporting planned CAPEX. Strong operating cash flow helped keep gearing (net debt as a percentage of net debt plus equity) remain modestly below management’s 25 percent target at 23.3 percent, down from 26.1 percent. Operating cash flow of AUD329.3 million was up 36 percent year over year.

During the year Mineral Resources finalized a AUD575 million syndicated debt and bank guarantee facility, which is being used to fund CAPEX and provide bonding capacity should the company pursue EPC contracts. Management is in discussions with lenders to restructure the facilities, including adding AUD120 million in equipment finance leases and reducing bank guarantees from AUD236 million to AUD100 million.

It’s important to note that, while Mineral Resources continues to post solid earnings and dividend growth, the company is in an investment phase, with projected CAPEX of approximately AUD300 million for fiscal 2014, versus AUD419 million for fiscal 2013.

Management’s medium-term target is 10 million metric tons per annum of capacity, though mining is a non-core business. As we’ve noted in previous discussions of Mineral Resources, management will likely look to exit the iron ore mining business over the long term, though a sale will happen only when the company gets closer to its production target and costs are reduced.

Mineral Resources is a buy under USD11 on the Australian Securities Exchange (ASX) using the symbol MIN and on the US over-the-counter (OTC) market using the symbol MALRF.

Mineral Resources also trades on the US OTC market as an American Depositary Receipt (ADR) under the symbol MALRY. Mineral Resources’ ADR, which is worth one ordinary, ASX-listed share, is also a buy under USD11.

Mineral Resources closed at AUD11.09 on the ASX on Oct. 9. Based on the prevailing exchange rate as of this writing, that’s USD10.47 in US dollar terms.

Mineral Resources’ fiscal year runs from Jul. 1 to Jun. 30. The company reports full financial and operating results twice a year; it typically posts first-half results in mid-February, with full fiscal year numbers out in mid-August.

Interim dividends are usually declared in February, along with financial and operating results for the first half of the fiscal year, with payment typically made in early April. Final dividends are usually declared in August, along with fiscal year results, with payment made in late October.

Mineral Resources’ final dividend in respect of fiscal 2013 of AUD0.32, declared on Aug. 15, 2013, will be paid on Oct. 25, to shareholders of record as of Sept. 20. Shares traded ex-dividend on this declaration as of Sept. 16.

The most recent interim dividend of AUD0.16 per share was declared Feb. 14, 2013. It was paid April 11, 2013, to shareholders of record as of March 21. Shares traded ex-dividend on this declaration as of March 15.

Management will declare the interim dividend for fiscal 2014 on or about Feb. 13, 2014, when it reports financial and operating results for the first six months of the financial year.

Dividends paid by Mineral Resources are “qualified” for US tax purposes. Based on the “fiscal cliff” compromise reached in Washington, DC, in early January 2013 dividends will be taxed at Bush-era rates of 5 percent to 15 percent for investors’ first USD450,000 a year of income for couples and USD400,000 for single filers. Above that the maximum tax rate is 20 percent.

The Australian government withholds 5 percent to 15 percent, based on the US-Australia tax treaty on double taxation. The two countries have not taken the step of eliminating withholding from dividends paid in respect of shares held in a US IRA, as have the US and Canada.

Among the analysts who cover the stock seven rate it a “buy” according to Bloomberg’s standardization of brokerage house recommendation terminology, while one rates it a “hold.” One brokerage that covers Mineral Resources rates the stock a “sell.”

The average 12-month target price between the six analysts that provide a figure is AUD12.80, with a high of AUD14 and a low of AUD9.93.  Based on an Oct. 9, 2013, closing price of AUD11.09 on the ASX, the implied one-year total return, including the present annualized dividend rate of AUD0.48, is 19.7 percent.