Mineral Resources (ASX:MIN) risks are heavily skewed to the downside due to rising debt, governance concerns, and valuation disconnect, according to a Wednesday note by Jarden Research.

On Tuesday, the company said it is not considering an equity raise, given "strong" liquidity of over AU$1.25 billion as of March 31.

The company reported that net debt stood at AU$5.4 billion, with the third quarter outflows driven by AU$360 million in capital expenditure and AU$50 million in working capital.

Mineral Resources also reported that it has full access to an undrawn AU$800 million revolving credit facility, with no covenant breaches expected.

Jarden expects the mining firm's net debt to peak at around AU$5.5 billion by the end of June, or more than AU$7 billion when including trade payables and iron ore prepayments.

The brokerage questioned the company's decision not to draw on its AU$800 million revolving credit facility, raising doubts about whether the funding remains available given the company's strained balance sheet.

Mineral Resources could struggle to access equity or debt markets in a liquidity squeeze, risking a distressed recapitalisation, Jarden warned.

Despite a downgrade to Onslow shipment guidance, Jarden said it continues to see downside risk given the "immense balance sheet uncertainty," escalating regulatory scrutiny, and the recent resignation of the entire three-member Ethics and Governance Committee.

Jarden Research downgrades Mineral Resources' rating to sell from underweight and lowers its price target to AU$15.50 from AU$16.20.