ASX reporting season: Mineral Resources’ Chris Ellison fronts analysts, media after huge loss shocker
Things have gone from bad to worse (and even worse) for WA mining magnate Chris Ellison.
Not only has he just been forced to pay back a whopping $3.8 million to Mineral Resources - the company he founded - over a tax dodge scandal that engulfed the lithium and iron ore major last year - but yesterday it was reported the $6.7b giant had booked a sensational $807 million net loss for the first half.
Lithium price carnage and the adverse effect of a strong US dollar on its huge debt pile were to blame for the carnage.
Damage caused to its troubled Onslow Iron haul road by a deluge has also whacked production guidance from its most important mining operation.
The reaction from investors was swift - and brutal. The company’s stock fell 17.6 per cent to $25.14 by 12.20pm — the lowest point since October 2020.
Ellison and CFO Mark Wilson fronted analysts and media this morning to talk through the results ... and face another barrage of questions over corporate governance and the CEO future role at MinRes.
You can read what happened in the feed below.
Key Events
And now, over to the analysts ...
And the PDFs have been put away and CFO Mark Wilson and boss Ellison are in front of the camera.
Is Ellison angling for a redemption arc?
Wrapping up the presentation ahead of an analyst Q&A, under-fire MD Chris Ellison said the following:
“I’m totally focused on where we’re heading, and subject to all things being normal and people getting positive on us again, I’ve put the past behind me.”
The $5.1 billion debt pile
Chief financial officer Mark Wilson has acknowledged concerns regarding Mineral Resources balance sheet.
“We recognise it’s a concern for many of you,” he said.
Analysts have long-flagged that MinRes has too much debt in relation to its earnings.
As at the half-year ended December 2024 MinRes had debts of $5.1 billion, a large portion of which tied up in US bonds the miner has used to grow the business.
Mr Wilson attributed the increase over the quarter to a stronger US dollar, putting pressure on repayments deriving from Australian dollar income.
“$300m of the movement was referable to the foreign exchange translation impact,” he said.
“Chris and I took a decision 2019 as to how we look at the balance sheet going foqard, and we took a decision to go to the US bond market. We made that decision because of the flexibility that market provides us.”
He assured MinRes had “reached peak leverage”.
“You will see that net debt to EBITDA ratio come down.”
Chief financial officer flags June for chairperson reveal
Mineral Resources’ chief financial officer Mark Wilson addressed governance issues within the business.
“I’m not going to speak for the board….progress is being made,” he told the call.
“In terms of the new chair, that recruitment process is well advanced.”
He indicated MinRes would be making an announcement regarding the replacement of current chair James McClements by the “June quarter at the latest.”
There is no word yet on the future of Chris Ellison’s role within the business or his replacement.
In November, he said he was due to leave within 12 to 18 months.
Read more here
Big interest!
To give you an idea of just how many people are keen to hear what Ellison has to say, there’s now 691 people on the analyst call!
The employee experience: MinRes Air and a MinRes Daycare
The besieged managing director says the mental and physical health of staff “remains a strong focus.”
MinRes has made much of its extra offerings to employees over the past few years in a bid to win over an at times competitive labour pool in WA.
He said ther were 4 doctors and three nurses at its plush Osborne Park head office, and 7 in-house psychologists.
Mr Ellison indicated the program had been well-received, with more than 600 consults.
He said it was “very important to us that we’re there to support our people.”
The business has 121 apprentices, 31 trainess and 38 university graduates.
MinRes cut the ribbon on a new daycare centre earlier this year that can accommodate up to 105 children.
“Parents and the kids are loving it,” he said.
Mr Ellison announced the development last year in Sydney, as well as the miner’s own airline “MinRes Air”.
“(We) started it so we can deliver our people to sites at a time of our choosing, that meant that we have had much less downtime.”
Road issues ‘not a big deal’: Ellison says
A spate of cyclones has caused damaged to MinRes’ brand new haul road.
“We’re overcoming it,” he said, indicating additional resufracing would need to be completed and to eventually deliver a “bulletproof road”.
MinRes sold a 49 per cent stake in the Onslow haul road to Morgan Stanley Infrastructure Partners in September for $1.3b.
Meanwhile, the mining boss said nearly 800 workers were redeployed across the business after closing the Yilgarn iron ore mine.
The asset was wound down at the end of December.
He dubbed the in-progress Onslow mine ‘the biggest and most innovative project we’ve ever delivered” and said there had been “huge progress”.
The miner wants to get the asset to 35 million tonnes per annum.
‘Minimising spend’, Ellison talks more prudent MinRes
Chris Ellison said the second half will be much stronger for lithium, the miner’s second key commodity after iron ore.
MinRes was forced to mothball Bald Hill in November - having only bought the asset the year prior.
Huge writedowns on the asset revealed in financials yesterday weighed heavily on an already strained balance sheet.
With Onslow ramp-up underway, he indicated there were no major projects in the pipeline over the next 12 to 18 months
“Our focus is on banking cash and minimising spend,” Mr Ellison said.
Governance woes ‘behind me’: Ellison fronts analysts
Mineral Resources managing director Chris Ellison is addressing analysts alongside his chief financial officer Mark Wilson.
Mr Ellison acknowledged the past six months have been “pretty tough” but has assured there are good things happening within the business, including new mine Onslow Iron.
He affirmed the mine was cashflow positive and on track.
“The issues that I’ve faced over the past six months... they’re behind me,” he said.
“The board and I are in lockstep.”
Santos profit drops 14 per cent on lower oil price
Falling commodity prices have hit returns at oil and gas explorer Santos, sending profits down 14 per cent for the full financial year.
The SA-based exporter said sales revenue fell 9 per cent over the year but was confident its Barossa gas project in the Northern Territory was 91 per cent complete and on track for its first gas by the end of the year. The Barossa project is expected to deliver 3.7 million tonnes of LNG a year.
Its Alaskan oil project, Pikka, which would deliver an additional 80,000 barrels a day was also on track, expected to be online by mid-year.
The company declared a dividend of US10.3c a share taking the full year payout to US23c per share.
Santos also reported that it had reduced scope 1 and scope 2 emissions by 26 per cent on the 2019 baseline, representing 84 per cent toward its net zero target by 2030.
