Hard-hit Mineral Resources in purgatory as investors await board probe on Ellison payments

Mineral Resources’ hard-hit shares are facing a stint in purgatory while the company’s board decides whether chief executive and co-founder Chris Ellison’s early financial dealings with the listed group warrant a sanction.

The stock, already hammered lower by this year’s subdued commodity prices, plunged 14 per cent in heavy trading on Monday as investors mulled the potential fallout from revelations Mr Ellison evaded tax for years on overseas businesses he co-owned before MinRes floated on the Australian Securities Exchange in 2006.

It lost another 4.5 per cent in early trade on Tuesday, hitting $37.77 by 7.45am.

The billionaire has admitted the non-disclosures were “a serious lapse of judgment”, but the MinRes board is also awaiting the findings of a “well advanced” independent legal investigation into whether the company and its shareholders were disadvantaged by payments it made to the offshore entities under pre-float supply contracts.

Monday’s market thumping wiped $1.29 billion off MinRes’ value — resetting it at $7.8b — with Mr Ellison’s 11.5 per cent stake dropping more than $143 million.

Stockbroker RBC Capital Markets said the sell-off — MinRes’ share sale volumes hit a 2½-year high — was exaggerated but warned there may not be a meaningful recovery until the outcome of the board investigation is known.

“While we understand that these concerns raise questions over corporate governance, we think the share price move today is overdone,” said analyst Kaan Peker, who rates the stock a buy.

“The added scrutiny and rigour, the current concerns placed on corporate governance, ultimately, should be positive for the organisation, and at face value there appears to be no adverse impact to operations/management.

“Currently, there appears to be confidence in Chris Ellison’s ability to manage/run the company, however, until the investigation is finalised there will likely be an overhang on the stock.”

While Mr Ellison self-reported his tax non-compliance to the Australian Taxation Office and has since paid what he owed — along with a substantial fine — the matter will likely attract shareholder scrutiny at next month’s annual general meeting.

The notice of meeting released on Monday reveals MinRes will seek shareholder approval to award Mr Ellison nearly $4m in share rights as the potential short and long-term bonus component of his 2025 pay package, with vesting of the stock tied to performance targets.

He would receive a maximum 51,976 rights valued at $2.88m as his long-term bonus, with up to a further $1m of rights to be issued as a short-term reward.

The notice of meeting reminds shareholders that the MinRes board has the power to block the vesting of rights, reduce agreed grants or claw back previous awards in the event of recipients intentionally or inadvertently breaching their duties or gaining an unfair benefit.

Mr Ellison is already one of WA’s highest-paid bosses, pocketing $13.3m in “realised pay” in the 2024 financial year.

Like other top ASX200 companies, his business sets out standards of behaviour expected from its employees.

Its latest corporate government statement commits the mining and services group “to a high level of corporate governance that encourages a culture valuing safe, ethical behaviour, integrity and respect”.

MinRes chair James McClements said on Sunday the board was “committed to robust and transparent corporate governance”, noting that the events under investigation occurred nearly 20 years ago and that “the board today comprises directors who individuallyand collectively have a strong focus on governance and are committed to continuous review and improvement”.

Mr Ellison has confirmed that before MinRes’ listing, he and other executives owned companies buying and exporting mining plant and parts for on-sale in Australia.

“Regrettably, revenue generated by the overseas entities that we were beneficiaries of was not disclosed to the ATO at that time. This was a poor decision and a serious lapse of judgment,” he said.