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Highlights
- Mineral Resources shares have plummeted 36.2% in three weeks, falling to AU$34.13 amid allegations of executive misconduct.
- Founders Chris Ellison and Tim Roberts allegedly purchased mining equipment at a discount, contradicting previous statements.
- ASIC is investigating Ellison for potential offshore tax evasion, further straining investor confidence amid weak market conditions for lithium and iron ore.
The share price of Mineral Resources Ltd (ASX:MIN) is experiencing a significant downturn, closing yesterday at AU$35.90 before dropping to AU$34.13 in early afternoon trading on Friday—a decrease of 5.0%. The company's stock, which reached a high of AU$53.54 on October 7, has now fallen by a staggering 36.2% in just three weeks, raising concerns among investors.
The decline in Mineral Resources' share price can be attributed to fresh allegations of executive misconduct, as reported by The Australian Financial Review (AFR). According to an invoice obtained by the publication, Chris Ellison, the company's founder and managing director, along with former director Tim Roberts, purchased AU$343,000 worth of mining equipment at a significant discount from the company itself. The equipment, which included tractors, excavators, generators, and utes, was reportedly acquired from the miner's PIHA subsidiary in July 2017 and sent to a rural property in New Zealand co-owned by Ellison and Roberts.
This transaction was approved by the company's former chairman, Peter Wade, but it raises serious ethical questions. Roberts previously stated that no plant or equipment was bought at an undervalue from Mineral Resources. His claims contradict the recent findings, leading to increased scrutiny of both his and Ellison’s actions.
The situation has worsened for Mineral Resources following allegations of offshore tax evasion against Ellison. The Australian Securities and Investments Commission (ASIC) is currently investigating whether he failed to report revenues accurately for multiple companies registered in the British Virgin Islands, which were allegedly used to acquire mining equipment. These allegations stem from transactions that took place over 20 years ago, when Mineral Resources was still operating as a private entity.
In response to these allegations, Ellison acknowledged his poor judgment in a statement, expressing regret and assuring that he has taken steps to rectify the situation with the Australian Taxation Office (ATO).
The share price of Mineral Resources is facing additional headwinds due to a weakening lithium market and an uncertain outlook for iron ore demand. As a result, the stock has seen a 43% decline over the past year, intensifying the scrutiny from investors and analysts alike.
