Mineral Resources Ltd (ASX: MIN) shares have clawed their way back into the green in early afternoon trade today after being down more than 1% in morning trade.
Shares in the S&P/ASX 200 Index (ASX: XJO) lithium miner and diversified resources producer closed on Friday trading for $34.12. At the time of writing, shares are changing hands for $35.20, up 3.17%.
For some context, the ASX 200 is up 0.15% at this same time.
Despite today's uptick, and as you can see on the chart above, it's been a horror month for Mineral Resources shares, down more than 32% since 30 September.
Some of that pressure has come amid broader market headwinds. That includes an ongoing medium-term oversupply of lithium, and a rather abrupt end to the brief iron ore rally.
On a company-specific level, Mineral Resources has been attracting a lot of unwanted media attention over tax evasion allegations involving its founder and CEO, Chris Ellison.
Ellison is alleged to have failed to properly report revenues earned by several British Virgin Island registered companies that had been employed to buy mining equipment. The tax issues date back more than 20 years.
With that background in mind, here's why Bell Potter Securities' Christopher Watt has a buy recommendation for the ASX 200 mining stock (courtesy of The Bull).
Mineral Resources share trading 'at a steep discount'
Atop its mining services, Mineral Resources produces lithium and iron ore.
Explaining the headwinds impacting Mineral Resources shares this year, Watt said:
Share price weakness in 2024 has been driven by its net debt level, weaker commodity prices and negative investor sentiment. The shares have fallen from $79.49 on 20 May to trade at $35.99 on 24 October. At these levels, we believe the shares are trading at a steep discount.
Indeed, at the current $35.20 a share, that discount is even steeper.
As for the growth outlook, Watt noted, "The company's Onslow iron project is a growth driver as it will significantly increase volumes at a lower cost moving forward."
Today's response from the MinRes board
Speaking of the negative investor sentiment that's weighing on Mineral Resources shares recently, the company's board released an announcement this morning on its ongoing investigation into the various allegations embroiling the company.
The board noted that it has received questions on these issues from the ASX, to which it intends to update the market "shortly". The board plans to announce its conclusions on these matters and the actions it will take by next Monday, 4 November.
The board highlighted that some of the reported matters date back to before the company's formation and ASX listing in 2006.
Mineral Resources chairman James McClements said:
The board's response is driven by high governance principles and the best interests of MinRes shareholders, now and in the long term.
We are determined to ensure that this is the path for MinRes long into the future and we understand our role as a board is to strike the appropriate balance of all factors, so this is delivered for our investors.
Mineral Resources shares are down 41% over 12 months.
