Will ASIC make a dog's breakfast of Mineral Resources shares?

ASIC has now stuck the probe in to investigate.

| More on:
Miner looking at a tablet.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Mineral Resources Ltd (ASX: MIN) share price has been volatile in 2024 and is down nearly 45% this year.

Shares have slipped nearly 28% in the past month alone, with investor confidence shaken by revelations into co-founder Chris Ellison's tax history.

Now, corporate watchdog, the Australian Securities and Investments Commission (ASIC), has escalated its inquiries into Ellison's potential misconduct involving tax evasion and governance issues.

The news isn't price-sensitive, so Mineral Resources shares are largely unaffected today. But there's no telling what long-term implications this may have.

Created with Highcharts 11.4.3Mineral Resources PriceZoom1M3M6MYTD1Y5Y10YALL1 Nov 20238 Nov 2024Zoom ▾Nov '23Jan '24Mar '24May '24Jul '24Sep '24Nov '24Jan '24Jan '24Apr '24Apr '24Jul '24Jul '24Oct '24Oct '24www.fool.com.au

Mineral Resources shares in the headlines again

Mineral Resources shares have been under the pump after news of Ellison's conduct began to circle the headlines.

News reports initially focused on Ellison's involvement in a tax evasion scheme involving companies registered in the British Virgin Islands. These companies were reportedly used to buy and sell mining equipment. However, investigations uncovered more findings into the co-founder's conduct.

These included Ellison using company resources for personal benefit and directing employees to manage personal matters.

Mineral Resources, or "MinRes", as it's known in investor circles, also completed an internal investigation into the matter, which resulted in Ellison agreeing to gradually step away from the company.

ASIC has now teamed up with the Australian Taxation Office (ATO) to examine the details and uncover any breaches of corporate laws.

There's even a Senate hearing into the matter. According to The Australian, ASIC Deputy Chair Sarah Court confirmed to the hearing the body's intention to scrutinise any misconduct by Ellison or the company.

Board and governance questions loom

Mineral Resources' board is feeling the heat over governance standards.

Following the internal investigation, Ellison agreed to a phased exit over 12-18 months, with board-imposed penalties of $8.8 million and forfeited remuneration of nearly $10 million. Ouch.

Despite these measures, scrutiny around the board's handling of Ellison's actions persists, with investors questioning the long-term impact on the company's credibility and performance.

The Australian Future Fund, which holds a nearly $90 million stake in Mineral Resources shares, recently voiced concerns over governance issues.

It hinted at a potential review of its investment in the company.

In light of the turbulence, brokers are also fairly neutral on the stock. It is rated a hold by consensus, according to CommSec.

Bell Potter is one of the bullish crowd. The broker retained its buy rating on Mineral Resources shares, in a recent note.

It highlighted the company's core business strengths in mining and mining services in its appraisal.

The broker remains optimistic, with a 12-month price target of $61.50 on the mining stock.

However, it cautions that volatility could persist as the ASIC investigation unfolds. It could potentially implicate other executives or reveal further misconduct.

Time is said to heal all. But time will also tell what happens from here.

Foolish takeaway

Mineral Resources shares remain in the hot seat as ASIC now sticks the probe into the mining giant.

For investors, the question is whether to weather the storm or sit this one out. Brokers are fairly split, despite some support from the likes of Bell Potter.

In the last 12 months, the stock is down more than 35%.

Should you invest $1,000 in Mineral Resources Limited right now?

Before you buy Mineral Resources Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Mineral Resources Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Resources Shares

Three miners wearing hard hats and high vis vests take a break on site at a mine as the Fortescue share price drops in FY22
Resources Shares

Did you catch what happened with the big 3 ASX 200 mining stocks in April?

BHP, Rio Tinto, and Fortescue all reported their latest mining results in April.

Read more »

Miner looking at a tablet.
Resources Shares

After its earnings result, what's Macquarie's price target on Fortescue shares?

Let’s dig into what Macquarie thinks of Fortescue after its quarterly update.

Read more »

Two mining workers on a laptop at a mine site.
Resources Shares

The Mineral Resources share price is down 72% in a year. Time to pounce?

Two top experts ran their slide rules over Mineral Resources shares. Here’s what they found.

Read more »

Miner looking at a tablet.
Resources Shares

Mineral Resources share price shoots 15% higher on third-quarter report

The ASX 200 iron ore and lithium giant has released its 3Q FY25 activities report.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Why Macquarie says this ASX 200 mining stock could rocket 67% in a year

Macquarie forecasts a big potential rebound for this diversified ASX 200 miner.

Read more »

Female miner smiling at a mine site.
Resources Shares

3 reasons why the Fortescue share price could still be a buy

Here’s why I view Fortescue as an opportunity.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Resources Shares

Here's the latest earnings forecast out to 2029 for Rio Tinto shares

Let’s unearth what this mining giant is predicted to achieve.

Read more »

Female miner smiling in front of a mining vehicle.
Resources Shares

Is the BHP share price a buy? Here's UBS' view

Let’s dig into what an expert thinks of this mining giant.

Read more »