Shares of ASX-listed Mineral Resources Limited (AU:MIN) tumbled today after founder Chris Ellison admitted to tax evasion allegations to the Australian Taxation Office (ATO). Ellison expressed his regret and stated that he failed to adequately disclose revenue from his overseas entities to the ATO. Investors reacted negatively to the news, and MIN stock dropped nearly 14% during today’s trading session.
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Mineral Resources is a diversified resources company with operations in lithium, iron ore, energy, and mining services throughout Western Australia.
Mineral Resources Backs Chris Ellison Amid Controversy
Mineral Resources expressed its full support for Ellison and stated that the company is investigating the matter.
Ellison’s admission was followed by a report revealing that he was involved in tax evasion for years before voluntarily reporting undeclared revenue amounting to millions of dollars to the ATO. According to the Australian Financial Review (AFR), Ellison and four other executives received undisclosed income while evading millions of dollars of taxes through offshore business holdings.
AFR also reported that Ellison was associated with a company called Far East Equipment Holdings, which purchased mining equipment and sold it to Mineral Resources at a higher price. Mineral Resources subsequently claimed depreciation on these purchases in its tax returns.
RBC Weighs in on MIN Stock
Analysts at RBC Capital Markets believe that the sudden movement in MIN stock seemed excessive, considering there appeared to be no immediate impact on operations or management. However, they added that there will likely be continued pressure on the stock until the investigation is on.
Last week, analyst Kaan Peker from RBC reiterated a Buy rating on the stock, lowering the price target from AU$66 to AU$63. He predicts 58.6% upside potential in the share price.
Is Mineral Resources a Good Stock to Buy?
According to TipRanks’ consensus, MIN stock has been assigned a Hold rating, backed by six Buys, four Holds, and three Sell recommendations. The Mineral Resources share price target is AU$49.43, which is 25% above the current trading price.
Year-to-date, MIN stock has lost 44% in trading.
