Mineral Resources has agreed to defer repayments on an interest-free $135 million loan to an ASX company led by chief executive Chris Ellison’s brother.


Mineral Resources has agreed to defer repayments on an interest-free $135 million loan to an ASX company led by chief executive Chris Ellison’s brother.
Resource Development Group, led by managing director Andrew Ellison, has disclosed that its total borrowings increased to $130.7 million as at 31 December, up from $117 million six months earlier.
MinRes, which has a 64 per cent stake in RDG, has advanced the funds under an agreement originally struck in 2020.
The shareholding and the loan both stemmed from a 2020 deal in which RDG bought two manganese assets from MinRes.
Since then, the loan amount has progressively increased from $35 million.
Late last year, MinRes said it would support another increase in the loan amount to $135 million, with the loan to stay interest-free until at least 30 June 2025.
The funds have been used to support development and upgrades at the Lucky Bay garnet mine in the Mid West.
Loan repayments were originally scheduled to commence shortly after the first shipment of garnet but two years ago the date was extended to September 2025.
Late last year, MinRes said it would not seek repayments until the Lucky Bay mine “transitions to commercial production and generates positive operating cashflow”.
MinRes further advised that it “will not call for payment of the loan to the detriment of the Group’s working capital position”.
That seems to equate to an open-ended extension until RDG is in a strong financial position.
MinRes noted in its recent half-year report there were “indicators of impairment” in regard to Lucky Bay due to delays in reaching commercial production.
However, it concluded that the recoverable amount of the business unit exceeded the carrying value of the loan by about $52 million and therefore no impairment expense was recognised.
As well as the interest-free loan, MinRes has helped RDG in a second way by awarding big construction contracts for its Onslow Iron mine in the Pilbara.
That helped RDG report healthy profits for the past couple of years.
It posted a net profit of $5.9 million for the half-year to December, after lifting revenue to $56 million.
RDG also reported an increase in net tangible assets to $137 million.
Completion of the major Onslow Iron contracts means that RDG’s only major ongoing project for a third party is at BCI Minerals’ Mardie salt project.
RDG’s contracting arm Centrals also counts its work at the Lucky Bay garnet mine as an ongoing project.
The group said the final upgrade works at Lucky Bay were scheduled to be completed during June 2025, after which it is aiming for a rapid ramp-up in production volumes.
RDG’s share price slipped 6.6 per cent today to 1.4 cents, valuing the company at about $43 million.
Shares in MinRes, which has been under intense scrutiny over its governance standards and high debt load, continued their slide, down six per cent to $22.71.