Mineral Resources will front up to $14.5 million to fund the administration of Chris Ellison’s brother’s collapsed Resource Development Group, after putting brakes on funding last month.
Mineral Resources will front up to $14.5 million to fund the administration of Chris Ellison’s brother’s collapsed Resource Development Group, after putting the brakes on funding last month.
McGrathNicol experts in control of the group’s seven subsidiaries last week struck the funding deal with MinRes, which previously offered the funds, to support ongoing trade while a sale and recapitalisation process gets underway.
The board of the troubled garnet miner and diversified services outfit – led by Andrew Ellison – called in administrators Jason Ireland, Rob Bruer and Linda Smith late last month.
The decision came after MinRes - as the major shareholder at 65 per cent and secured creditor - declined RDG's request for a cash advance against its $135 million interest-free loan, on which MinRes agreed earlier this year to defer repayments on until September.
Upon their appointment, the administrators were in discussions with MinRes over funding to support the continuation of trade, namely for the construction and ongoing production at RDG’s Lucky Bay garnet mine, alongside employee entitlements.
After entering the agreement with MinRes last week, McGrathNicol wrote the funds of up to $14.5 million will be used to support ongoing trade while a sale and recapitalisation process ensues, with the aim of preserving value through the administration process.
"The funding agreement is secured both by the administrators’ statutory indemnity and lien under... the Corporations Act 2001, and by a general security deed, in favour of MRL over the assets of the companies," McGrathNicol detailed.
It appears MinRes hasn't ruled out getting involved in the sales process for the business or its assets, after McGrathNicol wrote the miner "indicated it may participate” in a letter penned to employees last month.
The administrators were appointed to seven entities, including RDG and the outfit which holds the Lucky Bay garnet asset - Australian Garnet Pty Ltd.
The Lucky Bay garnet mine in the Mid West produces garnet products used in the abrasive blasting and water cutting markets.
The group’s construction subsidiaries Central Systems Pty Ltd and Concrete Construction (W.A) Pty Ltd are also among the entities under voluntary administration.
Upon RDG’s demise last month, MinRes said it expected to recognise a non-cash impairment expense in its FY25 results as it assesses the carrying value of RDG’s assets.
“MinRes will seek to protect its position through the administration process in the best interest of shareholders,” it told the market on July 28.
The miner also added, "MinRes nominees on the board of RDG were excluded from this review process and decision".
RDG is led by managing director Andrew Ellison, brother of MinRes managing director Chris Ellison.
The iron ore and lithium miner has previously awarded work in RDG's direction through a $140 million contract on the Onslow Iron project.
RDG’s last set of financial results showed a half year net profit of $5.9 million in the six months to December. Revenue came in at $56.1 million for the same period.
