Mystery swirls as Andrew Ellison agrees to cancel performance rights at struggling MinRes subsidiary RDG

Chris Ellison’s younger brother Andrew has agreed to bin 13.3 million performance rights attached to the ailing Mineral Resources subsidiary he runs.

In an unusual move, a bundle of performance rights controlled by Resource Development Group managing director Andrew Ellison were cancelled on Friday “after agreement between the company and the holder”.

MinRes, which owns nearly two-thirds of RDG’s stock, declined to comment about the cancellation.

Mr Ellison received the 13.3m of performance rights at RDG’s 2023 annual general meeting, with the performance hurdles tied to RDG’s 2024 financial year performance.

The exact criteria was not detailed but it was split into “sustainability” (20 per cent weighting), “strategic growth targets” (30 per cent weighting), “financial management” (30 per cent weighting) and “organisational culture” (20 per cent weighting).

But they would only vest into shares if Mr Ellison remains as managing director of RDG until June 30, 2026.

The rights had a nil issue price and could have been converted into shares on a one-for-one basis. At the current RDG share price, which has fallen 80 per cent over the past two years, they were worth a maximum of about $133,000.

RDG’s troubles stem from the misfiring Lucky Bay garnet mine near Kalbarri, which has also placed a big burden on the cash-strapped MinRes.

RDG by the end of 2024 had drawn down $130.7m of a $135m loan provided by MinRes, according to its most recent half-year accounts.

RDG is using the money to fix Lucky Bay and is yet to pay any interest on the entire loan. First payment is theoretically due in September.

Lucky Bay, which is about 20km south of Kalbarri, eked out first garnet in early 2023 but is still yet to reach anywhere near its nameplate capacity of 130,000 tonnes a year.

Garnet is commonly known as a gemstone in jewellery pieces, but the garnet-rich sand scooped up at Lucky Bay is used as an abrasive in waterjet cutting and the blasting process to apply protective coatings.

Mr Ellison saw his pay jump at RDG from $525,296 to $948,107 for FY2024, despite Lucky Bay’s woes.