Diversified mining business Mineral Resources (ASX:MIN) has struck a deal with Gina Rinehart’s Hancock Prospecting for the sale of two of its oil and gas exploration permits in the Perth Basin of Western Australia. In addition, the duo has entered joint venture (JV) agreements over Mineral Resources’ remaining exploration ground in the Perth Basin and Carnarvon Basin, which is also located in WA.
All up, Hancock will pay Mineral Resources up to $1.13 billion cash as part of the transaction.
Management noted that the deal reflects the long-standing and value-enhancing relationship between the two leading businesses in the resource development space of WA.
Mineral Resources – known as MinRes – boasts extensive operations in lithium, iron ore, energy, and mining services across the state. Amongst others, the group is building a vast iron ore portfolio with a focus on long-life and low-cost projects.
It is also considered an influential player in the world’s energy transition thanks to its “world class” lithium assets in WA. Lithium is a key ingredient in modern-day lithium-ion batteries used to power electric vehicles and consumer electronics.
Hancock Prospecting is a privately owned company specialising in the mining and agriculture sectors. The group is regarded as a pioneer of Australia’s iron ore industry with a rich history of production in the prolific Pilbara region of WA.
Today, the company is spearheaded by Gina Rinehart – one of the richest women in the world and daughter of Australian mining tycoon, Lang Hancock, who first discovered iron ore in the Pilbara back in the 1950s.
The newly entered agreement builds on the pair’s existing strategic partnership which focuses on enhancing the development of iron ore projects, especially in the Pilbara. This collaboration leverages Hancock’s expertise in iron ore production with the project development know-how of MinRes.
MinRes chief executive of energy, Darren Hardy, said:
MinRes and Hancock have a long history built on a strong relationship and I’m excited that we are again deepening our ties, this time in energy.
This transaction maximises the value of our exploration success for shareholders and again showcases our ability to unlock capital from MinRes’ portfolio of assets.
The new exploration joint ventures with Hancock in the Perth and Carnarvon basins immediately derisk and accelerate our future exploration programs across this highly prospective onshore petroleum acreage.”
The new agreement between will see Hancock pay MinRes an upfront consideration of $804 million to take full ownership of the two exploration permits in the Perth Basin. The deal is expected to be wrapped-up by the end of the year provided it receives the regulatory tick of approval.
Separately, the transaction includes an additional purchase price adjustment of $327 million subject to certain resource thresholds being met across MinRes’ remaining exploration ground in the Perth Basin and Carnavron Basin.
Here, MinRes will retain a 50 per cent stake in the exploration assets as part of the JV agreements with Hancock. It will also continue its role as operator of the projects.
Hancock will hold the remaining 50 per cent of the JV assets and take responsibility for funding high-priority exploration works in the Carnarvon Basin. Should a commercial discovery be made across the JV projects, Hancock has agreed to fully fund the development costs.
According to MinRes, the deal with Hancock will play an important role in de-risking the near-term exploration and development works across the company’s oil and gas projects by slashing the capital required to move the projects to production.
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