MIN To Acquire NWE (1 for 1367), page-9

Chris Ellison Joins PB Gas Consolidation - AFR

Snippets:

Billionaire Chris Ellison has joined the fray in the consolidation of onshore gas assets in the Perth Basin, launching a $403 million takeover bid for Norwest Energy. Mr Ellison’s Mineral Resources unveiled its bid on Friday, exactly a week after Kerry Stokes-backed Beach Energy waved the white flag in its battle with Gina Rinehart’s Hancock Prospecting for control of Warrego Energy.

The MinRes scrip takeover offer values Norwest at $403 million and is pitched at one MinRes share for every 1367 Norwest share, which implies a value of 6¢ per Norwest share. MinRes already owns 19.9 per cent of Norwest stock.

Mr Ellison signalled he wanted to become involved in the on-shore gas consolidation tussle unfolding in the Perth Basin last month when he ruled out a spin-off of the MinRes lithium business. He admitted taking a keen interest in the Warrego takeover battle where Hancock Prospecting, which works closely with MinRes in iron ore, is now in the box seat. MinRes wants to develop the Lockyer Deep project as quickly as possible and has ambitions to have a plant built and producing at a rate of 250 terajoules a day within two years.

The company has said there is an opportunity to market LNG and provide low-cost power – $1 a gigajoule – to all MinRes operations, including any lithium hydroxide plant built in the Pilbara, and a potential shift to magnetite pellet production at its struggling Yilgarn iron ore mines.

Mr Ellison said on Friday that MinRes had become one of Australia’s most successful companies through its ability to identify and act early on opportunities. “We started accumulating what is now the largest acreage position in the onshore Perth and Carnarvon Basins in 2015 with a clearly articulated strategy to lock in a low-cost, long-life energy supply for our operations,” he said.

“The significant conventional gas discovery we made at Lockyer Deep last year, which we believe may be the largest onshore gas find in Australia, is driving us to develop and commercialise this high-quality energy source as quickly as possible. “The scrip-based offer for our JV [joint venture] partner Norwest will consolidate Lockyer Deep’s project ownership and provide Norwest shareholders with exposure to a bigger prize.”

Absolutely agree that he has been brilliant at acquisitions, hence why I am a big fan of MIN and have a decent holding.

The only thing I'd be careful with the implied valuation for NWE is that MIN share price is quite volatile. So the implied offer price can potentially range from 4c to 8c.

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