Chris Ellison’s Mineral Resources has made a surprise entry into...

Chris Ellison’s Mineral Resources has made a surprise entry into the gas industry, picking up ERM Power’s stake in Perth Basin producer Empire Oil & Gas at a big premium to the market price.


MinRes will pay 45¢ a share, or $8.9 million, for ERM’s stake in Empire — a 41 per cent premium to the target’s last trade of 32¢. MinRes confirmed yesterday it had secured 19.4 per cent of Empire, adding a mall parcel of shares to ERM’s 18.7 per cent holding.


The surprise foray throws doubts over Empire’s week-old $15 million loan deal with the Wyllie Group-backed Viburnum Capital, which is to be used to repay ERM’s debt in two months time. The loan deal remains subject to due diligence. Mr Ellison last night would not comment on the proposed Viburnum loan, which comes with an 8 per cent interest rate and options that could deliver the lender a 12 per cent stake in Empire.


But he played down suggestions MinRes would pursue a takeover of Empire, saying he was content with its position and saw an opportunity to secure gas from the target’s Red Gully operation near Gingin.


MinRes has invested heavily in LNG technology, intending to fuel its mobile crushing equipment and other plant with gas rather than diesel. It also plans to run its Mt Marion lithium mine, near Kalgoorlie-Boulder, on gas. Mr Ellison said in February MinRes could halve its energy bill through gas conversion. He flagged a 10¢ a kilowatt-hour energy cost at Mt Marion from trucking LNG to the facility, as opposed to 34¢/KWh from using grid power.