True value around $15-$18, page-117

MinRes, Mitsui in the spotlightBridget Carter8:00PMAugust 26, 2024
The Australian Business Network1 commentsMineral Resources boss Chris Ellison.The Perth Basin is seeing plenty of oil and gas merger and acquisition activity, and the latest parties in the spotlight are Chris Ellison-backed Mineral Resources and Japan’s Mitsui.One of the suggestions doing the rounds is that Ellison, a billionaire, could be in talks with Mitsui.Within the onshore Perth Basin, Mineral Resources has the Lockyer conventional gas project development, for which it bought in Norwest Energy as a minority joint venture partner.It then purchased Norwest and pushed ahead with exploration activities across its Perth Basin permits, drilling six wells over two years.Mitsui owns the Waitsia gas plant with Beach Energy, and there would be efficiencies to be gained by acquiring more gas to process through that infrastructure.It is also probably short of gas.A deal could be worth several hundred million dollars.Deutsche Bank is understood to be eyeing the Perth Basin, and private equity groups like Carlyle Group are also sniffing around.Mineral Resources has been looking at ways to strengthen its balance sheet to fund projects including its Onslow iron ore project.In June, it sold a 49 per cent stake in the haul road for its Onslow Iron Project for $1.3bn to Morgan Stanley Infrastructure Partners.It was seen as evidence that Mineral Resources had a pressing need for funding, as gaining $1.3bn through a loan would probably prove to be less costly.The $13bn company had net debt of $3.5bn at December 31 and is at the limit of its borrowing capacity.It has been talking up the Onslow project’s prospects, boasting of it producing at least 60 million tonnes of iron ore in due course, with 35 million tonnes per annum in the near term as it ramps up.The Onslow iron project in the west Pilbara region shipped its first ore in May, ahead of schedule.Mineral Resources generates income from its three iron ore hubs – Onslow Iron in the west Pilbara, Utah Point in Port Hedland and Yilgarn in Esperance.In 2018, Mineral Resources and Mitsui entered a battle to buy oil and gas group AWE, with Mitsui winning the asset for over $600m.AWE’s key asset was a 50 per cent stake in the Waitsia gas field, which had been described as the biggest conventional onshore gas discovery in Australia in decades.MinRes had eyed Waitsia as a source of cheap energy for its planned lithium-processing business.Another possible consolidation is Hancock Prospecting buying out the $500m Strike Energy.Bridget CarterDataRoom Editor