Gina Rinehart’s Hancock Prospecting empire has inked a $1.1 billion deal to acquire embattled Mineral Resources’ Lockyer gas project and co-develop its remaining onshore assets in WA, making the mining giant one of the state’s largest onshore acreage holders.
On Thursday, Hancock Prospecting confirmed it would spend $804 million to obtain exploration permits for the Lockyer and North Erregulla assets in the Perth Basin in the coming weeks, subject to ministerial approvals.
Gina Rinehart, the billionaire executive chairman of Hancock Prospecting, has long been critical of environmental regulation.Credit: Bloomberg
It will then hand over a further $327 million, provided certain resource thresholds are met after exploration.
The announcement ends weeks of speculation after Mineral Resources revealed it was fielding partnership offers and bids for a full sale of the Lockyer asset, thought to be one of the largest onshore gas discoveries in Western Australia.
Hancock Prospecting has vowed to review options to accelerate development at the site in the state’s Mid West, where Mineral Resources had planned to build a 250 terajoule-per-day plant.
The deal will substantially expand Hancock Prospecting’s footprint in the Perth Basin and comes one year after the miner snapped up half of the West Erregulla gas field from Warrego Energy.
Hancock Prospecting will also acquire half of Mineral Resources’ remaining petroleum acreage in the Perth and Carnarvon Basins, as well as a 50 per cent share of the diversified miner’s Explorer drill rig.
The Rinehart-led company has agreed to bankroll the development of the assets if it is deemed commercially viable.
Mineral Resources has been grappling with a plummeting share price that has wiped $2 billion off the company’s value for almost a fortnight after the Australian Financial Review alleged its billionaire boss Chris Ellison had been involved in a tax evasion scheme.
But MinRes’ share price rose almost 14 per cent to $41.10 on news of the acquisition.
The deal also comes just weeks after WA Premier Roger Cook overhauled the state’s domestic gas policy, allowing companies with onshore tenements to export 20 per cent of the commodity extracted until December 31, 2030.
The state had previously introduced a ban on the export of onshore gas but afforded an exemption to the Waitsia project part-owned by billionaire Kerry Stokes’ Beach Energy.
Rinehart, Hancock’s executive chair and Australia’s richest person, hailed the new policy a “positive” one, claiming it would encourage the development of onshore gas projects that might not otherwise be financially viable.
On Thursday, MinRes chief financial officer Mark Wilson said the deal would allow the diversified miner to retain a foothold in gas while removing its exposure to development costs and strengthening its debt-laden balance sheet.
“We’ve partnered with a very well-respected and strong company. It enables us to accelerate development of exploration opportunities … recycle capital, crystallise value, and strengthen the balance sheet,” he said.
The board expects to hand down the findings of an external probe into Ellison’s alleged conduct next week.
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