Mineral Resources (ASX: MIN) shares have continued to recover after the mining company, which has faced questions over controversial related party transactions, agreed to sell oil and gas assets to Australia’s richest person, Gina Rinehart.
Mineral Resources (MinRes) agreed to sell exploration permits (EP) 368 and 426 in the Perth Basin of Western Australia to Rinehart’s privately-owned Hancock Prospecting and two Joint Venture Agreements have been established for MinRes’ remaining onshore Perth Basin and Carnarvon Basin exploration acreage.
MinRes said Hancock would pay A$804 million up front and an extra $327 million, subject to meeting resource thresholds and classifications for the Moriary Deep Prospect and Lockyer Gas and Erregulla Oil discoveries.
The MinRes share price closed at $40.61, up $1.21 (3.07%) on the day and more than 12% since the announcement was made on Thursday, capitalising the mining company at $7.74 billion.
The shares traded between $38.43 and $41.51.
MinRes said it had made several significant gas and oil discoveries in EP 368 and 426 since its first conventional gas discovery at Lockyer Deep-1, near Mingenew, in September 2021.
Chief Executive Energy Darren Hardy said forming a joint venture with Hancock, including the ability to bring forward drilling, reduce operating costs and provide funding support, had the strategic merit.
“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," Hardy said in a statement.
“This transaction maximises the value of our exploration success for shareholders and again showcases our ability to unlock significant 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.”
Rinehart, Hancock’s Executive Chair, said gas was critical to underpin baseload power requirements and support local industry with the provision of reliable power.
“Hancock is delighted to have made this investment to acquire 100% of this standout Western Australian gas project at Lockyer, the development of which can have meaningful future benefits for local customers providing access to reliable energy, as well as providing new employment opportunities,” she said in a statement.
Completion of the transaction is expected by the end of 2024, subject to conditions including ministerial consents.
MinRes’ share price fell sharply in October in the wake of media coverage about payments it made to offshore entities connected to Managing Director Chris Ellison and the corporate governance issues they raised.
The company has said it would announce the results of an investigation into these matters, and the action it would take, on 4 November 2024.