14/06/2016 - 23:58

Mineral Resources fires up on gas

14/06/2016 - 23:58

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Iron ore miner Mineral Resources has added another string to its bow, taking a 19.3 per cent stake in domestic gas supplier Empire Oil & Gas, a week after the company increased its slice of the Mt Marion lithium project.

Mineral Resources fires up on gas
Minres managing director Chris Ellsion.

Iron ore miner Mineral Resources has added another string to its bow, taking a 19.3 per cent stake in domestic gas supplier Empire Oil & Gas, a week after the company increased its slice of the Mt Marion lithium project.

About 18.7 per cent of the new holding came in an off market buy from ERM Power worth $8.9 million, with shares valued at 45 cents each, a 41 per cent premium to Friday’s closing price.

ERM is a supplier of electricity to industry and businesses and owns and operates generators, with a focus on the eastern states.

A further 0.6 per cent came from an additional source.

The deal also brought with it 1.4 milion Empire options.

The most significant part of Empire’s armoury is the Red Gully gas processing plant, located in the Perth Basin, which prodduces up to 10 terajoules of gas per day for the domestic market.

That’s about 1 per cent of the state’s consumption.

The plant had had teething issues but is now performing much closer to nameplate capacity.

Empire chief excecutive Ken Aitken said he welcomed Mineral Resources as a new cornerstone investor.

He noted that a number of Mineral Resources customers were domestic gas users, including Roy Hill Holdings and BHP Biliton.

"Empire looks forward to the ongoing support of MRL in unlocking the future potential of the Perth Basin,” Mr AItken said.

“ERM Power has played an important part in establishing Empire as a significant Perth Basin producer with its own infrastructure, and has been a supportive cornerstone shareholder for more than two years.”

Mineral Resoures flagged it intended to use LNG technology at the Mt Marion lithium plant, which it owns in a venture with Chinese company Ganfeng and Neometals.

That project is currently in development.

Last week it bought an additional 13.1 per cent share of the project at a cost of $19.7 million, taking it’s portion to 43.1 per cent.

Minres managing director Christopher Ellison said the it would be supporting the growth of Empire while developoing it’s power supply business for the mining industry.

It isn’t the first resources player to stake a claim in the Perth Basin either, with alumina producer Alcoa involved in a series of potential and developed gas projects.

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