The Waitsia project in the Perth basin.
MELBOURNE – Mineral Resources on Thursday said the size of its all-share bid for Australian gas producer AWE, worth A$477-million, took into account that its target may hold bigger gas reserves than currently estimated.
AWE said last month that its Waitsia find, which it has called Australia's biggest onshore conventional gas discovery in four decades, held proved and probable reserves of 811 PJ, up 78% from an estimate in June.
"We've thought there's probably some upside, so we've added that to the equation. We're sort of fully priced at where we're sitting now," Mineral Resources MD Chris Ellison told analysts and reporters on a conference call.
The miner last week topped a A$442-million offer for AWE from state-owned China Energy Reserve and Chemicals Group (CERCG), but a small move down in Mineral Resources' share price would put its offer roughly on par with the Chinese all-cash bid.
Ellison declined to comment on Thursday whether the company would consider adding cash or switching to all-cash to make it more appealing.
"At the moment, we're fairly convinced that we've got a very compelling offer sitting on the table just doing a share swap," he said.
"We think the value we're offering is probably at the top-end of the value of that business and those assets."
He said Mineral Resources has a good track record of capital growth and dividend payouts, which should be appealing to AWE investors.
AWE has yet to make a recommendation on either of the two bids it has received.
Mineral Resources wants to use gas from Waitsia to power a planned port, lithium and graphite processing plants and remote mine sites where it offers mining services.