It’s 1959 and mining entrepreneurs Lang Hancock (the late father of Gina Rinehart) and Peter Wright are on the hunt for cash.
The pair have discovered vast iron ore deposits in the Pilbara region of Western Australia, but they need funds to continue prospecting.
Hancock and Wright approach Stan Perron, a school dropout and former milk bar manager who would go on to make fortunes in earthmoving, car dealerships, property and a range of other investments.
Hancock and Wright ask Perron for £1,000 in return for a 30% share of any royalties that might flow from mining activity.
Perron decides £1,000 is too much of a risk and settles instead on a £500 investment that gives him a claim to 15% of the royalties.
Fast forward to 2010. Stan Perron is a billionaire thanks to his property and car empire, and Lang Hancock’s daughter, Gina Rinehart, is the richest woman in Australia, thanks largely to the iron ore deposits her father discovered.
Rio Tinto is now mining those deposits, delivering a steady (and growing) stream of royalties to Rinehart.
But after flying over the Pilbara, Perron notices something. Rio Tinto’s Brockman mines, near Mt Tom Price, are not located where he thought. He believes he is entitled to a larger royalty stream than he has been receiving and launches action in the Western Australian Supreme Court against Hancock Prospecting.
Yesterday, just a week before the billionaire brawl was scheduled to start in court, the parties announced a settlement had been reached.
The details are confidential, but a statement from Perron’s company, SP Investments, suggests Perron has emerged the clear winner.
“The parties have agreed that Mr Perron or SP Investments … is and has always been entitled to a 15% interest in the benefits and entitlements of an agreement between Hancock Prospecting, Wright Prospecting and other parties, including Hamersley Iron Pty Ltd,” Perron Group said in a statement today.
“Those benefits and entitlements include the payment of royalties in relation to certain mines in the Pilbara region including the Mt Tom Price mines (which include the Western Turner Syncline mine) and the Brockman mines.”
How much extra will Perron receive? Bloomberg suggests it could be as much as $4.2 million a year, based on iron ore prices and the output of the Brockman mines.
It’s not exactly a fortune for a man who last week spent $690 million buying stakes in three regional shopping centres.
But you get the feeling Perron has won a point of principle. Maybe it will even be enough to comfort him for that decision not to invest the full £1,000 with Hancock and Wright all those years ago.