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Race for resources -NMDC become cornerstone investor in Legacy Iron Ore

In a multi faceted transaction proposal, Indian state owned iron ore mining major National Mineral Development Corporation Ltd will inject funding into Legacy Iron Ore and the JV interest in Mt Bevan will be spun off into a new listed company and Legacy shareholders will receive free shares.

Legacy Iron Orehas secured NMDC as a cornerstone investor in a complex transaction and a new company Newco will be the developer of the Mt Bevan JV project, if shareholder and regulatory approval is obtained.

For its part NMDC would undertake an investment in Legacy and receive 50% of the equity in Legacy, in return for AUD 19 million investment. Legacy Iron Ore would become NMDC’s exclusive investment vehicle in Australia.

The major asset in Legacy, the JV rights held in Mt Bevan, would be spun out into “Newco”, a new company to be listed on the ASX as early as October if approvals are received.

Key aspects of the transaction

NMDC has presented an offer to subscribe for a significant investment in Legacy, subject to necessary shareholder and regulatory approvals in both Australia and India.

The offer is designed to provide NMDC with an interest in Legacy, on payment of the amount of AUD 18.89 million.

The offer presents an opportunity to provide the company with substantial funding and working capital, to continue to develop its various projects.

A relationship with NMDC brings to Legacy, a major shareholder with World class credibility in developing large scale Iron Ore projects.

The offer is subject to NMDC and Legacy entering into a binding subscription agreement.

NMDC has the right to nominate the majority of directors to the Legacy Board.

The Legacy board has recommended the NMDC offer to shareholders.

The transaction has still to be played out but represents an interesting and unique twist that enables Legacy shareholders to participate more fully in the upside from development of Mt Bevan.

Legacy Iron Ore is a Perth based Australian exploration company, established to search for iron ore and gold deposits. The flagship project is Mt Bevan Iron Ore project located approximately 100 kilometres west of Leonora in the central Yilgarn region.

Mt Bevan is a joint venture between Legacy and Hawthorn Resources whereby Legacy will earn a 60% interest in the project by expending a minimum of AUD 3.5 million to develop the project to a pre-feasibility status.