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Additional Information
Market: ASX
Sector: General Mining - Iron Ore and Bauxite
EPIC: LCY
Latest Price: A$0.10  (-4.76% Descending)
52-week High: A$0.22
52-week Low: A$0.09
Market Cap: A$58.13M
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Legacy Iron Ore
www.legacyiron.com.au

Legacy Iron Ore (ASX: LCY) 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 $3.5 million to develop the project to a pre-feasibility status.

Full Legacy Iron Ore profile here
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Legacy Iron Ore gains NMDC as cornerstone investor

22nd Sep 2011, 2:14 am

Legacy Iron Ore (ASX: LCY) has secured NMDC as a cornerstone investor in a complex transaction, and a new company will be the developer of the Mt Bevan JV project, if shareholder and regulatory approval is obtained.

The acquisition and deal would represent the first overseas acquisition by India’s NMDC, which is the country’s largest iron ore producer. NMDC has a $4 billion war chest for acquisitions in bulk commodities.

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


Key aspects of the transaction

India’s National Mineral Development Corporation Ltd (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 A$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 offer also outlines key strengths NMDC brings, as a major shareholder, such as experience in large scale Iron Ore production, relationships with international Iron Ore customers, project management experience in developing Iron Ore resources, and financial strength, with over USD $4 billion in cash.

The Legacy board has recommended the NMDC offer to shareholders.

Sharon Heng, Legacy’s chief executive officer, said "after conducting extensive due diligence on Legacy, NMDC have concluded that we are the ideal entry point for them into the Australian iron ore and resource sector.

“NMDC is not only providing Legacy with funding through the placement, but their presence on the register will create additional opportunities for Legacy, such as the acquisition and divestment of various projects.

“Since announcing the Memorandum of Understanding (MOU) in May this year, and indicating that Legacy was actively seeking new projects, we have been inundated with offers to joint venture and fund numerous advanced resource opportunities, including several in gold, iron ore and coal, with JORC resources.

“With NMDC on the register, and significant financial backing, upon completion of the placement, Legacy will be in a position to actively acquire such projects, to further increase shareholder value.”

Analysis

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. 

Shorter term investors may recoil however for astute longer term investors there is plenty of upside potential, with alot more to be played out.

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