NMDC has reached an agreement with Western-Australia-based exploration company Legacy Iron Ore to acquire its 50 per cent stake for approximately $18.89 million (about Rs 92.98 crore). This is NMDC’s first investment outside of India.
The Legacy board approved the proposal on Thursday. Now, it is subject to the approval of Legacy shareholders, who are likely to vote on the proposal in November. “We are awaiting the approval from shareholders. This amount would be mopped from internal accruals. Some of the Legacy mines are already developed and some need to be developed,” a senior NMDC official said. He declined to be identified.
“We are delighted to have secured India’s NMDC as a corner stone investor in Legacy. After 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,” Legacy CEO Sharon Heng said in a notification filed to the ASX.
With cash injection, Legacy’s ongoing funding obligations under various joint venture agreements would be met apart from developing its assets, accessing new opportunities through a strategic relationship with NMDC. Legacy plans to consider a spin-off of certain assets into a new entity to be listed on ASX.
With this, NMDC will have right to nominate the majority of directors to the Legacy board.
NMDC will get a minimum of 238 million shares of Legacy and the final number of shares to be issued will be subject to conversion of options. For NMDC to receive a 50 per cent shareholding in Legacy, it will also receive options equal to 120 million options on issue now.
Source: My Digital FC