Legacy Iron Ore Gets 60% of Hawthorn Resources Article
December 28, 2011 12:18 PM EST Indian-backed Legacy Iron Ore is poised to acquire a 60 per cent control in Hawthorn Resources, a move that will see the accelerated development of the Mount Bevan magnetite project
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Legacy and Hawthorn had signed a term sheet for the deal which will be finalized after an upgrade to the current inferred resource at Mt. Bevan is known. This is likely to be announced in mid-January.
Under the arrangement, Hawthorn will hand over to Legacy a 60 per cent slice of the company and a majority of directors in return for $5 million cash, as well as the 60 per cent stake in Mt. Bevan that Legacy is earning and the support of NMDC Ltd., India's largest iron ore miner.
This deal effectively places the control of Mt. Bevan with Legacy, and provide an entry access for NMDC Ltd. to further project finance Mt. Bevan, Proactivenvestors reported. NMDC Ltd., with cash reserves of $4 billion, had earlier committed to develop Mt. Bevan through Legacy.
The Legacy-Hawthorn deal is still subject to the completion of satisfactory due diligence by Legacy, as well as obtain necessary regulatory and approvals from Hawthorn shareholders.
In mid-November, NMDC Ltd. obtained a 50 per cent stake in Australia's Legacy, its first overseas procurement, for A$18.89 million. The acquisition surprised sceptics yet was lauded by analysts and investors who knew that new mines in India are harder to develop and sustain given regulatory risks and struggles involving land acquisitions, displacement of locals and environmental clearances.
Output from Legacy will either be sold in the international market or brought to India but not until years of exploration and mine construction.
NMDC Ltd. mines less than 25 million tonnes of iron ore annually. It aims to increase up to 40 million tonnes by 2014-15, the reason for its aggressive overseas acquisitions.
NMDC has put aside up to $400 million for overseas investments.
India produces more than 200 million tonnes of iron ore a year.
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