legacy and hawthorn to advance mt bevan

Company Announcements Office 21 December 2011
ASX Limited
Via E Lodgement
Legacy and Hawthorn take a positive step
towards the development of Mt Bevan
Highlights
?? Legacy to become 60% shareholder in Hawthorn Resources
?? Legacy to nominate the majority of directors
?? 100% Mt Bevan interest in one company
Legacy Iron Ore Limited (“Legacy”) and Hawthorn Resources Limited (“Hawthorn”) are pleased to
announce they have signed a term sheet whereby, subject to necessary shareholder approval,
Legacy will acquire a 60% interest in the issued capital of Hawthorn (“Agreement”).
The key terms of the Agreement include:
?? Hawthorn providing total consideration to Legacy, equal to 60% of the issued capital in
Hawthorn, post the current share purchase plan capital raising being undertaken by Hawthorn,
following:
o Legacy agreeing to subscribe for a placement of $5,000,000 at an issue price of $0.015
in Hawthorn, being a premium over the last ASX trade of $0.009, upon completion of the
transaction.
o Hawthorn agreeing to acquire the interest currently being earned in the Mt Bevan project
by Legacy, and agreeing to terminate the Joint Venture agreement, in return for scrip
consideration in Hawthorn.
?? Upon completion, 100% of Mt Bevan will remain in Hawthorn for development and
commercialisation.
?? Legacy will have the right to appoint a majority of directors to the Hawthorn board.
?? Hawthorn retaining Mr Kerr and Mr Elliott as non-executive directors, for a minimum period of 2
years.
The Agreement is subject to the completion of satisfactory due diligence by Legacy, and obtaining
the necessary regulatory and shareholder approvals.
On 5 December 2011, Hawthorn announced a corporate restructure whereby Hawthorn would spin
off all other assets, leaving the Mt Bevan iron ore project as its sole project and allowing Hawthorn
to be a distinct iron ore company.
The current proposal, as agreed between Legacy and Hawthorn, allows for the ongoing
development and commercialisation of Mt Bevan, under the one company.
Upon execution, the transaction will occur following the expected upgrade to the current inferred
resource, which is likely to be announced in mid-January 2012.
Following the recent placement to NMDC Limited, Legacy now has direct access to project finance
and funding through NMDC Limited. NMDC is India’s largest iron ore producer and a Government of
India owned enterprise which has current cash reserves in excess of $4bn, and has publicly stated
its commitment to developing the Mt Bevan project through Legacy, its Australian acquisition and
investment arm.
The $5m placement into Hawthorn will be funded by Legacy, out of current cash reserves. Legacy
shareholders recently approved an $18.9m placement to NMDC Limited.
NMDC’s support of the Mt Bevan asset being housed in a single entity is extremely positive and is
the key to unlocking the asset’s full potential, underpinning its rapid development with development
funding, 100% project finance, access to debt funding to avoid dilution, exploration support, mining
operational experience and off-take agreements. It comes at a strategically important time when
project feasibility studies, metallurgical testwork and logistic investigations are being contemplated in
parallel with an aggressive drilling program.
Commenting on the agreement, Legacy Managing Director Ms Sharon Heng noted that the
agreement to develop the Mt Bevan asset under one company will significantly accelerated the
asset’s development program and will allow for access to better financing and commercialisation
funding.
Hawthorn Managing Director, Mr. Mark Elliott, noted that the current JORC resource will be
expanded shortly for the Mt Bevan iron ore asset, as well as looking to commence feasibility studies
for the development of Mt Bevan.
Following implementation, Hawthorn shareholders will continue to participate in the expansion of the
company, with Legacy shareholders participating in the growth of the Mount Bevan asset via
Legacy’s 60% shareholding in Hawthorn.
Hawthorn shareholders have the opportunity to participate with the current share purchase plan
(SPP) remaining open till mid January 2012.
Under the SPP, Hawthorn shareholders have the opportunity to purchase up to $15,000 worth of
additional shares in Hawthorn. Shares purchased in the SPP will be made available at a discount
price of $0.01 to the proposed placement price.
Subject to successful completion, Ms Heng also noted that Legacy would look to in-specie the 60%
shareholding it would hold in Hawthorn back to Legacy shareholders. A record date to participate in
the in-specie will be advised.
Upon the execution of formal documentation, it is anticipated that Hawthorn will call an EGM during
February 2012, to approve the transaction.
The directors of Hawthorn have indicated their intention to vote for the transaction at any meeting.
CONTACTS
Legacy Iron Ore Limited Hawthorn Resources Limited
Sharon Heng Mourice Garbutt
Managing Director Company Secretary
T: +618 9421 2005 T: +613 9605 5917
F: +618 9421 2001 F: +613 9605 5999