looking more likely now

http://online.wsj.com/article/SB10001424052702304520804576343123259214498.html


NMDC Aims for Stake in Australia's Legacy Iron Ore

NEW DELHI ? State-run NMDC Ltd. has signed an initial pact with Australia's Legacy Iron Ore Ltd. to buy up to a 50% stake in the company, Rana Som, chairman of India's largest iron ore producer said Tuesday.

"The deal is in line with NMDC's corporate strategy for overseas acquisitions in projects that keeps our buying costs low and ensure minimal risks," Mr. Som said.

Another company executive, who didn't want to be identified, said the deal's value is estimated around 1.35 billion rupees ($29.8 million).

NMDC's buyout of an up to 50% stake in Perth-based Legacy Iron Ore will pave the way for the Indian miner to expand overseas at a time when operations at some of its local mines in the central Indian state of Chhattisgarh are threatened by Maoist rebels.

NMDC expects to complete the financial due diligence for the deal within 90 days, while Legacy Iron Ore will seek its shareholders' approval within 28 days, Mr. Som said.

Legacy Iron Ore has licenses for two iron ore projects in Australia, which are unexplored. The estimated reserves are 130 million tons.

Besides iron ore, the Australian exploration company has licenses for gold and manganese and is also venturing into coal and NMDC could become a partner, Mr. Som said.

Mr. Som, who was in Australia with an Indian delegation recently, said the company has also reached an informal understanding with Australia's Minemakers Ltd. to jointly develop one of the largest rock phosphate projects in the country's Northern Territory.

NMDC will soon prepare a detailed project report and if it is found to be satisfactory, the company will look at buying up to a 50% stake in the Australian company, Mr. Som said.

Separately, Mr. Som said NMDC has put on hold its plan to partner with Australia's Steller Resources Ltd. to develop the Tarcoola Iron Ore Project.

"We need to do more work before reaching a conclusion," Mr. Som said.

Early this month, Peter Blight, chief executive at Stellar Resources, confirmed that NMDC was conducting due diligence on the reserves. Tarcoola Iron Ore Project is a magnetite resource with estimated reserves of 700 million tons.

The Indian company is also in talks to buy coking coal mines from privately held U.S.-based Tacoa Minerals LLC, and is also working with India's Sunflag Iron & Steel Co. Ltd. to jointly buy coking coal reserves in Mozambique.

Last year, NMDC signed a deal with Russian steel producer OAO Severstal, to build a two million tons a year plant in the southern Indian state of Karnataka.