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English Release 29-August 2014
Date Month Year
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Previous Date

 
Cabinet Committee on Economic Affairs (CCEA)22-November, 2012 20:20 IST
Acquisition of 50% equity in M/s. Legacy Iron Ore Limited by NMDC Ltd

The Cabinet Committee on Economic Affairs today noted the acquisition of 50% equity shares by NMDC Limited, a Navratna PSU, in Legacy Iron Ore Limited (Legacy), which is a listed entity in Australian Stock Exchange at a total investment of Rs.99.63 crore under the delegated powers available to the Board of NMDC Ltd. The acquisition process has been completed and NMDC has now a majority shareholder on the Board of M/s Legacy.

The total investment of NMDC in Legacy towards acquisition of its 50% share is Rs. 99.63 crore. NMDC has sourced the above funds from its internal accruals.

This is the first overseas acquisition of iron ore resources by an Indian Public Sector Company. This initiative will encourage further acquisition of strategic raw materials overseas by other PSUs for long term mineral security for domestic industry. The process for acquisition has been completed. NMDC has majority in the Board of Directors and management control in Legacy as the major shareholder, which includes powers to reconstitute Board, executive management and delegation of power to CEO etc. NMDC has full control over the funds invested by it into Legacy.

The brief details of the acquisition is as follows:

(i) The Board of NMDC Limited, a Navratna Public Sector Undertaking approved a proposal for acquisition of 50% equity of Legacy Iron Ore Limited, a listed entity in Australia Stock Exchange, at a price not exceeding 8 cents per share aggregating A$18.89 million.

(ii) As approved by the Board, a Memorandum of Understanding and Share Subscription Agreement have been signed between NMDC and Legacy, Australia. The requisite procedural formalities have been completed by NMDC and Legacy for investment in Legacy.

(iii) As per the Share Subscription Agreement, NMDC has been allotted 288,362,699 shares and 155,649,619 options of Legacy and Australian Stock Exchange has approved the induction of shares of Legacy allotted to NMDC for trading on 21st December, 2011.

(iv) NMDC has transferred the first tranche of A$1.5 million (Rs. 8.02 crore approx at conversion rate of Rs. 53.481064/- A$ as on 12th January, 2012) to Legacy's Bank Account on 12th January, 2012. The Second tranche of A$17.39 million (Rs.91.61 crore approx at conversion rate of Rs.52.6785 as on 3rd February, 2012) has been transferred by NMDC to Legacy's Bank Account on 3rd February, 2012. The total investment of NMDC in Legacy towards acquisition of its 50% share is thus Rs.99.63 crore. NMDC has sourced the above funds from its internal accruals.

Background:

Legacy Iron ore Ltd (legacy) is a Perth-based Australian exploration company with focus on iron ore, gold, manganese and base metals. Incorporated in April, 2007 Legacy was listed on the Australian stock exchange (ASX) in July 2008. Legacy has six exploration stage projects in Western Australia. Legacy also has 11.18% shareholding in Hawthorn Resources Ltd (Hawthorn), the registered owner of Mt Bevan iron ore tenements and a listed company on the ASX. Legacy is currently focused on developing the Mt Bevan iron ore project, which has a current Joint Ore Reserve Committee (JORC) compliant inferred Resource of 1.59 billion tonnes of magnetite iron ore at 30.2% Fe. Tests results indicate that iron ore can be beneficiated to 69-70% Fe with around 44% recovery. Legacy also has South Laverton Gold Project having JORC Indicated and. Inferred Resource of 121,454 ounces (oz) of gold.

As part of diversification plan of NMDC Ltd., the Board of NMDC decided to invest in the Legacy Project in Australia. As per the decisions of the Board, a Memorandum of Understanding (MoU) was signed between NMDC and Legacy on 21st May, 2011 and a Share Subscription Agreement was agreed between NMDC and Legacy on 20th October, 2011. The requisite procedural formalities have been completed by NMDC and Legacy for investment in Legacy. NMDC has been allotted 288,362,699 shares and 155,649,619 options of Legacy and Australian Stock Exchange has approved for induction of shares of Legacy allotted to NMDC for trading on 21st December, 2011.

***


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(Release ID :89262)

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