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NMDC to buy 50% in Australia’s Legacy

23 Sep 2011 Evaluate

NMDC will buy 50% stake in Australia’s Legacy Iron Ore for Rs 92 crore, marking the navratna company’s first overseas foray and one that will give it access to key mineral resources. In a filing to the Australian Securities Exchange, Legacy Iron announced that its board has agreed to the NMDC proposal, though the deal would be subject to regulatory and shareholder approval. Legacy shareholders are likely to meet in November to approve the deal, which breaks the jinx of PSUs pitching for assets overseas, but losing out to rivals in the final lap.

This is only an initial investment into Legacy and NMDC’s involvement will depend on various projects that may be taken up later. On September 14, NMDC had put in a binding bid for acquiring a 50% stake in Legacy, which holds prospective iron ore tenements in both the central Yilgarn and Pilbara areas of Western Australia. It had first signed a memorandum of understanding with the Perth-based company on March 24. Legacy will also float a new company to develop its Mt Bevan joint venture project and it intends to list the joint venture on the Australian exchange later.

According to the deal, Legacy, which currently has approximately 120 million outstanding options at various prices, will also issue an equal number of options to NMDC, subject to certain conditions, including a bar on exercising them until a current Legacy option holder exercises its option first.

NMDC Share Price

86.79 -2.01 (-2.26%)
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Peers
Company Name CMP
Coal India 464.35
NMDC 86.79
GMDC 662.90
Sandur Manganese 234.65
MOIL 307.60
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