Legacy to decide on NMDC's offer by Sept 20

Australian exploration firm Legacy Iron Ore today said its board would decide next week on NMDC's offer to pick up 50% stake in the company.

"The board of Legacy is currently reviewing the offer and will make an announcement to the market in due course, anticipated to be no later than September 20, regarding its recommendation," it said in a filing to the Australian Securities Exchange (ASX).

The Australian firm further said that "this offer is for NMDC to become a cornerstone investor in Legacy, via a placement agreement", adding that it has received a formal binding offer from the Indian state-owned miner.

However, it did not disclosed the deal size.

Yesterday, NMDC Chairman Rana Som had told PTI, "We have submitted a formal binding bid for acquiring 50% stake in Legacy, as was envisaged in the MoU inked with them and if Legacy's Board approves it, we will be taking stake in the Australian firm."

Following the announcement, scrips of Legacy today closed down 7.14% on ASX at 0.195 cents apiece. NMDC share price closed marginally up, 0.04% on the BSE at Rs 234.35 a piece.

The Indian firm, which has been looking to secure iron ore supplies from abroad, will make its first overseas acquisition with Legacy purchase.

"With our expertise in iron ore mining and steel making and their [Legacy's] exploration expertise, we will make a perfect synergy for both the companies. Simultaneously, it will provide us a ready made foothold in Australia," Som said.

Both the companies had signed memorandum of understanding (MoU) on May 24, according to which NMDC would form a strategic alliance with Legacy by acquiring 50% stake in the firm.

Industry sources have pegged the deal amount somewhere between AUD 32 million and AUD 40 million (Rs 150-200 crore).

Legacy Iron Ore, based in Perth, holds prospective iron ore tenements in both the central Yilgarn and Pilbara areas of Western Australia. It currently has five exploration licences including for gold mining.

In its filing, the Australian exploration firm listed out number of benefits with having NMDC as strategic investor, including a substantial cash injection from an investor who is debt free and having about $4 billion in cash.

It also said that this would also help Legacy in becoming a substantial mining company from its current status of a junior exploration firm, with the help of NMDC in developing its projects.