NMDC’s Legacy Iron Ore announces AUD 25 million rights issue
NMDC is likely to spend AUD 12.5 million to acquire rights equivalent to its 49.6% stake in Legacy Iron Ore
Hyderabad: Legacy Iron Ore Ltd., the Australian arm of state-owned National Mineral Development Corp. (NMDC), plans to raise AUD 25 million by way of rights issue.
NMDC is likely to spend AUD 12.5 million to acquire rights equivalent to its 49.6% stake in Legacy Iron Ore, a senior official of the ministry of steel said.
The explorer recently informed the Australian Securities Exchange that the company plans to issue a ‘3 for 4 pro-rata non-renounceable entitlement offer’ to its shareholders.
Non-renounceable entitlement offer is one issued by a company to its shareholders to purchase more shares of the corporation (usually at a discount). Unlike a renounceable right, a non-renounceable right is not transferable, and therefore cannot be bought or sold.
“NMDC holds 49.6% state in Legacy Iron and is the largest shareholder in Legacy. It is logical that it participates in the rights issue," the official told PTI.
When contacted, a senior NMDC official said the decision was yet to be taken by the board of directors, scheduled to meet on 3 July. However, the ministry of steel official said that the approval of the board is just for formality and the PSU will concentrate on other formalities such as getting approvals from the ministry and bodies such as Reserve Bank of India.
“Proceeds from the entitlement offer will be applied towards further exploration and development work across Legacy Iron’s iron ore and coal exploration permits and other assets. In addition, Legacy Iron continues to evaluate value-accretive opportunities in the current market. Legacy Iron and its joint venture partner Hawthorn Resources are engaged in discussions regarding the development of the Mt Bevan Project," Legacy said in its communication to ASX.
Mt Bevan is a joint venture between Legacy and Hawthorn Resources Ltd. in which Legacy will get a 60% interest in the project by expending a minimum of AUD 3.5 million to develop the project to a pre-feasibility status.
Mt Bevan is considered to hold excellent potential for the definition of substantial Direct Shipping Ore hematite and magnetite iron resources that are located close to existing road, rail and port facilities, according to Legacy.
“Exploration work is currently underway for Mt Bevan project. It is expected that it will take another six months to get complete details of the mine. Based on the investment plan will be designed," the official said.
The Legacy Iron’s offer price is 5.7 cents per new share. This represents a 6.7% discount to the average closing market price over the last 10 trading days on which Legacy Iron ordinary shares traded and a 12.2% discount to the average closing market price over the last 20 trading days on which Legacy Iron ordinary shares traded, the Australian miner further said.
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