Legacy Iron Ore (ASX: LCY) has executed a memorandum of understanding with the Indian Government’s wholly-owned public enterprise the National Mineral Development Corporation (NMDC).
The agreement allows NMDC the right to acquire up to 50% in Legacy, subject to all necessary regulatory, FIRB, board and shareholder approvals.
The agreement, upon formal completion, will give Legacy the opportunity to source and secure additional resource projects for development and financing with the backing of NMDC, as the company's biggest shareholder.
NMDC intends to use Legacy as a vehicle to acquire large-scale Australian bulk commodity projects such as coal and iron ore.
Sharon Heng, Legacy chief executive, said “This is the first investment of its type by NMDC into the Australian resource sector, and Legacy is delighted to be the company chosen as NMDC’s vehicle to acquire and develop more advanced projects.”
NMDC currently produces 30 million tonnes of iron ore at a grade of more than 62% per annum and is India’s single largest iron ore producer, with reported resources of 800 million tonnes.
The proposed investment comes at a time when Legacy is developing the Mt Bevan Iron Ore project, with a JORC compliant resource due to be announced in early June 2011.