Legacy Iron Ore Limited (LCY) has entered into a binding term sheet with three vendors to acquire six highly prospective coal tenements located in key Queensland coal basins. The coal projects are the first corporate transaction to be undertaken by Legacy since India’s largest iron ore producer and rapidly developing steel maker, NMDC Ltd, acquired a 50% shareholding in the company in December 2011. This shareholding also facilitated access to significant funding sources to enable Legacy to undertake this initial acquisition and to pursue additional diversification opportunities in the Australian mining sector.
The coal tenements being acquired by Legacy are located in the productive Surat, Mulgildie and Maryborough coal basins and are close to major roads and the rail network. Substantial coal investments have been made nearby by BHP, Xstrata and, more recently, a number of major Indian corporations. A total of A$6.00 million will be paid to Subiaco Capital Pty Ltd, Velarium Holdings Pty Ltd and Sara Bella Energy Pty Ltd via staged payments comprising a refundable deposit, initial cash payment and a deferred cash payment upon the delineation of an inferred JORC standard resource of no less than 100Mt of thermal coal with a Calorific Value greater than 5,000 Kcal/kg calorific value.
“The tenements provide excellent targets for exploration and the delineation of large‐scale coking and thermal coal deposits which are surrounded by several operating mines and well established infrastructure that will support development and exports”. “This initial project acquisition is the opening foray into coal by Legacy and is only part of a continuing period of investigation of various opportunities within the Australian mining industry. Looking forward, Legacy’s ability to access significant funding sources means that the Company’s future acquisitions are likely to involve larger scale developed or producing assets.”