Legacy Iron Ore will acquire a 60 per cent share in Hawthorn Resources for $5 million in a deal which will terminate the Mt Bevan iron ore project joint venture between the two companies.
Legacy said today in a statement it had agreed to subscribe for a placement of shares in Hawthorn at a price of 1.5 cents, a premium over their last trade price of 0.9 cents.
The company said in return Hawthorn had agreed to acquire the interest currently being earned by Legacy in the Mt Bevan project and to terminate the joint venture.
On completion of the deal, 100 per cent of the WA goldfields Mt Bevan project will remain in Hawthorn for development and commercialisation.
Legacy will nominate a majority of the directors to the Hawthorn board.
The company said the current proposal allows for the ongoing development and commercialisation of Mt Bevan under one company.
Legacy said the $5 million deal would be funded from cash reserves created following its recent placement of 50 per cent of its shares to Indian investor NMDC Limited for $18.9 million.
Legacy managing director Sharon Heng said the agreement would considerable accelerate the asset’s development program and would allow for access to better financing and commercialisation funding.
Ms Heng said subject to successful completion of the agreement, Legacy would look to in-specie the 60 per cent shareholding it would hold in Hawthorn back to Legacy shareholders.