It is reported that Legacy Iron Ore will acquire a 60% stake in Hawthorn Resources and so enable the Mt Bevan iron ore joint venture in Western Australia to be developed under one entity.

Investors may recall that India NMDC, the largest iron ore producer and a Government of India owned enterprise committed to developing Mt Bevan through Legacy. NMDC has cash reserves of AUD 4 billion.

Legacy and Hawthorn signed a term sheet for the deal which is expected to be finalised following an upgrade to the current inferred resource at Mt Bevan, which is likely to be announced in mid-January 2012.

Key deal points are:

1. Legacy agreeing to subscribe for a placement of USD 5,000,000 at an issue price of USD 0.015 in Hawthorn, being a premium over the last ASX trade of USD 0.009, upon completion of the transaction.

2. Hawthorn agreeing to acquire the interest currently being earned in the Mt Bevan project by Legacy, and agreeing to terminate the Joint Venture agreement, in return for scrip consideration in Hawthorn.

3. Upon completion, 100% of Mt Bevan will remain in Hawthorn for development and commercialization

4. Legacy will have the right to appoint a majority of directors to the Hawthorn board

The deal is subject to the completion of satisfactory due diligence by Legacy and obtaining the necessary regulatory and shareholder approvals.

The USD 5 million placement into Hawthorn will be funded by Legacy, out of current cash reserves. Legacy shareholders recently approved an USD 18.9 million placement to NMDC for 50% of Legacy. Three NMDC directors have joined the Legacy board including NMDC chairman Mr Rana Som.

Australia’s Foreign Investment Review Board as well as the Legacy shareholders have given their approval to the NMDC-Legacy deal.

(Sourced from proactiveinvestors.com.au)