State-owned miner NMDC’s Board is expected to give its nod next week to acquire 26 per cent stake in Brazilian iron ore company Amplus for around $10-15 million, a senior company official said.
“Due diligence of their property is over and the report will be placed in next (Board) meeting. It should get approved, the (due diligence) report is favourable,” the official told PTI.
The NMDC Board is slated to meet on August 13 to consider company’s April-June quarter’s financial results, besides approving the deal with Amplus, the official further said, adding, “the deal would cost us about $10 to 15 million“.
The Hyderabad-based firm had signed an exclusivity agreement (MoU) with Amplus 4-5 months ago for the deal, which envisages investing in the exploration of the Brazilian firm’s iron ore mines and providing NMDC’s technical expertise.
In return, NMDC will get 26 per cent stake. This can also be increased to 50 per cent at a later stage and will depend on results of preliminary exploration and some other factors.
As per Indian miner’s estimates, Amplus has iron ore reserves of about 1 to 1.5 billion tonnes.
The deal, if successful, will be NMDC’s second overseas acquisition. Last year, it had acquired 50 per cent stake in Australia’s Legacy Iron Ore for about Rs 92 crore.
“After approval of the Board, we will move further. Final shareholding agreement will take another one or two month’s times,” the official said.
He said IMC Group Consulting Ltd was assigned the task of conducting due-diligence of Amplus’ iron ore reserves.
As part of its diversification strategy and expanding its presence overseas, NMDC has been scouting for low-cost acquisition of iron ore and coking coal properties abroad and has kept a budget of Rs 1,200 crore for the purpose.