The Foreign Investment Review Board of Australia has given a green signal to NMDC Limited to participate in a rights issue launched by Legacy Iron Ore Limited, the Oz arm of the state-owned miner.
According to a filing with Australian Securities and Exchange (ASX), Legacy said the FIRB approval paves way for the Indian miner to invest up to AUD12.1 million in the entitlement offer that is currently under way.
“FIRB has advised NMDC that there are no objections to the proposed investment of approximately AUD12.1 million by NMDC under the Entitlement Offer, enabling NMDC to subscribe for their full entitlement. The granting of FIRB approval is a significant milestone under the Entitlement Offer, as it was the only remaining condition for NMDC to subscribe for their full entitlement,” Legacy said.
The Australian mineral and metals explorer launched ‘a 3-for-1 pro rata non-renounceable entitlement offer’ to its shareholders.
NMDC, being the largest shareholder (48.8 per cent) in Legacy, confirmed its commitment to take up its full entitlement under the offer which will raise a minimum amount of approximately AUD 12.1 million.
Under the entitlement offer, each shareholder will be offered an opportunity to purchase three new shares for one existing Legacy Iron share held by them as on July 22.
The offer price has been fixed at 1.4 cents per new share.
Legacy Iron’s Managing Director Sharon Heng said, “It is pleasing to receive this notification, which provides a clear path for the completion of NMDC’s further investment into the company.”
Non-renounceable entitlement offer is an offer issued by a company to its shareholders to purchase more shares of the corporation (usually at a discount).
Unlike a renounceable right, a non-renounceable right is not transferable, and therefore cannot be bought or sold.
“Proceeds from the Entitlement Offer will be applied towards the ongoing development of the Mt Bevan iron ore project, repayment of AUD3 million Citibank loan facility and further exploration and development work across Legacy Iron’s iron ore and other assets,” the Australian miner had earlier said.
Mt Bevan is a joint venture between Legacy and Hawthorn Resources Limited in which Legacy will get a 60 per cent interest in the project by investing a minimum of AUD 3.5 million to develop the project to a pre—feasibility status.
NMDC acquired 48.8 per cent stake in Legacy Iron in 2011. It was the first overseas acquisition done by the Indian miner.