Media reports indicate that National Mineral Development Corporation (NMDC) would decide on whether to participate in the rights issue to be offered by Legacy Iron Ore, in which the former holds 49.6 per cent stake.
Legacy Iron Ore is the Australian arm of NMDC, which is the largest shareholder in the former. Some reports indicate that NMDC would acquire rights equivalent to its 49.6 per cent stake in Legacy Iron Ore by spending AUD 12.5 million.
Legacy Iron Ore informed the Australian Securities Exchange that the company plans to issue a ‘3 for 4 pro-rata non-renounceable entitlement offer’ to its shareholders.
A company issues non-renounceable entitlement 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 can not be bought or sold.
Legacy would use the amount raised from the Entitlement Offer to further exploration and development work across its iron ore and coal exploration permits and other assets.
In addition, Legacy Iron continues to evaluate value-accretive opportunities in the current market. Legacy Iron and its joint venture partner Hawthorn Resources are engaged in discussions regarding the development of the Mt Bevan Project, Legacy said in its communication to ASX.
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