PERTH (miningweekly.com) – ASX-listed Legacy Iron on Wednesday announced that it had entered into a binding term-sheet agreement with fellow-listed Synergy Plus to sell off its gold and base metals assets, in return for shares in Synergy.

Legacy Iron previously announced that it would spin-off its gold assets into a new vehicle, to ensure the focus required to develop these assets. The initial aim was for the spin-off to have its own management and technical expertise, and an ability to secure funding through a public offering, following the demerger.

Legacy reported on Wednesday that it had now signed a term sheet with Synergy, under which it would sell the gold assets along with paying a minimum cash consideration through a placement of A$1.5-million to acquire a controlling interest in Synergy.

On completion of the asset sale and the A$1.5-million subscription, Legacy would hold an 87% interest in Synergy.

However, before any of this was undertaken, the ASX-listed Synergy would affect a deed of company arrangement, which would see the company being converted into a clean listed shell company with no main undertaking. The shell company would then conduct a 1.125 consolidation of its existing issued capital, which would reduce the number of shares to just over six-million.

Following the transaction with Legacy, Synergy would seek to issue a prospectus to raise some A$4-million, at an issue price of 20c a share, and the company would then seek to apply for readmission to the ASX.

Under the public offering, Legacy Iron shareholders would receive a priority entitlement to A$1.5-million, along with existing Synergy shareholders.

Legacy told its shareholders that the deal with Synergy would allow shareholders to retain their exposure to the gold assets through Synergy, while also retaining exposure to the iron-ore and coal assets through Legacy Iron itself.

Subject to a number of conditions precedent, including the completion of due diligence by both parties, and shareholder and regulatory approval, the transaction would likely be completed by early September this year.