Legend Mining spins off Pilbara assets to boost focus on Cameroon operations

Legend Mining (ASX: LEG) has entered into a sale agreement over the company's Pilbara Project tenements, effectively spinning out non-core assets.

This strategic decision allows Legend to focus on the company's Cameroon assets, which have recently been delivering a news flow of strong iron intercepts.

The Pilbara spin-off

The Pilbara asset spin-off agreement includes the sale of the wholly owned subsidiary Armada Mining Limited, with a wholly owned subsidiary of Karratha Metals Limited.

The sale is conditional upon Karratha Metals Limited successfully completing a capital raising and obtaining approval to list on the Australian Securities Exchange.

The best bit for Legend is the consideration will comprise 10 million fully paid shares in Karratha Metals Limited, providing Legend with a strategic stake in the new entity and continued exposure to the region.

Mark Wilson, managing director of Legend, commented “The proposed capital structure for Karratha Metals Limited will result in Legend holding approximately 20% of the fully paid shares in Karratha Metals Limited off the back of a $4 million raising.

"This transaction will finalise our direct involvement with the Pilbara Project.”

The settlement date is scheduled on or before 15 December 2011, although may be extended for a further six months by the purchaser.

Legend to focus on Cameroon

The significance of the asset sale is Legend can now focus on the highly prospective Cameroon operations.

Earlier in the month Legend returned more wide iron intersections after completing a seven hole drilling program at the Melombo West target, which is located within the Ngovayang Project - and therefore indicating the large scale potential of the project.

The best intercepts include 53.05 metres at 22.6% iron and 125.98 metres at 16.3% iron, and grades can reasonably be expected to be upgraded.

Six of the seven holes drilled reported magnetite of similar character and tenor to the results previously announced from the Alpha, Hill 335, Hill 419 and Melombo North targets.

The magnetite discovered so far at Ngovayang produces a high grade, low impurity concentrate at a relatively coarse grind.

Ngovayang's potential is further highlighted by the deal Legend struck earlier in the year for a rail and port access agreement with fellow Australian Cameroon iron ore company Sundance Resources (ASX: SDL).

The letter of intent provides for the two Australian based companies with iron ore assets in the country to examine ways for Legend to use Sundance’s proposed infrastructure and rail and port haulage.

The infrastructure forms part of Mbalam Iron Ore Project located in Cameroon and Congo in central West Africa.

Both Sundance’s Mbalam Project and Legend’s project are located in the southern region of the Republic of Cameroon, with the proposed rail route being developed by Sundance passing in close proximity to Ngovoyang.

In total Legend has an extensive 3900 square kilometre land holding in the country.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/19099/legend-mining-spins-off-pilbara-assets-to-boost-focus-on-cameroon-operations-19099.html