It has been a stunning couple of days for the Legacy Iron Ore Limited (ASX: LCY) share price.
The iron ore explorer's shares were up as much as 120% to 4.2 cents on Tuesday morning.
When the Legacy Iron Ore share price hit that level, it was up a whopping 200% since the end of last week.
Why is the Legacy Iron Ore share price on fire?
Investors have been bidding the Legacy Iron Ore share price higher following the release of a very positive announcement.
According to Monday's release, Legacy Iron Ore has signed an agreement with a subsidiary of Gina Rinehart's Hancock Prospecting relating to the Mt Bevan iron ore project. This project is owned 60:40 by Legacy Iron Ore and Hawthorn Resources Limited (ASX: HAW).
The Mt Bevan iron ore project is situated 250km north of Kalgoorlie and 100km west of Leonora in the Central Yilgarn region of Western Australia. The company notes that the project is on a large tenement E29/510 which hosts 1,170 Mt of magnetite resource @ 34.9% Fe.
What's the latest?
The release explains that Hancock Magnetite has agreed to an earn-in under a subsequent joint venture agreement to develop the project, pending favourable outcomes from further studies, statutory and regulatory approvals, and financial investment approvals.
Hancock Magnetite will make an initial investment of $9 million to earn a 30% interest in the project with $8 million cash being paid to Legacy and Hawthorn in proportion to their interest. The remaining $1 million is for working capital for the new joint venture.
Upon completion of the initial Investment, Hancock Magnetite will hold a 30% interest, Legacy will hold a 42% interest and Hawthorn will hold a 28% interest in the project.
In the future, Hancock can earn an additional 21% interest by funding the completion of a pre-feasibility study. At that point, Hancock will hold a 51% interest, Legacy will hold a 29.4% interest, and Hawthorn will hold a 19.6% interest in the project.
Legacy's CEO, Rakesh Gupta, commented "I am pleased to announce Hancock joining hands with Hawthorn and Legacy for developing the world class massive magnetite ore body – Mt Bevan Project. This is our first major step to fulfill our dreams to develop it."
"As you may be aware that the demand of premium high grade iron ore products magnetite has been growing due to its efficiency and ability to reduce the environmental pollution for the steel industry. I am highly confident that with the support of our parent company NMDC Limited (A Government of India Enterprise), Hancock Prospecting Pty Ltd and Hawthorn, this Project would be successfully developed and would bring a social- and economic boost to regional Yilgarn province, WA and ultimately Australia," he concluded.
