Here's why the Legacy Iron Ore (ASX:LCY) has exploded 200% in 2 days

Legacy Iron Ore shares have been on fire this week…

| More on:
Vanadium Resources share price person riding rocket indicating share price increase

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a spectacular end to the trading week for the ASX today.

Read more »

Three people jumping cheerfully in clear sunny weather.
Share Gainers

These 3 ASX 200 stocks are shooting the lights out this week. Own any?

These ASX 200 shares have soared 11% to almost 23% this week. But why?

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Share Gainers

Why GQG, Imugene, Mirvac, and Temple & Webster shares are pushing higher

These shares are ending the week on a positive note. But why?

Read more »

Happy shareholders clap and smile as they listen to a company earnings report.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a momentous day for ASX shares, with the index hitting another record...

Read more »

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

Up 135% in a year, why this ASX 200 healthcare stock is 'on track to become a truly great Australian success'

A leading fund manager expects more strong performance from this surging ASX 200 healthcare stock.

Read more »

A young woman holding her phone smiles broadly and looks excited, after receiving good news.
Share Gainers

Why ASX, Domain, Ora Banda, and Temple & Webster's shares are storming higher today

These shares are catching the eye with strong gains on Thursday. Let's see what is happening.

Read more »

Man pointing at a blue rising share price graph.
Earnings Results

2 ASX 300 shares rocketing 6% today

Investors love what these two stocks just reported.

Read more »

Ten smiling business people wave to the camera after receiving some winning company news.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a wonderful Wednesday session for investors today...

Read more »