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Legend Mining: Extension Hill trumps Top Iron to buy Mt Gibson gold project

Legend Mining (ASX: LEG) has received a request for the first right of refusal from Extension Hill to purchase the Mt Gibson Gold Project in Western Australia.

Legend initially entered into an agreement in November to sell its non-core Mt Gibson Gold Project to Top Iron for a cash consideration of A$7 million, however one of the conditions of the sale was that Legend had to exhaust all relevant rights of first refusal and similar third party rights under the existing licence agreement.

As a result of Extension Hill’s exercise of its rights under the existing agreement, and provided that the company is able to complete the acquisition of the Mt Gibson Project, then the sale of the project to Top Iron will not go ahead.

The deal allows Legend to sell the last of its Western Australian projects and concentrate on its extensive 2,900 square kilometre land holding in the Republic of Cameroon, prospective for gold and iron ore.

Extension Hill is a wholly owned subsidiary of Hong Kong-based Asia Iron Holdings which owns a number of iron ore and coal development projects in the Mid West of Western Australia as well as a magnetite pellet plant project in Nanjing, China.

The company operates the Extension Hill magnetite development project neighbouring the Mt Gibson Gold Project and has been leasing facilities at the Mt Gibson Gold Project for the past three and a half years.

Extension Hill can now purchase the project on the same terms agreed with Top Iron, for $7 million cash and the return to Legend’s working capital account of the $1.4 million term deposit currently securing performance bonds in relation to the project.

The transaction is scheduled to be completed no later than 12 March 2012 subject to satisfaction of conditions including a 60 day due diligence period and Foreign Investment Review Board approval.