LEGACY IRON ORE LIMITED — M&A Activity 2013

Apr 9, 2013

Synergy Plus Limited

T 1300 85 13 13 E info@synergy.com.au W www.synergy.com.au

ACN 091 126 082

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Level 7, 10-14 Waterloo Street, Surry Hills NSW 2010 Australia

10 April 2013

Manager of Company Announcements ASX Limited Exchange Centre 20 Bridge Street SYDNEY NSW 2001

By E-Lodgement

BINDING AGREEMENT TO ACQUIRE GOLD AND BASE METAL ASSETS

1. Background

Further
to
the
announcement
on
27
February
2013,
Synergy
Plus
Limited
( Synergy or Company )
wishes to
announce
that
it
has
entered
into
a
binding
term
sheet
( Term
Sheet )
with
ASX
listed
Legacy
Iron
Ore Limited
( Legacy )
subject
to
all
necessary
shareholder,
board
and
regulatory
approvals
and
due
diligence regarding
the
acquisition
of
an
extensive
gold
and
base
metal
tenement
package
situated
in
Western Australia
( Assets )
in
return
for
shares
in
Synergy.
Refer
to
Schedule
A
for
details
of
the
Assets.

Legacy
(ASX:LCY)
is
a
Western
Australian
based
exploration
company.
Following
a
strategic
review
and having
regard
to
its
operational
objectives,
Legacy
decided
that
the
separation
of
the
Assets
into
a
new vehicle
would
ensure
the
focus
required
to
develop
these
assets
optimally
with
Legacy
to
remain
focussed on
its
iron
ore
assets.
The
objective
was
for
the
new
vehicle
to
have
its
own
management
and
technical expertise,
and
an
ability
to
secure
its
own
funding
via
a
public
offering
following
demerger.
Synergy
is
that new
vehicle.

As
announced
on
27
February
2013,
Synergy
has
complied
with
the
terms
and
conditions
of
the
Deed
of Company
Arrangement
( DOCA )
in
that
the
$500,000
due
in
contributions
has
been
paid.
A
first
and
final dividend
was
declared
for
creditors
of
the
Company
on
25
January
2013.
The
business
of
AirData
Pty
Ltd ( AirData )
continues
to
trade
and
the
Company
and
the
Deed
Administrators
for
AirData
are
working together
to
finalise
the
dividend
payable
to
AirData
creditors.
Following
this,
it
is
proposed
that,
subject
to the
receipt
of
shareholder
approval,
the
shares
in
Air
Data
will
be
disposed
of
prior
to
implementation
of
the transaction
with
Legacy.

The
effectuation
of
the
DOCA
and
the
disposal
of
AirData
will
result
in
Synergy
being
a
clean
listed
shell company
with
the
full
capacity
to
exploit
the
Assets.

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**2. The

Transaction**

Under
the
Term
Sheet,
Legacy
will
vend
the
Assets
into
Synergy
together
with
providing
a
minimum
cash consideration
via
a
placement
of
$1.5
million
to
acquire
a
controlling
interest
in
Synergy.

On
completion
of
the
sale
of
the
Assets,
together
with
the
subscription
of
a
minimum
of
$1.5m
cash
via
a loan
and
a
share
subscription
agreement,
Legacy
or
its
nominees
will
hold
not
less
than
87%
of
the
issued capital
of
Synergy
post
consolidation
of
Synergy's
existing
capital
on
a
1:125
basis.

The
key
terms
of
the
arrangement
are:

• a) Following
  completion
  of
  the
  DOCA,
  Synergy
  will
  conduct
  a
  1:125
  consolidation
  of
  its
  existing
  issued capital.
  This
  will
  reduce
  the
  issued
  capital
  of
  Synergy
  to
  a
  maximum
  of
  6,043,263
  fully
  paid
  ordinary shares
  ( Shares ).

• b) Legacy
  will
  loan
  to
  Synergy
  $200,000
  ( Loan )
  on
  execution
  of
  the
  Term
  Sheet,
  which
  will
  be
  used
  to pay
  audit
  fees
  and
  various
  costs
  associated
  with
  holding
  the
  shareholders'
  meeting
  to
  approve
  the proposed
  acquisition
  of
  the
  Assets.
  The
  loan
  will
  be
  convertible
  into
  Synergy
  shares
  (post consolidation)
  at
  an
  issue
  price
  of
  approximately
  $0.13
  each
  per
  Share
  to
  be
  issued
  following shareholder
  approval
  at
  the
  general
  meeting
  to
  be
  called
  by
  Synergy
  to
  give
  effect
  to
  the transaction
  ( Loan
  Shares ).

• c) Legacy
  will
  subscribe
  for
  a
  further
  $1,300,000
  worth
  of
  Shares
  (post
  consolidation)
  at
  an
  issue price
  of
  $0.13
  each
  per
  Share
  ( Placement
  Shares ).

• d) Synergy
  will
  acquire
  the
  Assets
  for
  a
  deemed
  consideration
  of
  $6.0m
  via
  the
  issue
  of
  30,000,000 Shares
  (post
  consolidation)
  to
  Legacy
  at
  an
  issue
  price
  of
  $0.20
  each
  per
  Share
  ( Acquisition Shares ).
  Given
  that
  Legacy
  is
  classified
  as
  a
  vendor
  of
  a
  classified
  asset
  for
  the
  purposes
  of
  the Listing
  Rules,
  the
  Acquisition
  Shares
  may
  attract
  restriction.
  Submissions
  will
  be
  made
  to
  ASX regarding
  escrow
  of
  these
  securities.

• e) At
  the
  general
  meeting
  of
  Synergy
  to
  approve
  the
  transaction,
  Synergy
  shareholder
  approval
  will also
  be
  sought:

• 1) for
  the
  purposes
  of
  Chapter
  11
  of
  the
  Listing
  Rules
  and
  Chapter
  6
  of
  the
  Corporations
  Act;

• 2) to
  change
  the
  company's
  name;
  and

• 3) to
  issue
  (on
  a
  post
  consolidation
  basis)
  7,000,000
  Shares
  and
  10,000,000
  options
  exercisable at
  $0.20
  each
  expiring
  4
  years
  from
  the
  date
  of
  the
  meeting,
  to
  officers
  of
  Synergy
  and
  120,000 Shares
  to
  the
  liquidators
  of
  Synergy
  Plus
  (Operations)
  Pty
  Ltd.

Completion
of
the
transaction
is
subject
to
satisfactory
due
diligence
by
both
parties
and
all
necessary shareholder
and
regulatory
approvals
and
third
party
consents
being
obtained.
Subject
to
ASX's confirmation,
the
Company
expects
that
Completion
of
the
transaction
will
require
recompliance
with

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Chapters
1
and
2
of
the
Listing
Rules.
Please
refer
to
Schedule
B
for
further
details
regarding
the
effect
of the
transaction
on
the
capital
structure
of
the
Company.

The
primary
goal
of
relisting
Synergy
will
be
to
recapitalise
the
Company,
recommence
trading
on
ASX
and then
exploit
the
Assets
to
be
acquired
from
Legacy.
Following
this,
it
is
an
aim
of
the
proposed
new
board of
Synergy
to
seek
to
acquire
other
gold
and
base
metal
projects
in
the
resource
sector
to
compliment
the Assets.

**3. Conditions

precedent
to
completion**

Completion
of
the
acquisition
of
the
Assets
is
subject
to
and
conditional
upon
satisfaction
of
the
following:

• a) Completion
  of
  due
  diligence
  by
  both
  parties
  to
  their
  satisfaction
  including,
  but
  not
  limited
  to,
  legal, financial
  and
  technical
  due
  diligence;

• b) Receipt
  from
  ASX
  of
  conditional
  relisting
  approval
  on
  ASX
  in
  compliance
  with
  Chapters
  1
  and
  2
  of
  the Listing
  Rules;

• c)

• Effectuation
  of
  the
  DOCA;

• d) Both
  Legacy
  and
  Synergy
  obtaining
  all
  relevant
  approvals
  and
  third
  party
  consents
  necessary
  to implement
  the
  transaction;

• e) The
  forgiveness
  of
  debts
  owed
  by
  Synergy
  to
  its
  current
  directors
  on
  terms
  which
  are
  satisfactory
  to Legacy;
  and

• f) Synergy
  disposing
  of
  its
  shareholdings
  in
  AirData
  Pty
  Limited
  and
  AirData
  (Australia)
  Pty
  Ltd.

**4. Public

Offering
and
priority
offer**

On
completion
of
the
issue
of
the
Loan
Shares,
Placement
Shares
and
Acquisition
Shares
and
the consolidation
of
Synergy’s
share
capital,
Synergy
will
issue
a
prospectus
to
raise
up
to
a
further $4,000,000
at
an
issue
price
of
$0.20
each
per
Share,
with
a
minimum
subscription
of
$1,500,000
( Public Offering ).

Synergy
will
then
seek
to
apply
for
re-­‐admission
to
the
Official
List
of
ASX.

Under
the
proposal
(and
prior
to
any
capital
raising),
Legacy
will
receive
41,538,462
Shares.
It
is
proposed that
Legacy
will
distribute
in-­‐specie
all
of
these
shares
to
its
shareholders.

Synergy
shareholders
will
receive
a
priority
entitlement
in
Synergy
under
the
proposed
capital
raising
to $1,500,000
(7,500,000
shares).
Legacy
shareholders
will
also
receive
a
priority
entitlement
to
$1,500,000 (7,500,000
shares)
under
the
Public
Offering.

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**5. New

Board**

Following
completion
of
the
transaction,
the
current
board
of
Synergy
will
be
replaced
with
nominees
of Legacy.
It
is
anticipated
that
Ms
Sharon
Heng,
Mr
Timothy
Turner
and
another
Legacy
nominee
will comprise
the
new
board
which
will
ensure
continuity
of
knowledge
and
experience
in
relation
to
the Assets
for
the
short
to
medium
term.

Legacy
has
also
advised
that
it
is
in
discussions
with
a
Singapore
based
fund
manager
to
act
as
the
third Legacy
nominee
to
the
Synergy
board
upon
completion
of
the
transaction.
The
individual
has
significant experience
in
mergers
and
acquisitions
including
the
raising
of
debt
and
equity
funding
involved
in
buying resource
assets
in
Malaysia,
Indonesia
and
other
jurisdictions.
It
is
proposed
that
the
individual
will
join the
board
to
help
the
newly
re-­‐listed
company
in
connection
with
the
identification
and
acquisition
of
near producing
assets
or
assets
that
are
distressed
but
have
the
potential
to
increase
capacity.
These negotiations
are
ongoing.

**6. Indicative

timetable**

The
milestone
dates
for
the
acquisition
of
the
Assets
and
completion
of
the
transaction
are
set
out
in
the table
below.
They
are
indicative
only
and
are
subject
to
change.

Event	Date
ASX Announcement of the acquisition	10 April 2013
Due diligence completes	Mid May 2013
Notice of General Meeting for shareholder approval of the transaction lodged with ASIC and ASX	Mid May 2013
General Meeting of shareholders	Mid June 2013
Lodgement of prospectus with ASIC	Mid July 2013
Prospectus offer opens	Mid July 2013
Prospectus offer closes	Mid August 2013
Allotment of new shares and despatch of holding statements	Late August 2013
Completion of the transaction	Early September 2013
Anticipated date for requotation on ASX	Early September 2013

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**7. Pro-­‐forma

statement
of
financial
position**

On
the
basis
that
the
transaction
is
completed,
the
indicative
pro-­‐forma
statement
of
financial
position
of the
Company
is
as
follows:

the Company is as follows:
	Company stand alone Acquisition effect Company BS after acquisition effect
	Non Audited Non Audited Non Audited
CURRENT ASSETS
Cash	7,366 5,992,634 6,000,000
Monies owed by AirData	350,281 (350,281) -
GST owed	6,761 (6,761) -
TOTAL CURRENT ASSETS	364,408 5,635,592 6,000,000
NON-CURRENT ASSETS
Deferred tax asset	280,837 (280,837) 0
Gold exploration assets	0 6,000,000 6,000,000
Investment in subsidiary-AirData	1,500,000 (1,500,000) 0
Total Non-current Assets	1,780,837 4,219,163 6,000,000
TOTAL ASSETS	2,145,245 9,854,755 12,000,000
CURRENT LIABILITIES
Trade and other payables	149,820 (149,820) 0
Accrued directors fees	708,500 (708,500) 0
Loan (to fund DOCA liabilities)	1,520,891 (1,520,891) 0
TOTAL CURRENT LIABILITIES	2,379,211 -2,379,211 0
TOTAL LIABILITIES	2,379,211 -2,379,211 0
TOTAL NET ASSETS	(233,966) 12,233,966 12,000,000
EQUITY
Issued Capital	31,351,216 12,000,000 43,351,216
Reserves	40,646 0 40,646
Accumulated losses	(31,625,828) 233,966 (31,391,862)
TOTAL EQUITY	(233,966) 12,233,966 12,000,000

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**8. Shareholder

benefits**

Completion
of
the
recapitalisation
transaction
will
restructure
the
Company's
issued
capital
and
net
asset
base, provide
working
capital,
terminate
the
DOCA
and
provide
a
new
board
and
business
direction.

Whilst
the
board
of
Synergy
is
aware
that
the
proposed
transaction
will
result
in
a
significant
dilution
of
existing shareholdings,
the
board
is
of
the
view
that
this
proposal
is
the
best
outcome
for
shareholders
in
the
current circumstances.

Because
of
this
dilution,
the
board
has
worked
to
ensure
that
existing
shareholders
of
Synergy
will
have
an opportunity
to
reinvest
in
the
Company,
via
the
priority
offer,
which
will
result
in
shareholders
having
exposure in
a
stock
with
significant
liquidity.

**9. Shareholder

Meeting**

To
implement
the
transaction,
Synergy
will
prepare
a
notice
of
meeting
seeking
shareholder
approval
for, among
other
things,
the
acquisition
of
the
Assets.

The
board
of
Synergy
will
continue
to
provide
shareholders
with
updates
regarding
the
recapitalisation transaction.

`For
and
on
behalf
of
the
Board

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Leanne Ralph Company Secretary