Nickel-Copper exploration is the only game in town in the Fraser Zone within Western Australia’s remote Fraser Range District. Legend Mining Limited’s (ASX:LEG) 2015 acquisition of the Rockford project makes it the latest junior to launch an exploration programme in the renowned Fraser zone. Sirius Resources put the region on the map with its discovery of the Nova deposit – a US$1 billion Independence Group (ASX:IGO) take over ensued. Now the hope for explorers in the region is that Nova is part of a camp of large deposits.
Legend started out with a silver mine in the Pilbara area of Western Australia before it moved on to the Gidgee gold mine, which took the company to the brink. It was at this stage, with the company facing a pretty uncertain future that Legend’s current managing director Mark Wilson was called in to steady the ship.
When Wilson was appointed in 2005, Legend was barely keeping its head above water with AUS$350,000 in cash and a debt pile of $11 million. Fast forward to 2009 after a series of asset sales, acquisitions and sales and the company had a rejuvenated cash stock of $10 million and more importantly, zero debt.
From this position Wilson identified an iron ore prospect in Cameroon, looking to capitalise on the West African iron ore story at that time.
“We got the only iron ore deposit in West Africa that didn’t have a haematite cap over the top of it and we ended up with a magnetite deposit.”
Wilson recognised the difficulty a junior would have in developing the project so went about looking for a sale opportunity. The eventual buyers were Jindal Steel and Power (NSE: JINDALSTEL).
“It took 18 months but we got a sale and purchase agreement with Jindal and that was settled in 2014,” reflected Wilson. “It left us with about $15m in cash and liquids and it was at that stage that we began negotiations with the Creasy Group for the purchase of the Fraser Range Rockford project, which settled in September 2015.”
As work begins on turning the vast Rockford project into another nickel-copper success story in the Fraser Range district, Legend are in a positive cash position with an optimistic outlook.
Its treasury amounts to $12 million consisting of $6 million of cash, $3 million of liquid investments available for sale, principally 990,000 shares acquired courtesy of the aforementioned Independence Group takeover of Sirius, and there is also a further $3 million receivable from Jindal, the last cash payment from the Cameroon deal, due in December 2016.
Going forward Wilson anticipates an estimated $3 million annual spend on exploration programmes, incorporating administrative costs. By his calculation Legend is in the healthy position of having four years of exploration money in the bank.
“We figure that our challenge is to use our money to add value to this project before we start looking to introduce new partners in any capacity,” the managing director said.
Wilson characterises the 2015 acquisition of the Rockford project, a 70-30 purchase agreement from the Creasy Group, using a real-estate analogy of buying ‘the biggest block on the best street’. He explains that phrase on the basis of the sheer size of the project at 2,530km2 and the fact it is totally within the Fraser zone, a 15,900km2 gravity anomaly which contains the Nova Bollinger deposit, with existing infrastructure access.
“We are the only junior who has a footprint anything like that in the Fraser zone. Everyone knows that Buckingham Palace is not a bad piece of dirt within the greater London – this exploration area in the Fraser zone similarly is a big footprint which enables us not to be constrained by postage-stamp tenements and gives a great chance to be systematic in our exploration endeavours.”
Legend’s first exploration endeavours were carried out through a method known as moving-loop electromagnetic (MLEM) surveying. It is a technique of locating conductive bodies below the surface by pumping current into the ground with a geophysicist in the middle of the loop taking recordings. MLEM is necessary as the entire project is sitting underneath 50-100m of soil cover.
“Traditional geological mapping cannot be used as an exploration tool due to lack of outcrop, so we have to use these geophysical methods and/or aircore drilling to identify bodies of interest which we will then go and test with reverse-circulation (RC) and/or diamond drilling.”
Legend recently announced the completion of the first five drill holes at ’Area D’ of the Rockford project, designed to test three of five conductors identified by the MLEM survey. One of the conductors was explained to the satisfaction of the company. The other two will be revisited with downhole electromagnetic surveys to try to identify conductive bodies which are off hole and can be subsequently drilled.
“We won’t know whether the other four conductors at Area D are what we are looking for until future drilling programmes are completed,” Wilson remarked. “We have covered only four per cent of the total project area with the MLEM surveys and that gives you an idea of how early in the journey we are.
“Success in Area D or otherwise will not determine Legend’s success in the overall project.”
As part of the purchase agreement, Creasy provided Legend with extensive high quality exploration datasets. These include project-wide high resolution aeromagnetic data, gravity data and 8,000 m of aircore drilling.
The datasets will enable Legend to identify follow-up areas of interest, and then having integrated new data from Legend’s own work make informed decisions on how to move the project forward.
The infrastructure access is another boon to Legend’s Rockford project. While located in a remote area, 250km East of Kalgoorlie, the transAustralian-railway line runs directly through the southern tenements and provides efficient access and transport to market in the event of success. Further to that, the gas pipeline from the North West shelf has recently been extended to the Tropicana gold mine, gas power is being commissioned there in the first half of 2016 and there is excess capacity to extend the pipe to Rockford.
Both the trans-railway line road access that runs parallel to the railway line and the reduction of cost in not having to truck diesel to the location are very important in terms of marketing the project.
Although Wilson is an experienced civil engineer used to overseeing large projects, when asked if he would consider taking a new discovery at Rockford into development he explained he was mindful of the expertise of the company and the size of the Rockford project.
“Our essential skill set is as an exploration company. We run a tight ship we have only three full-time employees and everything else is contracted. It would make a compelling case to excise a discovery with a view to sale to another company better equipped to development and then use our skill set to make the next discovery elsewhere at Rockford”.
In terms of reaching the position the Rockford project is at now Wilson recognises the work of the key contractors and how they have supported Legend. The aforementioned drilling programme has been carried out by Challenge Drilling, Southern Geoscience offer the geophysical advice and Highpower EM are doing the on-ground sub-contract work. Ernst & Young are the company’s Auditors and DWCorporate provide company secretarial services.
Looking forward Wilson is optimistic of exploration success and that Rockford has the right ingredients for a camp of deposits similar to the Nova discovery but he knows there is a lot of hard work between now and finding the next Nova.
“In five years’ time Legend and the world will know a lot more about this project from a technical perspective than we do now. Whether we make another discovery will require a lot of hard work and undoubtedly a little bit of luck.
“If we find the next [Nova] with the commodity wave running in the right direction for us, Legend shareholders will be wearing big smiles,” concluded Wilson.