Legacy Minerals set for $6m boost after farming out its Glenlogan copper-gold project to S2 Resources

Legacy Minerals has agreed to a $6m deal with S2 Resources to farm out its highly prospective Glenlogan copper gold project in NSW’s mineral-rich Lachlan Fold belt, where porphyry deposits can turn in to massive low-opex mining operations (reports Stockhead).

Handshake

Glenlogan is less than 55km from the giant Cadia Valley porphyry complex and it presents an exceptional opportunity to discover a major porphyry deposit in a region of NSW known for hosting Tier 1 porphyry copper-gold systems, such as the ~50Moz, 10Mt Cadia East deposit established in 1994.

Last explored by Rio Tinto (ASX:RIO) in 1996, Glenloganwas not drill testedand historical data captured from that period shows the potential of a buried, Cadia-style, copper-gold porphyry target that may be amenable to bulk mining techniques.

Currently owned by Legacy Minerals (ASX:LGM), the tenement have now sparked the interest and attention of S2 Resources (ASX:S2R), led by Mark Bennett who oversaw Sirius Resources from its inception to its $1.8b merger with Independence Group (ASX:IGO), and is also backed by mining boffin Mark Creasy

As part of the JV agreement, S2 can spend $6m over five years to earn a 70% interest in Glenlogan across two stages:

  • Stage 1 – $2m over two years to earn a 51% interest
  • Stage 2 – $4m over three years to earn a further 19% interest

S2 must complete a minimum 1,200m diamond drilling in Stage 1 and issue LGM with 1,000,000 ordinary shares on signing.

At the decision to progress towards mining, LGM can leverage an option of contributing at its 30% interest or convert to a 20% loan-carried interest to be repaid through production revenue.

In a further boost for LGM, 20% ownership of a mine means it is fully financed to production with no need for a dilutive capital raising.

LGM managing director Christopher Byrne says the JV with S2 provides a clear pathway to development, with the loan financing option allowing shareholders to be carried from discovery through to commercial production without the need to raise capital for the project.

“S2 is a high-quality exploration company with an exceptional track record of delivering value through mineral discovery,” Byrne says.

“We have recognised that a large amount of deep drilling will be required to explore this exciting project and it is appropriate that a well-funded partner with excellent credentials is brought in to help fund this type of exploration.

“This is a Tier 1 target near the Tier-1 Cadia Valley operation, and the company is extremely excited to see the results of the drilling.”

With the successful completion of the recent placement and cap raise, as well as its two projects funded through to production at Glenlogan (S2) and Bauloora (Newmont ASX:NEM) LGM can shift its focus on near-term discovery opportunities at the Black Range and Drake projects.

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