Legacy Minerals puts heads together with Red Hill for Thomson drilling

Detailed summary

An initial $2m program covers two royalty licences, with Legacy retaining 100% Thomson ownership through this stage. ... Read More The post Legacy Minerals puts heads together…

Taking aim: Legacy and Red Hill have teamed up to target gold and copper at Thomson. Pic: Getty Images

Special Report: Legacy Minerals has struck a deal for Red Hill Minerals to fund up to $6m of exploration at its Thomson gold-copper project, allowing the NSW explorer to keep its team focused on a Mt Carrington flagship now undergoing an optimised scoping study.

Legacy Minerals (ASX:LGM) signed a binding heads of agreement covering two stages. The initial $2m program covers two royalty licences, with Legacy retaining 100% Thomson ownership through this stage.

Red Hill will manage that initial program over 12 months after conditions are satisfied, including at least 1500m of deep diamond drilling to test a minimum of two targets.

In exchange, completion of Stage 1 would extinguish Legacy’s right to buy back Red Hill’s existing 1.5% net smelter royalty over two Thomson licences for $6m. The buy-back right remains if Red Hill does not complete that stage.

Red Hill could then elect to spend a further $4m over up to four years to earn 75% of all three Thomson licences. If the earn-in is completed and a joint venture formed, Legacy would hold a 25% participating interest.

Legacy will not contribute exploration expenditure before that joint venture is formed. The initial program therefore puts testing in a partner’s hands while preserving Legacy’s project ownership through Stage 1 and exposure to a potential discovery thereafter.

Both stages remain subject to conditions, including due diligence and access arrangements. The initial stage also requires an amendment to the royalty deed, with a formal agreement targeted within 30 days of signing.

Thomson covers about 5400km² west of Bourke in northwestern NSW, where younger sedimentary cover conceals the prospective basement rocks.

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