Lefroy just welcomed its primary Coogee South gold prospect back to the family
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Lefroy is poised to receive a boost to its bank balance and welcome back a promising prospect after Gold Fields said it was unable to meet its exploration commitment.
Under the farm-in agreement, Gold Fields had the right to spend $10m on exploration by 7 June 2021 to earn a 51% interest in the Western Lefroy project.
However, the South African company noted that delays to its planned exploration work programs meant that there would be a shortfall of about $2.76m.
As such Lefroy Exploration (ASX:LEX) and Gold Fields have executed a Side Deed to confirm that the shortfall will be satisfied by a cash payment of 50% of the shortfall (or $1.38m) and the excision of the top-rated Coogee South prospect from the farm-in.
Following satisfaction of the shortfall, Gold Fields must elect whether to proceed with the second stage of the farm-in, which will require it to sole fund a further $15m of expenditure over the next three years to increase its interest in the Western Lefroy to 70%.
While the boost to Lefroy’s cash balance is certainly welcome, the return of the Coogee South prospect to the company’s 100% control is also important.
The 7.8sqkm Coogee South prospect was the primary target for the company at the time of its initial public offering in October 2016.
It adjoins and contains the immediate southern strike extension of the shallow, high-grade Coogee open pit, which was mined by Ramelius Resources (ASX:RMS) in 2014 and produced 20,000oz of gold at an average grade of 5 grams per tonne (g/t).
Coogee South also sits within a geological and geophysical setting similar to the company’s Burns copper-gold prospect about 14km to the southeast.
Adding interest, Victory Mines (ASX:VIC) recently discovered new gold and copper mineralisation in reverse circulation holes to the north and south of the Coogee open pit and has started a 6,000m drill program at Coogee North – about 400m north of the open pit.
Lefroy notes that the priority target at Coogee South is the area immediately along strike to the south of the Coogee Open pit, where RC drilling in 2006 recorded a best intersection of 17m at 1.67g/t gold.
This is supported by rotary air blast drilling completed in the 1990s that extends for about 500m to the south of tenement boundary.
It plans to start exploration in the third quarter with a program to include aeromagnetic and gravity surveys as well as a combined aircore, RC and diamond drilling program.
This article was developed in collaboration with Lefroy Exploration, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.