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Special report: A big joint venture with global gold miner Gold Fields Limited has validated Lefroy Exploration’s confidence in a highly prospective project near Kalgoorlie.

Lefroy’s (ASX:LEX) Western Lefroy gold project is immediately next to the world-class 15 million ounce St Ives gold camp, owned by Gold Fields. The St Ives camp also encompasses the Beta Hunt underground mine operated by RNC, the site of the fabulously rich specimen gold discovery.

Gold Fields has agreed to put up to $25 million to earn a 70 per cent interest in the project in a comprehensive farm in and exploration joint venture on Western Lefroy, which fully funds exploration.

Gold Fields is the perfect partner for a junior gold explorer like LEX.

It is a major global major with enormous focus on exploration in Western Australia, spending about $80 million a year — 50 per cent of this around St Ives.

Its large exploration team have a wealth of experience in drilling and exploring in a salt lake environment – which is technically difficult – and initimate knowledge of the local geology.

It has a world class operation and the ability to bring any discovery made at Western Lefroy into production very quickly.

Lefroy’s projects with close proximity to St Ives, Beta Hunt and Silver Lakes Mt Monger
Lefroy’s projects with close proximity to St Ives, Beta Hunt and Silver Lakes Mt Monger

In 2012, Gold Fields discovered the 1.4-million-ounce Invincible deposit on its tenements at Lake Lefroy.

Invincible was in production as an open pit 3 years later and underground development has commenced.

Using the existing 4.5 million tonnes per annum mill at St Ives also means LEX would need to spend far less cash to participate in development of a mining operation in the Western Lefroy package if a gold resource was defined.

In a June research note, well respected geologist and analyst Chris Baker said this was a transformational deal for LEX.

“Gold Fields can spend up to $25m over a 6-year period on exploration aimed at discovering a new gold system that can provide feed to its 4.5mtpa [gold processing] plant,” he said.

“The success case would see LEX participate in 30 per cent of the resources, reserves, and production from any new discoveries.

The deal also enables LEX to focus its exploration spend on its 100 per cent-owned Eastern Lefroy project.

What attracted Gold Fields to Lefroy?

LEX is run by geologist Wade Johnson, who has 30 years’ experience in gold exploration, especially in the Goldfields region of WA.

Wade was also former Exploration Manager with leading gold miner Newmont Australia.

It’s this experience that allowed LEX to capitalise during the gold price downturn when some mining companies left the Lake Lefroy area.

The explorer picked up the vacant, highly prospective land– knowing that the gold price and sentiment toward gold exploration would turn around.

Now Western Lefroy represents a very strategic area for Gold Fields, who are looking to add to its gold resources at St Ives.

Gold Field have also spoken previously about the potential for 5 million ounces of palaeochannel deposits under Lake Lefroy.

Much of LeFroy Exploration's flahship gold project is covered by the Lefroy and Randall salt lake systems. Pic: LeFroy
Much of Lefroy Exploration’s flagship gold project is covered by the Lefroy and Randall salt lake systems. Pic: LeFroy

A palaeochannelis a remnant of an inactive river or stream channel that has been filled or buried by younger sediment.

In many cases the ‘tops’ of the gold discoveries made by Gold Fields at St Ives have been shifted by palaeochannels – which all flow into LEX’s tenements.

Mr Baker said that there seems to be little doubt that the palaeochannel deposits – if they exist – could push past and current resources at St Ives beyond 20 million ounces.

LEX’s deal with Gold Fields should place the company firmly on the radar screens of investors,” Mr Baker said.

“With over 500 square kilometresof highly prospective tenements adjacent to one of Australia’s most prospective mining camps, the company looks inexpensive with a market capitalisation of under $15m.”

 

This special report is brought to you by Lefroy Exploration.

This advice has been prepared without taking into account your objectives, financial situation or needs. You should, therefore, consider the appropriateness of the advice, in light of your own objectives, financial situation or needs, before acting on the advice. If this advice relates to the acquisition, or possible acquisition, of a particular financial product, the recipient should obtain a disclosure document, a Product Disclosure Statement or an offer document (PDS) relating to the product and consider the PDS before making any decision about whether to acquire the product.