Why has this small cap explorer gained 580% over the past 3 days?

Since Monday, Legacy Iron Ore (ASX:LCY) — a small WA gold-iron ore explorer – has made big, high volume gains on no real news.

The stock is now worth about $381 million.

It hasn’t been at these levels since 2012, when it was trying to bring the flagship Mt Bevan magnetite iron ore project into production.

Mt Bevan joint venture partner Hawthorn Resources (ASX:HAW) has also been on a tear this week, jumping from 9c to over 15c per share before going into a trading halt.

Just look at these charts:

Over the last six months, Legacy’s major focus has been moving the small 184,100oz Mt Celia Gold project in the Eastern Goldfields into production.

Still, with iron ore prices hitting record highs, punters may be speculating that the company will dust off Mt Bevan, which has very interesting history.

In 2011, a deal was inked between Legacy and current major investor (78.56 per cent) and financial supporter NMDC, India’s largest iron ore producer.

The part government owned conglomerate would pay $18.89m for 50 per cent of Legacy, part of a plan to spend $500m on overseas acquisitions.

It also planned to underwrite an estimated $1.3bn in Mt Bevan development capex. Legacy was going to be a “foothold into Australia – not only to develop the mines under Legacy but also for acquiring other mines in the country”.

At the time of NMDC making its investment into Legacy Iron, iron ore prices were around $170 per ton.

“Since that time and in the last 12 months, the iron ore price has been hovering around $130 per ton,” the company said in 2013.

“As a result of this fall in pricing, the board has reviewed it’s strategy towards Mt Bevan and will continue to work under the Joint Venture structure till a more opportune time.”

NMDC is currently cashed up as iron ore prices soar once again. Who knows — maybe that “opportune time” is coming soon.

Legacy chief executive Rakesh Gupta says the company is currently focussed on Mt Celia. But he also recognised that neighbouring Mt Bevan is Jupiter Mines’ (ASX:JMS) high grade Mount Mason iron ore project, which the miner is demerging into its own ASX listed company.

This new IPO would develop Mount Mason “on a fast track basis”.

Here’s the kicker: this hematite deposit runs over the boundary into the Mt Bevan tenure.

“We have about 10 per cent of that [deposit] and 20 per cent of the deposit is common – they cannot mine it without our consent,” Gupta says.

“We have previously spoken with Jupiter but they did not offer us a good deal, so we decided not to do anything [at the time]. Maybe we can talk again.”

Or Legacy and Hawthorn could work out another development opportunity.

“If [neighbouring mine developer] MacArthur Minerals. (ASX:MIO) build the Lake Giles project we may get easy access to the railway line and the port,” Gupta says.

“We have not decided anything yet, but there is a possibility.”