Mt Bevan

IRON ORE

Legacy Iron Ore Limited ("Legacy" or "the Company") operates the Mt Bevan Joint Venture in the Yilgarn of Western Australia. Legacy Iron has now drilled out a major magnetite resource and is investigating the strong potential for shallow DSO or beneficiable hematite resources. It also holds two substantial iron ore projects located close to infrastructure in the Pilbara of Western Australia.

 

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Location of Legacy Iron projects



All drilling by Legacy Iron has been conducted to date on the Western BIF magnetite target.

This is located in the southern part of the Mt Bevan project area, to the immediate north of the significant magnetite and hematite resources held by Jupiter Mines Limited ("Jupiter"). The Jupiter Mt Ida magnetite resource has recently (4th September 2012) been upgraded and now consists of an Inferred and Indicated JORC compliant resource of 1.23 Bt grading 29.79% Fe (10% Fe grade cut-off) and the hematite resource consists of 5.75Mt @ 59.9% Fe (inferred) at Mt Mason close to the Mt Bevan southern boundary. This mineralisation is known to extend into the Legacy/Hawthorn joint venture ground at Mt Bevan. Jupiter anticipates completion of the Mt Ida Feasibility Study in the June quarter 2013.

Figure below shows an aeromagnetic image showing the targeted BIF units and drilling completed to date.

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Aeromagnetic image showing magnetite bearing BIF units (red) and drill hole locations


The Western BIF horizon extends for at least 11km within the southern part of the project area, and is the northern, more extensive part of the same horizon that hosts the Mt Ida magnetite resource of Jupiter. In addition, this Western BIF horizon is present over several kilometres of strike length in the northern part of the project area at Mt Alexander. The project area also contains the Eastern BIF unit that occupies some 20km strike within the project area. No drill testing for magnetite has been undertaken on this unit to date.

Figure below shows again the drill hole locations and drilling lines superposed on aerial imagery

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Western BIF aerial image showing drilling lines. Magnetite mineralisation intersected over whole 10 km strike length Phase 3 Indicated Resource Drilling between Lines 3 to 5.

 

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RC drilling at Mt Bevan with outcropping BIF forming ridge to west

 

A 3-D Leapfrog image showing the main magnetite unit with drilling is shown in the figure below. The 100m plus thick magnetite unit extends continuously along strike for 10km.

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3D image of main magnetite unit - strike length of 10km

Please refer to the current annual report for all 10 drilling cross sections. Typical sections are shown in the figure above. These illustrate the very strong continuity of the magnetite bearing units along strike and also down dip. The shallow dip and substantial thickness of the mineralisation will allow low waste ore stripping ratios, meaning that final open cut depths could potentially far exceed the approximately 250 - 300m vertical depth tested by drilling to date.



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SRK Consulting completed modelling and resource estimation utilizing all phase 1 and 2 drilling. This has resulted in a near tripling of the JORC compliant Inferred Resource for the main Western BIF target:


 

Mineral Resource Estimate Statement
for the Mt Bevan Iron Ore Project as at 1 February 2012, reported at a cut-off
grade of Fe>15%

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Mineral Resource Estimate Statement
for the Mt Bevan Iron Ore Project as at 1 February 2012, reported at a cut-off
grade of Fe>25%


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The calculation of the increased Inferred Resource is in line with the previously announced Exploration Target for the Western BIF of 1.5 - 2.0 Bt grading between 30 - 40% Fe.

Although classed as an Inferred Resource, drilling to date has shown the mineralised body to have exceptional continuity both along the 10km of strike and some 500m (still open) down dip. This can be seen in the cross sections showing all drilling presented in the figure above. As a result, Legacy has high confidence in increasing and efficiently converting the JORC resource status with further drilling.

 

Metallurgical Test Work

Comprehensive metallurgical test work has been undertaken on the Mt Bevan magnetite mineralisation supervised by Calibre Global. This includes routine DTR testing on 6m composites (based on grind liberation curve test work tailored to the mineralisation), LIMs testing, and Bond Work Index test work.

DTR testing of mineralisation intersected in phase 2 drilling has produced very similar results to that of previous drilling. Using a relatively coarse grind size of P80/50 - 55 microns, DTR testing shows excellent achievable grades of 69 - 70% Fe with high weight recoveries of circa 45%. Silica contents at this relatively coarse grind remain low, averaging 3 - 4 % with very low sulphur and phosphorus.

These outstanding results place the Mt Bevan magnetite resource at the highest quality level of West Australian magnetite projects, particularly in the low silica component of the concentrate. Most peer projects show DTR concentrate silica in the 4.5% to 6% range and utilise a more costly finer grind. Put simply, even with a lower cost coarse grind size, Mt Bevan magnetite can produce a premium concentrate with low silica. Importantly, there is also no necessity for a flotation circuit as is common for many WA magnetite projects.

The DTR results indicate that a high purity magnetite concentrate can be produced. This gives the project the potential flexibility to produce either normal BF (Blast furnace) grade pellets (silica < 5.5%) which may be produced at a coarser grind size, or premium DR (Direct reduction) grade pellets (silica < 3%) at a finer grind size.

 

Low Grinding Costs

Comprehensive testing on diamond core samples by Ammtec has provided a Bond Work Index of 11kWh/t. This is relatively soft for magnetite BIF mineralisation. In comparison, most WA magnetite BIF projects have a Bond Work Index of circa 18 - 20 kWh/t.


Low Operating Costs

The combination of being able to produce a quality concentrate at a relatively coarse grind and the soft nature of the mineralisation has a very significant positive economic impact for a mining project at Mt Bevan. A major OPEX cost in magnetite projects is power consumption. Preliminary energy calculations based on the grind and bond work index indicate power requirements of only 12 kWh/t - very low compared to that of about 30 kWh/t  for typical WA magnetite projects.

The Phase 3 Drilling - Resource conversion has recently been completed with complete assay/DTR results awaited. This program was essentially infill drilling designed to increase confidence in the continuity and grade prior to pre-feasibility studies. This would convert a substantial proportion of the Inferred Resource to Indicated status and provide material for metallurgical test work.

This drilling was on a 250m x 160m grid pattern, and intersected the thick magnetite body in all drill holes. The drilling confirmed similar geology, thicknesses and geometry to that seen in the earlier broader spaced drilling.

SRK Consulting has been engaged to conduct modelling and mineral resource estimation work following receipt of final assays and DTR test results. It is anticipated that the upgraded resource estimate would be completed by November 2012.

 

DSO Hematite Potential

A geological mapping and sampling program is underway along the 20km extent of the undrilled Eastern BIF unit - as part of the joint venture's objective of defining DSO hematite targets for early drill testing. DSO hematite targets have already been identified at Mt Alexander and in the southern part of the Western BIF - where an extension of the Mt Mason DSO hematite resource of Jupiter Mines Ltd (Measured and Indicated JORC resource of 5.9Mt @ 60.1% Fe) has been identified. Drill testing of these targets is a priority and is planned upon receipt of statutory approvals.