* article

Mentioned on the other thread but thought it would be worthwhile to reprint here as it is worth reading for any newcomers to this stock.
Source

Legacy Iron Ore (ASX: LCY) is an iron ore exploration company that is based in Western Australia, and is developing the Mt Bevan Iron Ore Project, which has the potential to develop into one of the largest resources of iron ore in the Central Yilgarn.

Legacy is also developing an advanced gold exploration project at Mt Celia, at the South Laverton Project, and holds other prospective areas including Robertson Range for iron and manganese, Hammersley for iron, and East Kimberley for gold.

The company is earning a 60% interest in the Mt Bevan Project from Hawthorn Resources (ASX: HAW), by committing $3.5 million to exploration and completion of Pre-Feasibility studies before the end of calendar year 2012.

The tenements are located 100 kilometres west of Leonora, and cover 25 kilometres of Banded Iron Formation (BIF) that abut and extend from Jupiter Mines (ASX: JMS) Mt Ida magnetite iron ore resource of 530 million tonnes of 31.94% Fe, and a resource of 5.75 million tonnes of haematite grading 59.9% Fe at Mt Mason.

A first stage drilling campaign tested 4,600 metres of the western side of the Banded Iron Formation that runs through the Mt Bevan Project area, and targeted around 40% of the potentially mineralised strike line.

The 20 drill hole program was completed along 5 drill lines that were spaced 1,000 metres apart, where all of the holes intersected a shallow dipping, magnetite bearing ore body that varied in true vertical thickness of around 80 to 140 metres, and exhibited strong continuity between drilling lines.


JORC Resource

Based on the drilling SRK Consulting estimated a maiden JORC Inferred Resource at Mt Ida of 617 million tonnes of magnetite ore at a grade of 32.1% Fe, using a cut-off grade of 15%.

The recently completed first phase drilling program was 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.

However, this first phase drilling program was conducted over 40% of the strike length of the Western BIF unit ? the first of several iron ore prospects to be drill tested within the project area.

Jupiter has recently announced that Scoping Studies, carried out by Promet Engineering Pty Ltd, have been completed on both the Mt Ida magnetite resource and Mt Mason DSO haematite resource, delivering financially robust results in both cases.

Jupiter commenced Feasibility Study reverse circulation drilling at Mt Mason during May 2011.


Direct Shipping Ore (DSO) potential

There is significant potential for the definition of shallow DID and DSO hematite iron ore resources at Mt Bevan that could allow for early stage mining.

This is based on a hematite resource of 5.75 million tonnes at 59.9% Fe 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.

Defining a DSO resource at Mt Bevan would change completely the valuation dynamics of Legacy as it would open the possibility of generating earlier cash flows at a relatively low capital expenditure

Next phase drilling planned for August 2011 at Mt Bevan will look to extend the resource on north and south of area drilled and test area bordering Jupiter?s Mt Mason for DSO hematite.


Davis Tube Recovery (DTR) tests

Preliminary Davis Tube Recovery tests averaged 45.6% weight recovery, and produced a concentrate grade of 71.4% Fe, with minor silica, phosphorus and sulphur contamination.

The shallow dip and substantial thickness of the mineralisation will also allow low waste to ore stripping ratios and keep operating costs low. Resource potential below drilling depths of 200 to 250 metres also remains open along strike.


Exploration Target

Previously, an exploration target had been set for magnetite mineralisation of 1 ? 1.5 billion tonnes grading between 30% and 40% Fe within the Mt Bevan project area.

Following the results of first stage drilling, the Exploration Target has been raised by 30% to 50% to 1.5 to 2.0 billion tonnes grading 30% to 40% Fe.

Notably, this target is purely from and within the southern part of the Western BIF target zone.


Infrastructure

Mt Bevan is considered to have excellent potential to develop substantial DSO hematite and magnetite iron resources that are located close to existing road, rail and port facilities

One of the drivers of ongoing development of iron ore projects within the Central Yilgarn is the accessibility of port facilities at Esperance by local rail.

A development of Mt Bevan would hook into an existing rail line at Menzies, which would need to be upgraded; however, developers understand that infrastructure upgrades, to carry greater ore capacity can be completed at reasonable capital cost.

The rail line runs south to Esperance, the export port for 9 million tonnes of direct-shipping iron ore produced by U.S. group Cliffs Natural Resources (NYSE: CLF) (Market Cap: US$14.1b) at the Koolyanobbing operation, 50 kilometres south of Southern Cross.

It is believed that the government-owned Esperance port is an expandable hub.


Positive project economics at Mt Ida

Any discussion of development of Mt Bevan can invariably take a line through the adjacent resource and progress by Jupiter at Mt Ida.

Jupiter has recently announced that scoping studies, carried out by Promet Engineering Pty Ltd, have been completed at the adjacent Mt Ida magnetite resource and Mt Mason DSO haematite resource, have delivered financially robust results in both cases.

A Scoping Study completed in March this year found that Mount Ida would be a financially and technically robust project with a project Net Present Value (NPV) of $1.685 billion, forecast operating costs of $62.78 a tonne.

A Feasibility Study is also underway at Mount Mason based on DSO hematite production of 1.5 million tonnes per annum from a JORC resource of 5.75 million tonnes at 59.9% Fe. Capital costs are estimated at $65 to $75 million with a one year payback.

This has positive implications for Legacy / Hawthorn JV and the Mt Bevan project area, to the immediate north of the significant magnetite and hematite resources held by Jupiter Mines. This mineralisation is known to extend into the Legacy/Hawthorn joint venture ground at Mt Bevan.

Jupiter commenced Feasibility Study reverse circulation drilling at Mt Mason during May 2011.


National Mineral Development Corporation (NMDC)

Legacy?s Mt Bevan project will likely require significant investment and development to advance Mt Bevan. Legacy has entered into a Memorandum of Understanding with National Mineral Development Corporation (NMDC), and plans to sell up to a 50% equity interest in Legacy, based upon an independent valuation.

NMDC is a Government of India owned public enterprise under the control of the Ministry of Steel, and is India?s single largest iron ore producer, with reported resources in excess of 800 million tonnes.

In 2009/10, NMDC achieved sales of A$1.2 billion from annualised production of 30 million tonnes of iron ore (62%+ Fe) per annum at multiple mines. NMDC is currently developing a 3 million tonne per annum steel plant and 2 pellet plants in excess of 1.2 million tonnes per annum.

The MOU confers the right for NMDC to acquire a shareholding of up to 50% in Legacy by subscribing for shares, with a price agreed between the parties.

NMDC, who specialise in large-scale construction, railway/transport logistics and project financing, sent a team at its own expense to begin legal, technical and financial due diligence on Legacy.

The agreement with Legacy will introduce a significant Indian iron ore producer and developer, with the relationship expected to lead to the development of a mine at Mt Bevan, along with acquisition of complementary resource projects.

Discussions are currently underway to formalise funding and development options with the Indian miner, and will be subject to shareholder and Foreign Investment Review Board review.

Details confirming the proposed relationship are expected to be released next month.


Other projects

Legacy is also developing a number of gold projects within the South Laverton Project area, including Mt Celia, which is located 40 kilometres south of Sunrise Dam with 8 million ounces of gold.

Mt Celia hosts a JORC Inferred Resource of 46,000 ounces of gold, at a grade of 1.4 g/t gold, with a cut off of 0.7 g/t.

This resource is contained within a 2,000 metre shear system that includes the Blue Peter Prospect, where the potential is high for widespread, near surface gold mineralisation that can be extracted utilising bulk mining techniques and toll treated at nearby gold process plants.

Additional mineralisation has been identified at Stophanis Well and Yerilla, on nearby tenements.

However, the main thrust of development will obviously centre on Mt Bevan, where Legacy currently has a direct 60% interest that is supported by a substantial shareholding of 299,026,956 shares, or 17% of issued capital of Hawthorn.

This provides Legacy with an additional indirect interest of 7.2%, for a total of 67.2% in Mt Bevan.

The next few months will likely provide key inflexion points and milestones for Legacy Iron including negotiations with NMDC that will serve as a springboard for significant change for the company.

Based on the progress by Jupiter Mines at next door Mt Ida, and interest from NMDC, Legacy Iron will likely have a platform to develop Mt Bevan into a significant iron ore project.