FROM MY BLOG__________________________________________Reedy...

FROM MY BLOG

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Reedy Lagoon has entered into an exploration agreement with Cliffs Natural Resources to jointly develop the Bullamine Iron Project in the southern wheatbelt district of WA. The project area covers some 3500 square km?s with significant magnetic anomalies potentially indicative of magnetite mineralisation. RLC is yet to announce an exploration target for the project, however I believe could it well be in the range of 1.5-3 billion tonnes of BIF with magnetite and minor hematite potential.

The key to this projects viability is the pre existing rail infrastructure that services the wheat belt. The massive investment and lead times required to build such infrastructure normally lends itself to only the most robust of projects. The Bullamine project area is likely to be made up of number of small sized deposits which will be mined relatively quickly with minimal effort.

So why Cliffs?

Cliffs are Australias 4th larger exporter of iron ore, with operating mines approx 100km due east of RLC's Bullamine project. The Koolyanobbing project is closest and is linked to the same rail network in the south west. Cliffs have proven experience in project development, and more importantly in this case, negotiations in regards to rail and port access. Cliffs are the biggest player in the region and their investment in the Bullamine project gives it a big vote of confidence. RLC has already identified upgradable magnetite mineralisation with low contaminents in previous drilling programs.

Elsewhere in the region, Cliffs have recently purchased Golden States (GDN) 30% in the Johnson Range project for an upfront payment of $3M. Further payments are possible via a royalty once the value of that royalty pays back the $3M paid up front. Cliffs also purchased the Mt Richardson lease from Iron Mountain for $6M in staged payments. Both of the transactions are shown on the map below which outlines the entire project area in the south central region.



RLC also has another proven commodity......quality management. This commodity is often seriously lacking in many companies of this size. The managing director Geof Fethers is a geologist who has over 25 years experience. He is a founding director of RLC who previosuly worked for DeBeers Australia. Their Exploration Manager is Hugh Rutter who has over 40 years experience in the mining industry. We worked for 10 years at WMC before joing BHP as their chief geophysicist in 1976, aiding in the development of their geophysical exploration and research group. At WMC, Hugh participated in, and made contributions to the discovery of Olympic Dam Mine and development of the Wilga deposit. RLC is currently exploring for IOGC targets, potentially of Olympic Dam style.

During the last financial period the directors of RLC decided to reduce their remuneration package by half due to adverse economic conditions in a bid to reduce spending. Their company strategy is aimed at finding only quality projects where exploration is a means to add value. The Cliffs JV is an example of responsible capital and risk management whereby RLC remains free carried with a 25% contributing interest in the project which is payable from future mine production.

Managing director Geof Fethers has recently bought more shares in RLC and has done so only after the release of announcements on both Edward Creek and the Cliffs JV. For more information on RLC goto their website or here.
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