Lefroy’s Low-Risk Mining Partnership with BML Could Accelerate Production Timeline

Strategic Partnership to Accelerate Lucky Strike Development

Lefroy Exploration Limited (ASX: LEX) has taken a significant step towards commercialising its Lucky Strike gold deposit by entering into a profit-sharing mining agreement with Kalgoorlie-based mining contractor BML Ventures Pty Ltd. The agreement grants BML exclusive rights to mine the Lucky Strike area, which boasts a mineral resource estimate (MRE) of 1.27 million tonnes at 1.95 grams per tonne gold, equating to approximately 79,600 ounces.

Under the terms, BML will act as the statutory Mine Operator, responsible for all mining activities, approvals, and funding of capital and operating costs. Lefroy and BML will share net surplus cash equally, reflecting a 50/50 profit split. This arrangement allows Lefroy to advance the project with minimal upfront capital outlay, while leveraging BML’s operational expertise and local industry relationships.

Operational and Financial Implications

BML’s role extends beyond mining to include coordinating toll milling negotiations with third-party processing plants, a critical factor given Lucky Strike’s proximity to multiple milling facilities such as Vault Minerals’ Randalls Mill and Westgold’s Lakewood Mill. Lefroy is currently finalising these toll milling agreements, with updates expected in the March quarter.

Mining is targeted to commence within 18 months of signing the agreement, contingent on BML’s assessment of ore continuity, profitability thresholds, and milling capacity availability. This timeline positions Lucky Strike to potentially contribute to Lefroy’s production profile in the second half of 2025, coinciding with a favourable gold price environment, recently reaching AUD 4,600 per ounce.

Resource Growth and Pre-Mining Drilling

In preparation for mining, Lefroy will undertake a 3,000-metre reverse circulation (RC) drilling program starting in late February 2025. This program aims to infill and extend the resource within the top 50 metres of the deposit, enhancing geological confidence and supporting mine planning optimisation. Post-decision grade control drilling will be funded and managed by BML.

The Lucky Strike deposit is hosted within a banded iron formation unit with high-grade gold mineralisation concentrated around a tight fold hinge, featuring notable intersections such as 8 metres at 18.66 g/t gold and 5 metres at 28.1 g/t gold. The deposit lies on a granted mining lease close to major haulage routes, facilitating efficient logistics.

A Defining Moment for Lefroy’s Growth Strategy

CEO Graeme Gribbin described the agreement as a “defining moment” for Lefroy, highlighting the low-risk pathway it provides to unlock value from the company’s substantial +1 million ounce gold resource base. The partnership with BML, a proven operator with a track record in open pit gold mining, aligns with Lefroy’s strategic focus on resource growth and commercialisation through partnerships.

With BML funding and managing the upfront costs, Lefroy can accelerate development without diluting its balance sheet, while maintaining exposure to the upside through profit sharing. This model could serve as a blueprint for advancing other projects within Lefroy’s portfolio, which includes significant gold, copper, and nickel resources in the prolific Kalgoorlie and Kambalda districts.