Legacy Minerals unlocks funded drilling at its giant Thomson target

Red Hill funds the first Thomson drilling campaign

Legacy Minerals Holdings Limited (ASX:LGM) has found a way to put its 5,400-square-kilometre Thomson gold-copper project in north-western New South Wales to the test without drawing on its own exploration budget. Under a binding Heads of Agreement, Red Hill Minerals (ASX:RHI) will sole-fund and manage up to A$2 million of exploration across EL9190 and EL9194 over 12 months, including at least 1,500 metres of diamond drilling targeting a minimum of two prospects.

The initial program is aimed at Thomson’s untested magnetic “bullseye” anomalies, including the Cut-A, Cut-AC and Cut-Ciii targets. At Cut-A, earlier drilling intersected 377 metres at 0.1 grams per tonne gold from 225 metres, including 11 metres at 0.8 grams per tonne from 287 metres. Those results are exploration indicators, not a mineral resource or an economic discovery, but they provide a concrete reason for the new drilling campaign.

A staged path to a 75% project interest

Red Hill’s larger commitment remains optional. If it completes Stage 1, it can elect within 30 days to spend a further A$4 million over up to 48 months to earn 75% of the entire Thomson project, including EL9728. Before withdrawing during that period, Red Hill must spend at least A$2 million and complete another minimum 1,500 metres of diamond drilling within the first 24 months.

That structure gives Red Hill a funded route to increase its exposure while leaving Legacy with 100% ownership during the initial program and no exploration contribution until a joint venture is formed. If the earn-in is completed, Red Hill would manage an unincorporated joint venture with a 75% interest, while Legacy would retain 25%. Red Hill would also receive a 5% management fee on joint venture expenditure.

Royalty buy-back right changes the deal economics

The trade-off is Legacy’s existing A$6 million right to buy back Red Hill’s 1.5% net smelter royalty over EL9190 and EL9194. That right is extinguished if Red Hill completes Stage 1, while the royalty remains uncapped. If Red Hill does not complete the first stage, the buy-back right remains in place under the agreement.

If Red Hill proceeds to the joint venture, its royalty would extend across all three tenements, although it would not apply to Legacy’s share of production while the joint venture continues. The arrangement is still subject to due diligence, land access, native title and tenement-related conditions, and the formal agreement is yet to be executed. The immediate catalyst is therefore not the potential 75% earn-in, but whether the Stage 1 conditions are cleared and the promised drilling is finalised and started.