Wednesday, 15 February 2012

Legend Mining signs MOU with POSCO for Ngovoyang iron ore project, Cameroon

Legend Mining (ASX: LEG) and POSCO (NYSE:PKX) have signed a Memorandum of Understanding for a joint venture in relation to Legend’s Ngovoyang iron ore project in Cameroon.

Negotiations are at an advanced stage for the agreement of a joint venture between the two companies.

Legend managing director Mark Wilson told Proactive Investors today that the agreement was a “huge vote of confidence” in Legend’s Ngovoyang project.

“We look forward to working closely with POSCO over the coming months to finalise an exploration joint venture agreement,” Wilson said.

“Most juniors that are involved with major projects, the big question is how are they going to fund the capital costs, and when you have a partner like POSCO that question very quickly disappears into the vapour.

“POSCO’s given a tick to the sovereign risk of Cameroon, a big tick to our project.”

The memorandum of understanding is non-binding and non-exclusive.

Legend has an extensive 2,900 square kilometre land holding in the Republic of Cameroon, prospective for gold and iron ore.

Diamond drill assays released in November 2011 returned commercially significant intercepts of:

-    116.2 metres at 26.2% iron, including 79.1 metres at 29.7% iron; and
-    80.5 metres at 36.6% iron.

Both holes ended in high grade, plus-35% iron mineralisation.

These results confirm the magnetite potential of the Ngovayang Project based on assays from Melombo East, as the company works towards an exploration target.

South Korea-based POSCO has interests in engineering and construction, power generation and natural resource development around the world and is now reportedly focused on opportunities in Africa.

Proximity to infrastructure

One of the major drawcards for POSCO was Ngovoyang’s proximity to infrastructure, including road, rail, port and airports.

“After a review of numerous iron ore projects in the region, POSCO was primarily attracted to Legend’s Ngovoyang project due to its attractive infrastructure,” Wilson said.

“The proximity to the coast and the existing infrastructure and the quality of the magnetite that we’ve previously disclosed to the market are all the sort of things that have attracted POSCO to the project.”

Ngovoyang is located halfway between the major cities of Douala and Yaounde, which are connected by a sealed road and a rail line.

Both cities host international airports, and Douala is home to a port.

The project is also supported by a rail and port access deal struck in 2011 with fellow Cameroon-focused Australian iron ore company Sundance Resources (ASX: SDL).

Under the agreement, the two companies will examine ways for Legend to use Sundance’s proposed infrastructure and rail and port haulage.

This infrastructure forms part of Sundance’s Mbalam Iron Ore Project, located on the border of Cameroon and Congo.

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