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Dragon Energy Finalises Acquisition Of Murchison Metals' Rocklea Iron Ore Project

Dragon Energy (ASX: DLE) has completed the acquisition of Murchison Metals' (ASX: MMX) Rocklea iron ore project, which more than doubles the existing iron ore Resources for the company's Pilbara Project.

The assets, which Dragon acquired for A$3.2 million, will now be combined with the company's Rocklea and Nameless Deposits to expand the Pilbara Project.

Dragon's Rocklea Resource will increase from 62.7 million tonnes at 53.41% iron (60.39% caFe) to 151.7 million tonnes at 53.3% iron (60.1% caFe).

The importance of this deal is in the location of the Rocklea project, directly adjacent to Dragon's Rocklea tenement within the Pilbara iron ore project, and the significant cost efficiencies that could result.

The acquisition provides the potential for the company to develop a larger scale operation at its Pilbara iron ore project and benefit from economies of scale.

Dragon plans to review the Murchison data and identify new targets in the latter half of 2012.

Approach to production

Dragon could be in production as early as 2013 at the Pilbara Project, where the company is pursuing rapid development of a direct shipping ore operation.

The Pilbara project comprises the Nameless and Rocklea projects, where JORC Resource calculations are underway.

A Scoping Study at Rocklea and Nameless showed that production through road transportation could begin as early as the end of 2013.

Subject to defining adequate JORC Reserves and securing adequate port facility, Nameless and Rocklea could represent a medium term development scenario.

Dragon has defined an exploration target of 140 to 190 million tonnes of 48 to 52% iron (54-56% caFe) for the Nameless Project.

Mapping by AusQuest delineated 15 kilometres strike of a prospective 200 to 600 metre wide palaeochannel, of which 12.5 kilometres was drill tested.

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