Under the binding agreement, Northern Star will pay Pioneer $500,000 cash to acquire an initial 20%.
Northern Star will be able to earn an additional 55% by sole funding $3 million of exploration expenditure within 3 years.
This would result in Pioneer having a 25% free-carried interest until a mining proposal is approved.
Furthermore, Northern Star must expend a minimum of $1.5 million on exploration before it may elect to withdraw from the project.
David Crook, managing director, commented: “Northern Star has a very good discovery record in the Kalgoorlie District, and will bring its organisational technical expertise and financial capacity to rapidly advance the Acra gold project without further financial impost to Pioneer until a mining proposal is approved.”
Acra gold project
The Acra gold project covers an area of 370 square kilometres and is located 60 kilometres north east of Kalgoorlie in Western Australia.
Acra has a 20 kilometre-long, north-west trending, structural corridor, which is evident in aeromagnetic data with elements observable in field mapping, and which is considered prospective for gold.
Physical gold has been recovered from small gold workings that date from the 1890s until World War II, and more recently from nugget patches that are still being located and worked.
Most exploration undertaken from the early 1970s to the present, however, has focussed on identifying nickel mineralisation.
Agreement details
Northern Star will pay to Pioneer $500,000 cash to acquire an initial 20% interest in the Acra gold project plus the right to earn a further 55% interest (total 75% interest) in the project by sole funding $3 million of exploration expenditure within 3 years.
Following the formation of a joint venture (JV) Pioneer will continue to be free carried up until the JV secures an approval for a future mining proposal.
When a mining proposal is approved, Pioneer may either contribute pro-rata to future JV expenditure or sell its 25% JV interest at fair market value to Northern Star for cash or shares at Pioneer’s election.
Analysis
This landmark agreement means that a clear strategy exists for a potential future mining operation at the Acra gold project.
The agreement with Northern Star means that the project likely has an established ore treatment route as Northern Star’s Kanowna Belle Gold Mill is located 40 kilometres away.
It also means that forthcoming exploration programs will be well funded and expedited by one of Western Australia’s most successful gold project developers and miners in Northern Star.
Impressively, Northern Star had exploration costs averaging A$50 per reserve ounce discovered in 2016.
Shares are up 10% intraday on the news, currently trading at $0.021.
Pioneer will advance Acra alongside its lithium exploration programs where recent final assays at Pioneer Dome confirmed the discovery of what could potentially be economic lithium-caesium mineralisation.