Star Minerals Ltd (ASX:SMS) is aiming to bolster its gold portfolio with a proposed new acquisition.
The explorer has inked an option agreement that puts it in line to pick up the ‘Star of the East’ gold camp, a precious metal deposit in WA’s Murchison region.
This historical, high-grade gold mine was first worked in 1897 and records indicate it produced just under 28,000 gold ounces over its lifetime.
If Star proceeds with the buy, Star of the East will complement the existing Tumblegum South project, which hosts a 600,000-tonne ore resource, grading 2.2 g/t.
Drilling is poised to commence immediately as Star weighs up the gold project's broader potential.
Investors have responded positively, with SMS securities up as much as 16.3% this morning to $0.10.
“Straight into action”
Star Minerals CEO Greg Almond said of the deal: “We are very excited to add this historical and very promising project to our portfolio, and are looking forward to getting straight into action.
“Our team has already developed plans and drilling targets and we’re excited to test them out.
“We are keen to deploy our existing knowledge and expertise to this area, and consider this option to be a low-risk approach with potential for high rewards.
“We expect to quickly build on the promising historical information to allow us to quickly target what we believe is exciting gold mineralisation.
“Many of these historic mines, once believed to be mined out, prove to have a significant endowment once modern exploration techniques are employed, and we are confident that will be the case here.
“Our shareholders should be encouraged by this news, as it demonstrates the company’s ability to leverage its land position and relationships to unlock additional assets, and shows that others in the market are looking towards Star Minerals as a partner.
"Leveraging from our experience from Tumblegum South, we look forward to fast-tracking development of the exploration program at Star of the East.”
The fine print
Star Minerals’ option agreement is part of a 12-month deal that starts with a $60,000 initial option fee.
The remaining $360,000 can be paid in cash, shares, or a mix of both at the vendor’s election, either during or at the end of the 122-month period, provided Star completes 2,000 metres of reverse circulation drilling on the property.
Importantly, Star Minerals can exclusively choose whether to proceed with the option.
Complementing Tumblegum South
Since its IPO, Star has been focused on developing the Tumblegum South asset, which sits just 2.2 kilometres from the Star of the East camp.
At Tumblegum, Star has just rounded out its phase two drilling program and is working on an update for its mineral resource estimate.
The company’s current focus remains gold, but there is also material copper potential on the lease.
Moving ahead, Star plans to kick off drilling at the Star of the East property. An initial 700-metre phase is expected to take five days to complete, although, as with previous drilling in the wider area, holes may be extended if they remain in mineralisation.