Goldstar signs JV for Millrose with BHP

West Perth-based gold explorer Goldstar Resources NL has signed a joint venture agreement with BHP Billiton Ltd, allowing the giant to take a 70 per cent stake in the company's Millrose gold and nickel project, near Wiluna.

Under the agreement, BHP can earn the stake by spending $2.25 million on exploration within six years, with a minimum exploration commitment of $250,000 within the first year before it can withdraw.

After completing the full earn-in, BHP Billiton will hold a 70% interest, with Goldstar diluting its 85 per cent stake to 15 per cent, with minor stakeholder Murchison Resources Pty Ltd retaining its 15 per cent share.

The news comes two days after Goldstar announced it would acquire an 85 per cent stake in the Walhalla gold project tenement after signing a joint venture agreement with unlisted group Franklin Resources.

The full text of a company announcement is pasted below

Goldstar Resources NL (ASX: GDR) is pleased to announce that it has finalised a joint venture agreement with BHP Billiton Limited covering its Millrose Project near Wiluna in Western Australia. Under the agreement, BHP Billiton can earn up to a 70% interest in the project with a focus on exploring primarily for nickel.

The BHP Billiton Joint Venture completes the farm-out of all Goldstar's non-core exploration projects in Queensland and Western Australia, consistent with the Company's continued focus on its core 100%-owned Walhalla Project. Last year, Goldstar finalised separate joint venture agreements with Matrix Metals Limited on the Queensland Top Camp project and Peak Resources Ltd for its Peak Hill Projects Western Australia.

Millrose Joint Venture - BHP Billiton

Goldstar has finalised an agreement giving BHP Billiton the right to earn a 70% interest in the Millrose Project, located approximately 80km north-east of Wiluna in Western Australia. BHP Billiton will explore primarily for nickel mineralisation within the +200km2 tenement package, which is separated into two distinct blocks (Millrose South and Millrose North). Goldstar will retain the gold rights to the project area (Fig1).

Under the agreement, BHP Billiton can earn a 70% interest in the tenements by spending $2.25 million on exploration within six years, with a minimum exploration commitment of $250,000 within the first year before it can withdraw. After completing the full earn-in, BHP Billiton will hold a 70% interest, with Goldstar diluting to 15% and Murchison holding 15%.

After earning the 70% interest, BHP Billiton will sole fund ongoing exploration expenditure through until either a decision to mine is made, or a total of $15 million has been spent on exploration. After this time, any partner may elect not to contribute to its share of subsequent exploration expenditure, but will be accordingly diluted. If any partner's interest is diluted below 5%, it may convert this interest to a 1% gross royalty interest.

The Millrose Project is prospective for both gold and nickel mineralisation, based on previous drilling by a number of exploration and mining companies. Goldstar has a drillhole database in excess of 90,000 metres incorporating all available data generated for the area since 1989. A number of anomalous targets for both gold and nickel have previously been identified.

A reconnaissance RC drilling program completed by Goldstar in 2006 within the Millrose North tenements returned both gold and nickel anomalism in the assay results. It also highlighted some lithologies which are potential hosts for nickel mineralisation.

The joint venture further reinforces Goldstar's focus and commitment as an emerging gold company, with its resources and management time focused on the evaluation, exploration and development of the Walhalla Project in Victoria.

Goldstar's Managing Director, Mr Andrew King, said the completion of the joint venture with BHP Billiton demonstrated a continued proactive approach by the Company to its asset management. "We are pleased to have secured a joint venture partner of the calibre of BHP Billiton for our Millrose Project. This effectively completes the farm-out of our non-core exploration assets, but ensures that exploration is effectively progressed - in this case by a quality joint venture partner in BHP Billiton.

"At the same time, we retain exposure to any upside arising from exploration success on these tenements," he added.