Northern Star spends $67m to feed Jundee

Northern Star Resources is set to pay $67 million for an exploration project to feed its Jundee operation while notching a long-term power deal with Zenith Energy. 

The Subiaco-based gold miner entered into a binding asset sale agreement with Strickland Metals to purchase its Millrose gold exploration project located in the Yandal Greenstone Belt in the Northern Goldfields.

The series of exploration tenements making up the Millrose project is located 40 kilometres east of Northern Star’s Jundee gold operations, which is part of the miner’s larger Yandal production centre.

Northern Star expects the Millrose project to be a supplementary feed source for the Jundee mill in the medium-term, complementing its underground base load.

Under the deal, Northern Star will immediately pay $2 million in cash and pay the remaining $39 million on completion of the transaction, alongside issuing 1.5 million of its shares.

“The acquisition of the Millrose gold project presents a very compelling development opportunity that is accretive to the Jundee life of asset plan as it should deliver us a sizeable low cost, high grade supplementary resource feed,” Northern Star managing director Stuart Tonkin said.

“This bolt-on acquisition, which also comes with significant brownfields exploration upside, will provide us with further confidence to plan organic and profitable growth for Jundee, which already is the lowest cost asset in our tier-1 portfolio.”

Mount Pleasant-based Strickland Metals bought the Millrose project for $10 million in mid-2021 from Millrose Gold Mines and Golden Eagle Mining after completing a capital raise.

Strickland Metals chief executive Andrew Bray said he was pleased with the transformative sale.

“After a highly successful 11-month drilling campaign throughout 2022 costing approximately $16 million, we are now selling the project for approximately $61 million, generating an approximate $35 million profit for the company,” he said.

“We are exceedingly pleased that we have been able to deliver such a strong outcome for shareholders given the ongoing difficult market conditions for junior exploration companies.

“This transaction leaves Strickland in the highly envious position of having one of the strongest balance sheets in the junior exploration space.”

Northern Star also struck a long-term power supply agreement with Belmont-based Zenith Energy for the supply of electricity to its Junee operations, including 40 mega watts of wind and solar.

The Jundee operation will integrate wind, solar and install a battery to complement the existing gas power station network.

The renewable power generation will make up 56 per cent of the mine sites’ power and is a part of Northern Star’s goal to reduce its carbon footprint by 35 per cent by 2030.

Zenith built, owns and operates the existing power station at the Jundee mine site and completed an expansion of the facility in 2019.

On the ASX, Northern Star Resources shares were trading up 1.87 per cent to $13.53 at 2.02PM AWST.

Strickland Resources shares trading down 2.22 per cent to 4.4 cents apiece.