Star inks deal with mining heavyweight to fast-track Mid West gold

Star Minerals has inked a deal with MEGA Resources, a subsidiary of India’s mining giant BGR Mining & Infra, to propel into production its 45,000-ounce Tumblegum South gold project in WA’s Mid West region.

Star’s non-binding contract with MEGA will see a strategic collaboration between the groups on mine development, environmental approvals and feasibility studies, opening the door to a future profit-share or a joint venture arrangement.

With gold trading at a staggering $5000 per ounce - more than $1000 above the upper assumptions of the company’s May 2024 scoping study - Star stands to capture substantial upside from a project that was projected to churn out up to $20 million in free cash flow.

Star Minerals is delighted to commence a relationship with one of the largest mining contractors in India. Through MEGA, BGR has rapidly developed an interest in a suite of projects in Australia and this provides a crucial step in the process to bring the Tumblegum South gold project to production. BGR also participated in the latest capital raise completed by Star Minerals to progress toward mining approvals.

Tumblegum is 40 kilometres south of Meekatharra in WA on a granted mining lease endowed with a resource of 616,000 tonnes grading 2.28 grams per tonne (g/t) for 45,000 ounces of gold. The resource has a higher-grade indicated core of 337,000t at 2.52g/t for 27,000 ounces.

Last year’s updated scoping study pegged an 18-month mining campaign at the site to produce up to 15,900 ounces to generate $19.6 million in surplus cash at a gold price of $3800 per ounce. With the precious metal now fetching $5000 per ounce, Star is accelerating the project on a clear trajectory towards a targeted mining start in the first quarter of 2026.

Star’s partner MEGA Resources is an Australian-based outfit, born from BGR’s global ambitions and brings a wealth of mining, engineering and geology expertise to the table.

The company has been making waves in WA with a string of collaborations and was drawn to Tumblegum South’s near-term cash potential and exploration upside. Notably, MEGA’s model - replicated in other recent deals - could minimise shareholder dilution for Star by leaning on profit-sharing or joint venture structures rather than heavily dilutive equity raises.

BGR joined Star’s register in last month’s $1.6M capital raise, clearly understanding the project’s potential against a backdrop of a booming gold market.

Star says it is wasting no time. It has the environmental approvals process underway – this is the longest lead item in the permitting process. The company aims to lock in these approvals within months.

The next item on the list will be to lock away a toll treating agreement with an existing mill in the region. That should not prove too difficult to achieve given Star’s impressive head grade of 2.28g/t to 2.52g/t gold, which is a quality feed for today’s producers.

The company also has continued exploration drill testing planned for later this year, targeting high-grade gold lodes identified in a detailed desktop review. Should the program hang more gold resources together well, an enlarged pit design could bring an additional 16,000 ounces into play, further sweetening the pot.

Industry peers, such as Auric Mining and Horizon Minerals, have unlocked stranded deposits on existing mining leases through toll treating, which has no doubt played a role in Star’s recent change of strategy. With MEGA’s backing and gold prices touching all-time highs, Star could be well in line to make plenty of hay while the sun shines, potentially as soon as next year.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au