Northern Star Resources has entered into an agreement to acquire the Hermes gold deposit in Western Australia from Alchemy Resources. Hermes is in the Bryah Basin and within trucking distance to Northern Star’s Plutonic gold operations.
Hermes has a 212,000 ounce gold resource while the deal also includes additional walk-up drill targets as well as additional exploration upside.
Northern Star has also entered into a farm-in and joint venture agreement with Alchemy covering additional tenements in the Bryah Basin, including the Wilgeena gold deposit which has an indicated resource of 87,000 ounces. These resources were calculated by Alchemy in line with JORC 2004 guidelines.
Northern Star will immediately commence an exploration program aimed at both expanding the resource and bringing it into line with JORC 2012 guidelines.
The acquisition is designed to provide additional near-surface mill feed for Northern Star's Plutonic gold operations.
Under the terms of the agreement, Northern Star will:
• Pay Alchemy Aus$1.45 million for the Hermes tenements;
• Acquire Alchemy shares valued at Aus$500,000 via a placement at 1.5 cents a share, giving Northern Star 15% of the company and Board representation;
• Earn an interest of up to 80% in Alchemy’s Bryah Basin project (excluding the areas under an existing Independence Group JV) by spending Aus$400,000 a year over three years; and
• Pay Alchemy a royalty of 1% of Net Smelter Return on refined gold recovered from the Hermes tenements in excess of 70,000 ounces and up to 90,000 ounces.
The Hermes gold project comprises 136sqkm of mining and exploration tenements about 70km by road from Plutonic. The farm-in and JV agreement allows Northern Star to earn up to 80% in an additional 219sqkm of both mining and exploration tenements located within the Bryah Basin by expending funds over a three year term.
Alchemy has submitted programs of work applications to enable a major program of both infill and extensional drilling of the Hermes deposit, and currently have permits in place for drilling at other known targets across the tenement base. Northern Star plans to begin these drilling programs in the first half of this year to accelerate the upgrades to JORC 2012 standards.