Star greenlit to drill gold play ahead of toll treatment decision

Star Minerals has secured government approval to fire up the rigs at its 45,000-ounce Tumblegum South project 40km south of Meekatharra in WA.

The 3000-metre reverse circulation drilling program is slated to kick off in early June, dependent on rig availability and has set the stage for a high-impact drill campaign to upgrade confidence in the existing gold resource and potentially even extend it.

The company will use the infill drilling to target shallow inferred resources within the bounds of its scoping study-defined pit shell. By tightening the drill spacing from 25m x 25m down to 12.5m x 10m, Star aims to convert much of the current inferred resource into the higher confidence indicated category ahead of a decision to produce millions in quick cashflow by toll treating the ore.

The drill bit will also plunge about a third of the metres into testing out potential extensions to the deposit where recent airborne magnetic surveys lit up an area immediately to the northwest of the existing mineralisation. Coupled with a previous 120-metre-deep hole, which intersected grade in the same spot, the data is hinting at a promising array of parallel structures. If confirmed, a new mineralised zone could supercharge the project’s economics.

Drill rig contracts are being finalised and site preparation is already underway. Meanwhile, the mine plan approvals on the already mining-permitted lease are progressing.

The drill program follows on the heels of Star’s updated scoping study conducted by Perth-based Orelogy Consulting and released in May last year, which outlined a compelling case for near-term mining at Tumblegum South – and that was at much lower gold prices to today’s spot price.

Last year’s study revealed the project could deliver between 11,800 and 15,900 ounces of gold over an 18-month campaign via toll treating, based on a gold price of $3000 to $3800 an ounce. With pre-mining costs forecast at just $700,000 to $1.5 million, the study projected tidy surplus cash flows ranging from $9.4 million up to $19.6 million, depending on various processing options.

Whilst no new study has yet been done at the new uber-high gold price the new $5000 price an ounce—a whopping 31 per cent above the study’s top-end price assumption, will no doubt provide a nice upside kicker that could be worth millions to Star.

Drilling will target inferred resources aiming to increase the resource confidence from Inferred to Indicated in the shallow areas defined in the scoping study pit schedule. Extensional drilling to the NW of the proposed pit location will test for similar mineralised structures identified in the airborne magnetics structural interpretation.

Tumblegum South already hosts a tidy resource of 616,000 tonnes at 2.28 grams per tonne (g/t) for 45,000 ounces of contained gold. Of that, a high-grade core of 337,000 tonnes sits in the indicated category, grading 2.52g/t for 27,000 ounces—offering strong early-stage mining potential.

As part of the deposit’s future development plans, which would likely involve toll treating the ore at a nearby plant, Star recently inked a memorandum of understanding with mining contractor MEGA Resources, a subsidiary of India’s mining giant BGR Mining & Infra.

The deal outlines a collaborative agreement on mine development, environmental approvals and feasibility studies, opening the door to a future profit-share or a joint venture arrangement.

Notably, as part of a recent $1.6 million capital raising to fund the drilling program, Star also pulled BGR in as a strategic investor.

BGR’s arrival on the share register appears to be a major vote of confidence in the Tumblegum South deposit. Its management said the company was drawn in by the project’s compelling economics against a backdrop of a buoyant metal price.

Beyond Tumblegum, Star also has a foot hold on 10 tenements covering 694 square kilometres of ground called the West Bryah project, 140km north of Meekatharra.

The project lies in the richly endowed Bryah Basin, which is home to some of WA’s most iconic copper-gold discoveries including the high-grade DeGrussa copper-gold mine, famously uncovered by Sandfire Resources in 2009 and the historic Horseshoe Lights mine. Adding to the neighbourhood credentials, Westgold Resources is actively operating its Fortnum gold mine right next door to Star’s ground.

Armed with a treasure trove of historic data, including work from Bryah Resources and no less than five old-timer mine workings scattered across the project area, Star has a good second string to its bow in the Bryah Basin

The latest drill campaign should be a pre-curser to a decision to mine. At best Star will close up the drill spacings and upgrade confidence in the resource for Mega to mine it and at best it will also unearth a brand new deposit further to the northwest.

Either way it looks like Star may well be on its way to early cashflows at Tumblegum South.

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