Strickland Metals Ltd (ASX:STK) has struck a deal to sell its Millrose Gold Project, an advanced exploration asset in Western Australia, to producer Northern Star Resources Ltd (ASX:NST).
The acquisition is worth A$67 million, including A$41 million in cash and 1.5 million fully paid ordinary NST shares to be issued to Strickland on completion, subject to a 12-month escrow period.
346,000-ounce resource
The Millrose Gold Project boasts a published mineral resource of 346,000 ounces of gold at a grade of 1.80 grams per tonne and offers significant geological potential both laterally and at depth.
At around 40 kilometres east of Northern Star's Jundee Operations, the Millrose Gold Project is expected to serve as a supplementary feed source for the Jundee mill in the medium term, complementing Jundee's existing underground operations.
Jundee, a key asset within Northern Star's Yandal Production Centre, will soon benefit from a long-term power supply agreement with Zenith Energy.
Green, renewable energy
Under this agreement, Jundee Operations will incorporate 40 megawatts (MW) of wind and solar generation, which will further Northern Star's renewable energy ambitions.
The renewable energy infrastructure will include 24 MW of wind power, 16.9 MWp of solar power, and a 12 MW/13.4 MWh battery energy storage system. This integration is projected to provide 56% of the mine site's power based on current modelling.
Northern Star has set ambitious targets to reduce its carbon footprint, aiming for a 35% reduction by 2030. With the Jundee Operations identified as the next focus for carbon emission reductions, Northern Star has successfully implemented solar power at the Carosue Dam Operations and is now planning to introduce solar and wind power at Jundee.
These initiatives are estimated to reduce CO2 emissions by 52,000 tonnes per annum, significantly surpassing the original target of 32,500 tonnes by the 2024 financial year.
Strickland will receive an initial cash deposit of A$2 million upon signing the agreement, with the remaining balance to be paid upon completion of the transaction.
The sale of the Millrose Project will enable Strickland to strategically upgrade its portfolio of gold prospects on the Yandal Belt to a similar standard as that of Millrose.
Both parties welcome strong outcome
Both companies are pleased with the deal. Strickland CEO Andrew Bray said: “We are very pleased to deliver such a transformative sale for shareholders in a relatively short period of time.
“The Millrose Project was purchased for $10 million in mid-2021. 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.
“We are also 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.”
As for Northern Star, managing director Stuart Tonkin said: “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.
“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-one portfolio.”