Gold explorer Great Southern Mining has locked in a blockbuster $9 million deal with heavyweight Regis Resources to sell its Southern Star mining licence in Western Australia’s Duketon Greenstone Belt while forging a strategic alliance to unlock the region’s untapped riches.
The deal sees Regis take full control of the mining licence hosting the Southern Star gold prospect, which is just 3.5 kilometres south of the company’s operating 390,000 gold ounce Ben Hur open pit.
Regis has forked out an upfront $4 million payment in cash, with up to $5 million more on the table, depending on future gold price movements and resource milestones.
It’s not hard to see why. Drilling at Southern Star has previously returned some hefty hits, including 68 metres at 1.9 grams per tonne (g/t) gold from 61m and 59m at 2.1g/t gold from 53m, proving the prospect’s potential to deliver near-surface ounces.
The transaction is structured across three stages - the $4 million upfront payment is just a starter. Stage two includes a further $3 million in cash pegged to gold price levels when mining begins, ranging from $1 million at a $4000 per ounce gold price to a full $3 million if the price stays above $5000 per ounce.
With the gold price currently trading at $5157 per ounce, Great Southern could well be in for the full payout.
Stage three unlocks an additional $2 million if Regis declares a JORC-compliant reserve greater than 150,000 ounces of gold at the Southern Star prospect.
Great Southern Mining managing director Matthew Keane said: “This transaction is beneficial for both Great Southern Mining and Regis. It delivers a strong capital boost to fund aggressive exploration across GSN’s highly prospective Duketon tenure, most of which remains underexplored. Meanwhile, Regis is perfectly positioned to leverage the near-term development upside from Southern Star. It’s a deal that creates immediate value and sets the stage for new discoveries in the Duketon Belt.”
There is more in play than cash in the new deal. Regis has also picked up a first right of refusal on any defined mineral resources up to 1 million gold-equivalent ounces across the remaining 98 per cent of Great Southern’s granted tenements in the belt, which span a further 421 square kilometres.
To further sweeten the trade, both parties have inked a data sharing alliance aimed at fast-tracking discoveries across Great Southern’s grounds, one of WA’s hottest greenstone belts. The company plans to use Regis’s cash injection to hit the ground hard.
Great Southern’s Duketon tenure covers major strike lengths across three mineralised corridors with significant exploration upside potential. These include 8km of the Erlistoun Trend, 7km along the Garden Well Trend and 11km between Regis’ Rosemont and Ben Hur deposits.
All tenements are close to Regis’ 10 million tonne per annum processing facilities at Garden Well, Moolart Well and Rosemont.
Meanwhile, Great Southern is set to kick off what may be its most exciting drilling campaign yet at its Leichhardt Creek prospect, which is part of the company’s flagship Edinburgh gold and copper project in North Queensland.
The upcoming program will mark the first time deep diamond drilling has targeted this area, where the company suspects a major porphyry or intrusion-related gold system may lie hidden.
The company has partnered with global mining powerhouse Gold Fields Limited, which can earn a 75 per cent stake by investing $15 million over six years. The pair plan to sink three holes up to 800m deep to test two compelling induced polarisation anomalies and uncover the geological truth below. If the drill bit hits its mark, a significant discovery could be just around the corner.
With Regis holding the keys to processing and Great Southern holding the frontier land at Duketon, the strategic alignment may set the stage for the next multi-million-ounce discovery in the hugely endowed greenstone belt.
The region already hosts the massive Gold Fields-owned Granny Smith gold mine, 40km south, and the Ashanti Gold-owned Sunrise Dam gold operations, just a little further south.
Great Southern’s balance sheet just got $4 million stronger, its focus is now sharper and with gold trading at record highs, the company looks cashed up and ready to chase its next big score.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
By James Pearson
