- Kalamazoo Resources (KZR) has bought Northern Star Resources' (NST) Ashburton Gold Project for a deferred contingent cash consideration of $17.5 million
- Northern Star claims the project no longer fits its portfolio
- However, it has agreed to receive a two per cent Net Smelter Royalty on the first 250,000 ounces of gold produced
- Ashburton is located in the Pilbara region of WA and has a mineral resource estimate of 20.8 million tonnes at 2.5g/t gold for 1.65 million ounces
- Kalamazoo has strategically gathered an experienced exploration team to kickstart exploration
- Ultimately, the company hopes to make new discoveries and increase the 1.65 million ounce gold resource
- Shares have soared 49.5 per cent just before market close and trading at 72.5 cents each
Kalamazoo Resources (KZR) has bought Northern Star Resources' (NST) Ashburton Gold Project for a deferred contingent cash consideration of $17.5 million.
Northern Star announced the acquisition yesterday claiming the Ashburton Gold Project "no longer fits" in its portfolio.
Ashburton is located on the southern edge of the Pilbara Craton in Western Australia. Between 1998 and 2004, Ashburton produced around 350,000 ounces of gold.
The project's Mineral Resource estimate currently sits at 20.8 million tonnes at 2.5g/t gold for 1.65 million ounces.
It covers 217 square kilometres and comprises the Mt Olympus, Zeus, Peake and Waugh deposits.
While ASX 200-lister, Northern Star, considers the project to be somewhat a throw-away, Kalamazoo believes it's an important addition to its Pilbara gold assets.
"We are delighted to have acquired this major exploration project with its 1.65Moz gold resource from Northern Star," Kalamazoo Chairman and CEO Luke Reinehr said.
"This is a tremendous outcome for our shareholders and an outstanding addition to our prospective portfolio of gold projects in the Pilbara," Luke added.
Even though Northern Star has sold the project, it's still aware of the exploration and production potential, which is why it has chosen to retain some of the benefits.
Northern Star will get a two per cent net smelter royalty (NSR) on the first 250,000 ounces of gold produced, with a 0.75 NSR on any subsequent gold that is produced from the tenements. The same NSR's apply on any other metals produced from the tenements.
Additionally, Kalamazoo will need to pay its fellow miner $5 million on mining of the first 250,000 tonnes of ore.
Kalamazoo is eager to kickstart exploration and development and has strategically engaged an experienced exploration team.
The company's technical committee includes Paul Adams, Exploration Manager Dr Luke Mortimer and Novo Resources' Chairman Dr Quinton Hennigh. This committee will provide technical oversight of exploration at Ashburton.
Paul Adams was the Managing Director of ASX-listed Spectrum Metals (SPX) and played a key role in the discovery at Penny West. During his leadership, the gold resources increased from 36,000 ounces to 355,500 ounces in just 12 months.
"I am delighted to now have the opportunity of leading our first-class exploration team at Kalamazoo as we look to develop this project further," Director Paul Adams said.
Kalamazoo has also engaged Damien Keys, a geologist with 20 years' experience in mining and exploration.
First and foremost, Kalamazoo will conduct exploration activities at the Ashburton Gold Project to make new discoveries, increase the 1.65 million ounce oxide and sulphide gold resource, and advance development.
Kalamazoo's shares have soared 49.5 per cent just before market close and trading at 72.5 cents each.