Union Star Metals (ASX:USM) has entered a binding option agreement with Lionex Metals Group to divest its Kalgoorlie Gold Project in Western Australia.
The agreement offers Lionex an exclusive option to wholly acquire the Kalgoorlie Gold Project for a total consideration of up to $890,000.
This includes a $30,000 non-refundable option fee, $270,000 upon exercise of the option, and up to $570,000 in milestone payments.
Milestone payments will be linked to the definition of a JORC-compliant resource estimate.
The option period will last three months, with an extension fee of $20,000 to extend the agreement by another three months.
Union Star CEO Lucas Stanfield says the agreement represents “another important milestone in our strategy of rationalising non-core Australian assets”, while the company focuses its capital and management efforts on the US gold portfolio.
“The proceeds strengthen our balance sheet as we continue advancing Cobb Creek toward becoming a drill-ready project later this year, subject to permitting,” Stanfield says.
“At the same time, we retain meaningful upside through the milestone payments should Lionex successfully advance the Kalgoorlie Project.ˮ
Funds will be used to advance the Cobb Creek Project in Nevada, US, where the company is currently conducting permitting and exploration activities.
Union Star intends to begin a maiden drilling campaign at Cobb Creek later this year, after obtaining the necessary approvals.
The Cobb Creek Project is Union Star’s flagship asset, located on the Independence Trend in northern Nevada, immediately north of Western Exploration‘s (CVE:WEX) Aura Project and south of First Majestic Silver‘s (NYSE:AG) Jerritt Canyon Gold Mine.
The project lies within one of the world’s most prolific gold provinces, where the Carlin, Battle Mountain–Eureka, and Independence trends collectively host more than 150 million ounces of gold in production and defined resources.
As reported by Mining.com.au last month, Nevada is home to gold-rich geology which led gold production for the US in 2021, with the state alone producing 4.5 million troy ounces of gold, accounting for 74% of gold produced in the country that year.
Union Star Metals is a precious metals exploration company focused on building a portfolio of gold and silver assets in the US.
Write to Maddison Elliott at Mining.com.au
Images: Unsplash
