Gold miner St Barbara (ASX: SBM) has agreed to secure a 50% stake in Catalyst Metals’ (ASX: CYL) Drummartin project, which is close to Kirkland Lake Gold’s (ASX: KLA) Fosterville high-grade, low cost mine in Victoria.
The duo has executed an earn-in and joint venture agreement giving St Barbara the ability to acquire 50% of Drummartin by spending at least $3.5 million on advancing the project over two years.
St Barbara may elect to withdraw from the agreement, but it can only do so once it has spent at least $1 million on the project.
Because St Barbara already has a 14% stake in Catalyst, shareholder approval will be sought before the agreement is made official.
Commenting on the joint venture, Catalyst technical director Bruce Kay said it was a continuation of Catalyst’s strategy to share exploration risk and provide the best return on shareholder funds.
He added St Barbara will bring new technical skills to the company’s exploration efforts at Drummartin.
Drummartin gold project
Located about 60km north of the Fosterville gold mine, Drummartin encompasses 648 square kilometres of underexplored land.
According to Catalyst, the exploration licence appears to be on the interpreted northern extension of the Redesdale, Fosterville and Drummartin faults, which are believed to host the Fosterville-style mineralisation.
Kirkland achieved record production at its Fosterville mine during the September quarter due to higher than anticipated grades in the Swan zone.
The mine is tracking to full year 2019 guidance of 570,000-610,000 ounces of gold.
To-date, Catalyst has undertaken limited air core drilling on the western portion of the licence and recently completed a ground gravity survey over one-third of the project.
With St Barbara on board, the duo plans to test the anomalies identified from the gravity survey with air core drilling in the coming year.
As part of the earn-in St Barbara will also refund Catalyst $150,000 it has spent on exploring Drummartin since the beginning of the year.