Australian miner Northern Star Resources has reached a A$61m ($40.7m) deal to acquire Strickland Metals’ 100%-owned Millrose gold project.

Millrose project is located south of Strickland’s Horse Well gold resources and next to the Yandal East project in Western Australia.

The 600km² project has nine exploration licences and one mining lease application. There has been minimal exploration at the site for the past 15 years.

Strickland claims that the project has a mineral resource of six million tonnes (mt) at 1.8 grams per tonne (g/t) of gold for 346,000oz. The inferred resources at the mine comprise 5.77mt at 1.4g/t for 257,000oz.

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The consideration for the transaction includes a A$41m cash element, of which A$2m will be paid immediately and the remaining A$39m upon closing is scheduled within 30 days.

Northern Star will also issue 1.5 million shares to Strickland as consideration on closing, which is subject to one-year escrow.

If the deal is not completed, the initial deposit amount will be converted into a loan and repaid within 30 days from the date of termination.

Strickland purchased the project for A$10m in mid-2021.

After conducting a drilling campaign last year at a cost of A$16m, the project is now being sold for around A$61m, for a profit of A$35m.

Strickland CEO Andrew Bray said: “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.

“We are confident of advancing and upgrading a number of additional gold prospects along strike to a standard similar to Millrose. Horse Well, Cowza and several other prospects will be the immediate focus of upcoming gold exploration programmes. The company will also be able to expedite some exploration programmes around the highly encouraging Iroquois base metal discovery.”

Strickland plans to use the proceeds from the transaction to undertake large-scale reverse circulation drilling and diamond drill programmes at its Horse Well project, the Cowza prospect within the Yandal East project and the Dusk til Dawn project.