Union Star Metals has executed a binding option agreement with Lionex Metals Group for the potential sale of the Kalgoorlie Gold Project in Western Australia.

The total potential consideration for the transaction is around A$890,000.

Under the terms disclosed, Union Star Metals will receive a non-refundable option fee of A$30,000 from Lionex once the agreement is completed.

If Lionex exercises the option, a further A$270,000 payment will be made, in addition to up to A$570,000 in milestone payments linked to the Joint Ore Reserves Committee Mineral Resources definition.

The agreement gives Lionex an exclusive right to acquire the project, contingent upon a number of conditions precedent.

The conditions include Lionex exercising the option and the transfer of any existing royalty obligations where applicable.

It also requires any necessary approvals under the Australian Securities Exchange Listing Rules, which may include shareholder approval, along with other customary completion requirements.

Proceeds from the option agreement are intended to strengthen Union Star Metals’ balance sheet and help fund further work at its Cobb Creek Gold Project in Nevada, US.

Union Star Metals CEO Lucas Stanfield said: “This transaction represents another important milestone in our strategy of rationalising non-core Australian assets and focusing our capital and management effort on our 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.”

The Cobb Creek project is located in a highly productive gold region that includes the Carlin, Battle Mountain-Eureka and Independence trends, which together account for well over 150 million ounces of gold from production and defined resources.

The company is continuing permitting and exploration there, with the aim of starting its first drilling programme later this year, subject to receiving all required approvals.