Brightstar is shooting for gold with attractive DFS for Menzies and Laverton

• Brightstar Resources’ DFS for Menzies and Laverton projects pre-tax NPV of $316m and IRR of 73%
• Staged development provides clear, low-cost pathway to becoming a mid-tier gold producer
• Company has also flagged non-binding terms to acquire Aurumin to consolidate Sandstone assets

Special Report: Brightstar Resources has unveiled a highly anticipated definitive feasibility study for its Menzies and Laverton gold projects in Western Australia, charting a path directly to Australia’s class of mid-tier gold producers.

Under the spot gold price scenario of $5000/oz, the two projects are expected to jointly deliver undiscounted pre-tax cash flow of $461m and return a net present value and internal rate of return of $316m and 73% respectively.

The economics remain attractive at a conservative base case gold price scenario ($4500/oz) with the projects expected to generate cash flow of $316m with NPV and IRR of $203m and 48% respectively.

Peak capex under the spot gold price scenario is estimated at a modest $120m with a payback of just one year from commissioning of a planned 1Mtpa processing plant at Laverton.

Brightstar Resources’ (ASX:BTR) staged DFS estimates an initial mine production target of ~6.4Mt grading 1.81g/t gold, or the recovery of 338,528oz of gold over about five years.

This is underpinned by a newly declared open pit ore reserve of 4Mt at 1.63g/t, or 210,500oz of contained gold, that complements the existing underground ore reserve of 24,000oz at the Second Fortune and Fish mines in the Laverton hub.

However, the DFS assumptions exclude any material from these two underground mines.

Average recovered ounces are expected to be ~70,000oz per annum though the company believes there is strong potential to increase mine life with continued exploration of existing resources of +1.5Moz.

Along with the final investment decision for Sandstone, which is targeted for 2027, this supports the company’s goal of producing 200,000ozpa by 2029.

The DFS comes as the company embarks on merger discussions with Aurumin (ASX:AUN) to consolidate their respective tenement holdings in the Central Sandstone region, which will de-risk and potentially accelerate development of the Sandstone project.

The compelling combination will provide greater certainty for the development of new infrastructure in the region and unlock exploration synergies.

A consolidated Sandstone project grow BTR’s total resources in the overlooked gold field to 2.4Moz gold at an average grade of 1.5g/t on granted mining licences.

Clear pathway

Managing director Alex Rovira said the Laverton and Menzies DFS outlines a robust and clear pathway to building BTR into a meaningful mid-tier gold miner with average production of about 70kozpa for five years.

“Importantly, Brightstar has the vision that the gold production from Menzies and Laverton outlined in the study is targeted to provide the organic free cash flow required to develop the significant Sandstone gold project in the coming years, underpinning our aspiration of building a +200,000oz per annum gold production business,” he added.

“We have identified and will execute on a staged development plan to deliver the optimal outcome when considering capital requirements and operational risk management, which commences at Menzies with the near-term development of the Lady Shenton open pit.

“This staged approach to developing multiple mines across Menzies and Laverton generates capital to expand the business, which includes the construction of a new 1Mtpa CIL processing plant in a highly strategic location south-east of Laverton, utilising the significant benefits of existing infrastructure and permitting.”

Support in place

BTR has already received letters of intent and term sheets from multiple domestic and offshore commercial banks, as well as demonstrable interest from non-bank lenders for debt financing support account for ~70% of the capital requirements.

It has also received a non-binding term sheet from an offshore precious metals specialist investment company for a material $120m funding package comprised of a gold doré offtake and equity financing at a premium.

Additionally, the company could ramp-up production in the near-term under a memorandum of understanding with Paddington Gold, which owns the Paddington processing plant north of Kalgoorlie.

Under the MoU, both companies are advancing towards a binding agreement for BTR to sell up to 2Mt of ore from the Menzies gold project from H1 2026 over a period of 2.5 years.

This will add to the current Laverton ore purchase agreement for the delivery, sale and processing of up to 500,000t of ore from the Second Fortune and Fish mines to Genesis Minerals’ (ASX:GMD) Laverton mill over 2025 and Q1 2026.

Development plans

Under the DFS, BTR plans to construct a new 1Mtpa processing plant in Laverton on the existing processing plant site, which will deliver significant capital and timetable saving by using existing infrastructure and permits.

Initial production from come from the Menzies project in 2026 with processing through the targeted agreement with Paddington.

Ore will be sourced from the Lady Shenton open pit and ancillary adjacent open pits such as Aspacia, Lady Harriet and Link Zone.

Material from the Yunndaga underground mine will be processed through the planned Laverton processing plant, which is expected to come online in 2027.

This will also process ore from the Lord Byron and Cork Tree Well open pits and the Alpha underground mine.

Separately BTR’s move to acquire Aurumin will see the latter’s shareholders receive one new BTR share for every 4.6 AUN shares they hold under the non-binding indicative terms for a scheme of arrangement.

Based on the 20-day volume weighted average price of 54c per BTR share, this implies a value of 11.7c for each AUN share, or a 26% premium to their 20-day VWAP of 9.3c.

Both companies have held a number of discussions and are currently progressing mutual due diligence investigations.

This article was developed in collaboration with Brightstar Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.