Brightstar Resources signs $4m equity for drilling deal with Topdrill

Brightstar Resources executes a $4m drill for equity agreement with drill contractor Topdrill
The company will be able to pay up to 50% of future drilling costs by issuing shares
+30,000m multi-rig RC and diamond programs continue at pace

Special Report: Drill contractor Topdrill has demonstrated its belief in Brightstar Resources’ prospects by executing a major $4m drill for equity agreement that adds to a previous $1m deal.

Under the agreement, up to 50% of the costs of future drilling services provided by Topdrill can be paid in shares of Brightstar Resources (ASX:BTR) to a cap of $4m.

This will cornerstone the company’s multi-drill rig exploration program to aggressively advance the consolidated Sandstone project following the completion of transactions with Alto Metals (ASX:AME) and Gateway Mining (ASX:GML).

It follows on Topdrill agreeing in early August to take up $1m in BTR shares as payment for drill costs and further enhances the company’s financial capacity to deliver on its multi-hub exploration and development strategy.

“We are pleased to expand materially upon the strong relationship with Topdrill and the existing drill-for-equity agreement, which aligns with our strategic ambition of partnering with tier 1 industry partners as we seek to genuinely build a WA-focused gold exploration, development and production business in a rising gold price environment,” managing director Alex Rovira said.

“The significant investment offers a cost-effective approach to enhance our aggressive exploration plans across Brightstar’s growing gold project portfolio and demonstrates Topdrill’s confidence in Brightstar’s team, Brightstar’s assets and development plan of organically growing gold production to become a material, multi-asset producer in Western Australia.

“It is fantastic to see Topdrill’s commitment to not only Brightstar, but a number of emerging ASX-listed WA gold exploration companies with promising projects.

“This funding assistance, against the backdrop of continuing challenging equity capital markets, to effectively enable companies to drill more holes and discover more gold, is great to see and has a meaningful benefit to the junior exploration sector.”

The deal also came the same day as Brightstar announced the reallocation of a $4m second tranche equity placement, expected to part-fund commitments in its merger with Sandstone gold explorer Alto Metals (ASX:AME) to local and international institutional investors.

Hedley Widdup’s Lion Selection Group (ASX:LSX) will notably take up $1.5m of the reallocation to take its total commitment in the offer to $5.8m, marking Brightstar as one of the respected Aussie fund manager’s largest investments with a 6.1% stake in the gold developer.

Drilling underway

BTR’s current +30,000m reverse circulation and diamond drilling program across its Menzies and Laverton assets in WA is expected to be completed in September.

Results from the infill and extensional drilling will be used in future resource estimate upgrades and also feed into the company’s definitive feasibility study that is currently underway.

The company is also in the process of acquiring AME and the gold rights to Gateway Mining’s Montague East project, which will essentially sew up the Sandstone district and build the foundation for a third gold production hub.

AME’s Sandstone project covers ~900km2, which represents the vast majority of the historical Archaean Sandstone Goldfield ~600km north of Perth while Montague East already has a resource of 526,000oz of gold.

On completion of these transactions, BTR plans to mobilise a drill rig for infill and extensional drilling across the Gum Creek and Sandstone properties to advance them meaningfully towards mining studies and ultimate commercialisation of their significant mineral resource endowment.

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.