Western Australian gold producer Black Cat Syndicate has entered into a binding heads of agreement and ore purchase agreement with Dreadnought Resources to develop and process ore from the high-grade Star of Mangaroon openpit gold deposit.

Star of Mangaroon, located about 330 km south-west of Black Cat’s Paulsens gold operation, is expected to deliver 93 000 t at 8.3 g/t gold for 24 000 oz over a one-year mine life, according to a recent upgraded scoping study completed by Dreadnought. The study estimated A$78.2-million in operating cash flow after capital and tax at an all-in sustaining cost of A$2 020/oz.

Under the terms of the deal, Black Cat will manage contractors and fund up to A$10-million for mine development and ore haulage. Any development spend above that threshold will be shared equally between the partners. Up to 110 000 t of ore will be processed at Paulsens under the ore purchase agreement.

Surplus project cash flow will be split 50:50 between the companies for the first A$80-million, shifting to 70% for Dreadnought and 30% for Black Cat thereafter. Dreadnought will also receive advance payments equal to 5% of revenue, net of processing costs, from each processing campaign until the project turns cash-flow positive.

Black Cat has also secured first rights over any future mining opportunities around Star of Mangaroon and a right to match third-party offers for Dreadnought’s tenements in the area.

MD Gareth Solly said the project would provide high-grade feed to Paulsens, allowing the operation to prioritise higher-margin production while stockpiling lower-grade material for later treatment. “The high-grade feed will allow Paulsens to preferentially treat high-grade ore from the Paulsens underground while stockpiling lower grade material, increasing total gold production in the short to medium term,” he said.

Black Cat owns about 202.5-million Dreadnought shares and the companies share the same chairperson, who abstained from voting in line with Black Cat’s conflict-management policies.

Key next steps include Dreadnought securing all approvals by April 30, followed by Black Cat executing mining contracts within 60 days. Mine planning and integration with the Paulsens processing strategy are already under way.