Star Minerals’ $1.5M Placement Puts Q1 2026 Mining Start on the Line
Star Minerals has raised $1.5 million through a share placement to fund critical drilling and mining approvals at its Tumblegum South Gold Project, aiming for production start in early 2026.
- Placement of 33.3 million shares at $0.045 each to raise $1.5 million
- Funds targeted at western gold extension drilling and mining approvals
- Mining commencement targeted for Q1 2026
- Strong support from strategic, institutional, and sophisticated investors
- Robust project economics with updated production targets amid high gold prices
Capital Injection to Accelerate Development
Star Minerals Limited (ASX – SMS) has successfully secured $1.5 million through a placement of over 33 million new shares priced at 4.5 cents each. This capital raise is designed to propel the company’s flagship Tumblegum South Gold Project in Western Australia towards production, with mining targeted to commence in the first quarter of 2026.
The placement attracted strong backing from both existing shareholders and new institutional and sophisticated investors, underscoring confidence in the project’s potential amid a buoyant gold market. CPS Capital Group acted as lead manager, facilitating the placement and receiving a combination of fees and options as part of the arrangement.
Focused Use of Proceeds
The funds will primarily support two critical activities – extension drilling of the western gold target beyond the proposed open pit and the completion of all necessary mining and milling agreements. These steps are essential to finalise approvals and ensure a smooth transition into mining operations.
Managing Director Ashley Jones highlighted the importance of this funding round, noting that it enables Star Minerals to maintain momentum and capitalise on the favourable gold price environment. The company’s updated scoping study projects a production target ranging from approximately 11,800 to 15,900 ounces of gold, with an estimated cash surplus of up to A$19.6 million before capital costs, reflecting robust economics.
Strategic Partnerships and Approvals
Star Minerals has formalised a memorandum of understanding with MEGA Resources for mine development and mining services, while ResourcesWA has been appointed to manage the mine approvals process. These partnerships are pivotal in navigating regulatory requirements and operational readiness.
The company’s resource base, as updated in May 2023, supports the production targets with indicated and inferred gold resources totaling over 600,000 tonnes at grades averaging around 2.3 grams per tonne. This foundation provides a solid platform for the upcoming drilling and mining phases.
Market and Investor Implications
The placement price reflects a modest discount to recent trading levels, a common feature in capital raises to incentivise participation. While dilution is a consideration for existing shareholders, the strategic use of proceeds aims to enhance the project’s value and deliver operational milestones that could underpin future share price appreciation.
Investors will be watching closely for results from the extension drilling and progress on mining approvals, which will be key indicators of the project’s trajectory towards production and cash flow generation.
Bottom Line?
Star Minerals’ $1.5 million raise sets the stage for critical drilling and approvals, with the market keenly awaiting tangible progress towards gold production.
Questions in the middle?
- What will the upcoming extension drilling reveal about the western gold target’s size and grade?
- How swiftly can Star Minerals secure all mining and milling approvals to meet its Q1 2026 production target?
- What impact will the placement and resulting dilution have on shareholder value in the near term?
