Southern Star heads north

Southern Star Resources (YSO-V) has agreed to earn a 50% stake in the Gold Eagle mine property in the Red Lake gold camp from Exall Resources (EXL-T)

To earn its half-interest, Southern Star must pay Exall $160,000 in cash and issue 3 million shares over 3 years. Southern Star has also agreed to spend $2 million on exploration over 3 years. Once Southern Star fulfills its commitments, the two companies will jointly manage further development of the project.

Southern Star plans to crank up exploration as soon as the deal receives the approval of regulators and both companies’ board of directors.

Southern Star is also responsible for a finder’s fee totalling 125,00 units, each of which comprises one share and a pair of share purchase warrants. Each warrant allows the holder to buy one share for 12 for 2 years. Northfield Capital (YFD.A-V) will receive 350,000 warrants exercisable at 12 for two years in return for backstopping the financing for the first year’s $350,000 work commitment.

A former producer, the Gold Eagle Mine is bounded to the east by Goldcorp‘s (G-T) Cochenour mine and the Red Lake mine to the north. Between 1937 and 1941, the mine churned out around 40,000 oz. of gold from the Gold Eagle vein system using a shaft and winze on 8 levels to a depth of 305 metres. The property has seen little exploration since the cessation of operations.