A decision made just over a year ago to move to a joint venture strategy in order to leverage growth has launched Star Minerals Group Ltd., a Saskatoon-based diversified exploration company, into a leadership position in the rare metals exploration industry, according to Jim Engdahl, president and CEO of Star Minerals Group Ltd.
Star Minerals primary focus is on the rare metals and technology metals sector. To advance exploration, the company has leveraged the strength and experience of its management, board of directors, and advisors to identify and acquire strategic investments that have the capability to generate cash flow with low capital expenditure costs, Engdahl explains.
“When I took over Star Uranium, one of the directors, Gary Billingsley, and I became interested in joint ventures,” he says. “We have changed the focus of the former company, and Star Minerals will now pursue joint ventures and partners to develop our projects.”
Engdahl’s instinct to steer Star Minerals toward a joint venture strategy was based on experience and a solid track record. Before taking over Star Minerals, Engdahl had served as president, chief executive officer, and director of Great Western Minerals Group (GWMG). During his seven years at the helm of GWMG, the company acquired key assets which positioned GWMG to become one of the first fully integrated rare earth companies in the world, and raised over $150 million for GWMG’s growth. Engdahl resigned these posts in fall 2012, but remains a special consultant to the chief executive officer and board of directors of GWMG.
Hoidas Lake is flagship
With a focus on strategic metals, Star Minerals embarked upon its first joint venture — Hoidas Lake, an advanced rare earth project located within Saskatchewan’s northern mining district.
The Hoidas Lake Rare Earth Project is 100 per cent owned by GWMG, and is one of North America’s most significant primary rare earth element properties currently being developed. With one of the highest proportions of neodymium (Nd) present in any known rare earth deposit, Hoidas Lake is important to the permanent magnet industry. As demand for permanent magnets used in “green” applications, like electric motors in hybrid vehicles and permanent magnet generators in wind turbines increased, it became the driving force behind the rare earth industry.
“Hoidas Lake is our flagship joint venture property,” says Engdahl. “We plan to focus on the battery world; batteries for electric cars, and a battery plant in Tucson, Arizona. We want to become a one-stop shop for battery materials.”
Within its joint venture agreement with GWMG, Star Minerals Group Ltd. has the right to acquire a 25 per cent participating interest in the Hoidas Lake project by financing and completing a Preliminary Economic Assessment Report by January 2016. Upon successfully exercising the first tranche and acquiring a 25 per cent participating interest, Star will have the right to acquire an additional 26 per cent participating interest in the Hoidas Lake project by financing and completing a bankable feasibility study within four years of the acquisition of the initial 25 per cent participating interest, thereby giving Star a 51 per cent ownership interest in the property.
“We expect the Preliminary Economic Assessment Report, which is being completed by Barr Engineering of Minneapolis, to be completed by the end of the year and will be looking for end users to participate in further development of this project,” advises Engdahl.
Gold exploration underway
Star Minerals other interests include gold exploration property in the Seabee gold mining district, diamond properties in the Fort a la Corne region, as well as base metal and uranium properties.
A definitive agreement with the Komberec family from Drummond, Montana to lease certain mineral claims and assume management of the Casey-Snyder placer gold operation near Drummond is another partnership that Star Minerals has undertaken.
The Casey-Snyder property is situated in an historic gold mining area. Since the 1890s, both hard rock and placer gold mining operations have existed in the immediate area of the Casey-Snyder claims, and since the 1980s, small scale placer gold mining has taken place on the Casey-Snyder claims.
“The area was long known for placer gold and the Komberec family, who owned the property for more than 30 years, wanted to make it more commercial,” states Engdahl, adding the property also offers excellent exploration potential to locate an in situ source of the gold as well, and will be pursued through an exploration program presently being planned.
“Star’s core focus of strategic metals is strengthened through the acquisition of the Casey-Snyder placer gold operation,” he suggests. “The operation is a strategic asset that is expected to produce short and long term cash flow to the company to further its core exploration assets. This will enable further progress on acquiring and advancing presently owned or joint venture property in a diversified strategic metals portfolio, while increasing shareholder value in a continuing volatile market environment.”
Experienced, dedicated personnel have been secured to ensure short and long term maximization of the cash flow potential of this low capital cost asset, he points out.
The Komberec family and Star Minerals have begun production, adds Engdahl, noting they will now be able to assess how strategic this operation will be to their overall corporate objectives.
“Our initial goal was to provide in the range of $1 million cash flow per year, and we are optimistic that can be achieved,” he says.
Star Mineral’s diamond interests focus on the Fort à la Corne area, located approximately 65 kilometres northeast of the city of Prince Albert, explains Engdahl. Star Minerals holds a 100 per cent interest in 39 claims and the remaining 10 claims are under 50/50 joint venture with Karoo Exploration Corp.
The target is diamond-bearing kimberlite of the type known to exist in the Fort à la Corne area. Typical examples are the Star and Orion kimberlites currently being developed by Shore Gold Inc.
Partnerships for projects
While Star Minerals joint ventures have focused on rare earth metals, the company is also in negotiations with parties to become partners on existing and future projects, assures Engdahl, pointing to an interest in partnering with companies to pursue such strategic metals as magnesium, graphite, lithium, and cobalt.
“We decided to build a company through developing properties and partnerships,” he concludes. “We have an experienced team of consultants from the exploration world, knowledgeable about developing fully integrated operations. I am confident that we have the expertise to carry out our plans.”