Key Highlights

  • Star Minerals Limited (ASX:SMS) announced a binding 24-month ore purchase agreement with Forrestania Resources Limited (ASX:FRS) on 22 October 2026, covering the purchase and processing of up to 400,000 tonnes of gold-bearing material from Tumblegum South.
  • Approximately 84,000 tonnes of mineralised material had been stockpiled at Tumblegum South, with initial haulage to the Edna May processing facility scheduled to commence on 23 October 2026 in batches of at least 50,000 tonnes.
  • Star Minerals Limited (ASX:SMS) reported AUD 1.46 million in cash at 30 September 2026, compared with AUD 2.10 million at 30 June 2026, while its reported funding runway stood at approximately 2.09 quarters.

Star Minerals Limited (ASX:SMS) is an Australian-listed gold exploration and development company focused on its Tumblegum South Gold Project near Meekatharra in Western Australia. On 22 October 2026, the company announced a binding ore purchase agreement with Forrestania Resources Limited (ASX:FRS), establishing a commercial pathway for processing gold-bearing material from Tumblegum South at the Edna May gold plant. The agreement covers up to 400,000 tonnes of material over 24 months and follows the accumulation of approximately 84,000 tonnes of stockpiled ore. Although the arrangement creates a potential source of operating revenue, actual proceeds will depend on delivered grades, processing performance and the agreement's commercial terms.

What Does the New Ore Purchase Agreement Mean for Star Minerals Limited (ASX:SMS)?

Star Minerals Limited (ASX:SMS) entered into a binding ore purchase agreement with Forrestania Resources Limited (ASX:FRS) to facilitate the sale and processing of gold-bearing material from Tumblegum South. The agreement is effective immediately, contains no conditions precedent and establishes a 24-month framework under which Forrestania may purchase and process up to 400,000 tonnes of ore.

Under the arrangement, mineralised material will be transported from the Tumblegum South mine to Forrestania's Edna May processing facility in Western Australia. Forrestania is responsible for arranging and funding haulage, while Star Minerals will pay a one-off plant access fee of AUD 50,000.

The agreement also provides Forrestania with exclusive rights to purchase qualifying Tumblegum South ore that meets a specified minimum gold grade during the contract period. This creates an established commercial arrangement for the project's material, although the maximum contracted quantity does not represent a guaranteed purchase volume.

For Star Minerals Limited (ASX:SMS), the agreement provides a potential route to generate proceeds from mined material without developing a dedicated processing facility.

How Will Ore Transportation and Processing Work?

The ore purchase agreement provides for transportation and processing campaigns involving minimum batches of approximately 50,000 tonnes. Initial haulage was scheduled to commence on 23 October 2026, with material to be transported from Tumblegum South to the Edna May processing plant.

At the time of the announcement, approximately 84,000 tonnes of mineralised material had accumulated on the Tumblegum South run-of-mine pad. The existing stockpile provides sufficient material for an initial delivery campaign, subject to grade requirements, operational scheduling and the other conditions of the agreement.

Forrestania Resources Limited (ASX:FRS) will coordinate the haulage arrangements and associated transportation expenditure. This reduces Star Minerals Limited's (ASX:SMS) direct exposure to haulage costs under the contract, although the overall commercial outcome will still depend on the ore purchase pricing mechanism.

The arrangement also allows Star to use established processing infrastructure rather than incur the capital expenditure associated with constructing and commissioning its own gold treatment facility.

However, scheduled haulage should not be confused with confirmed processing or gold sales. The company must still demonstrate that delivered material meets the required specifications and is processed under the agreed commercial arrangements.

How Will Star Minerals Limited (ASX:SMS) Receive Revenue From Gold Ore?

The agreement uses a formula-based pricing mechanism rather than a fixed payment for each tonne of material delivered. The calculation incorporates ore grade, prevailing gold prices, processing costs and assumed metallurgical recovery, meaning the eventual financial outcome will vary with the characteristics of the material supplied.

The commercial framework includes a benchmark gold grade of approximately 1.45 grams per tonne and a maximum recovery assumption of 94%. Treatment charges and other contractual parameters are also incorporated into the pricing formula.

Consequently, the actual gold content of delivered ore will be an important determinant of the revenue that Star Minerals Limited (ASX:SMS) may receive. Material containing lower grades than anticipated could result in reduced proceeds, while differences between estimated and recovered gold may also influence payment calculations.

The company has not publicly disclosed all pricing inputs, including the exact treatment charges and contractual gold price assumptions. As a result, the total financial value of the 400,000-tonne agreement cannot be reliably calculated from the announced information alone.

What Is the Current Mining Status at Tumblegum South?

Tumblegum South is located approximately 40 kilometres south of Meekatharra within Western Australia's Murchison region. The project operates under a Right to Mine arrangement involving Star Minerals Limited (ASX:SMS) and mining contractor MEGA Resources, with the relevant commercial arrangements providing for profit sharing after recovery of specified costs.

Mining activities during 2026 focused on developing the open pit and extracting mineralised material for stockpiling ahead of processing. In its September 2026 quarterly activities report, Star confirmed that mining had been paused after excavation reached approximately the 445-metre reduced level.

The company indicated that stockpiled material was awaiting transportation to an available processing facility. The Forrestania agreement therefore addresses an important operational requirement by establishing a pathway for material already extracted from the mine.

However, the commencement of ore processing remains subject to transportation schedules, plant availability and the performance of the delivered material. Future mining activity will also depend on technical evaluations and the economics of recovering additional gold-bearing material.

What Does the Tumblegum South Mineral Resource Indicate?

Star Minerals Limited (ASX:SMS) has reported a Mineral Resource estimate for Tumblegum South of approximately 616,000 tonnes grading 2.28 grams per tonne gold, equivalent to around 45,000 ounces of contained gold.

The resource includes an Indicated component of approximately 337,000 tonnes grading 2.52 grams per tonne gold, representing roughly 27,000 ounces. The remaining material is classified as Inferred, reflecting a lower level of geological confidence.

These estimates provide the geological basis for the project's mining and development assessments. However, no Ore Reserve has been declared, and the reported Mineral Resource should not be treated as a guaranteed quantity of economically recoverable gold.

The difference between estimated resource grades and the actual grades of mined material will be particularly important under the new ore purchase agreement. Grade reconciliation, ore losses and dilution may affect the quantity of payable gold ultimately recovered from processing.

How Does the Agreement Compare With Existing Processing Arrangements?

Before announcing the Forrestania agreement, Star Minerals Limited (ASX:SMS) had established a gold milling arrangement with Catalyst Metals Limited (ASX:CYL) involving potential processing of approximately 250,000 tonnes of Tumblegum South material at the Plutonic processing facility.

The new agreement with Forrestania Resources Limited (ASX:FRS) introduces another commercial processing arrangement, this time involving Edna May. The two agreements provide different potential routes for processing mineralised material, although their precise interaction has not been fully clarified in the company's available disclosures.

The Forrestania contract includes specific terms relating to qualifying ore, exclusivity and the maximum quantity that can be purchased during the 24-month period. These provisions will be relevant when assessing how the company allocates future material between processing arrangements.

Although multiple agreements may provide operational alternatives, the company remains dependent on third-party processing infrastructure. Plant scheduling, processing capacity and contractual terms will therefore influence the timing and economics of future gold sales.

What Does the Merredin Gold Project Add to the Portfolio?

Alongside Tumblegum South, Star Minerals Limited (ASX:SMS) holds the Merredin Gold Project in Western Australia's wheatbelt region. The project covers approximately 219 square kilometres of exploration tenure and is located around 30 kilometres from the Edna May processing facility.

Merredin provides an additional gold exploration opportunity beyond the company's existing Tumblegum South resource. Its proximity to established processing infrastructure may become relevant if future exploration identifies mineralisation suitable for development.

However, the project remains at an early exploration stage. Star Minerals Limited (ASX:SMS) has been progressing land access investigations, including Indigenous Land Use Agreement considerations and engagement with relevant landholders.

Further geological assessment and exploration will be required before the company can establish whether Merredin contains a Mineral Resource or offers a commercially viable source of gold-bearing material.

The existing ore purchase agreement concerns Tumblegum South and should not be interpreted as an agreement to process any future ore from Merredin.

What Do Star Minerals Limited's (ASX:SMS) FY26 Financial Results Show?

Star Minerals Limited (ASX:SMS) reported a net loss after tax of AUD 2.39 million for FY26, compared with AUD 1.90 million in FY25. The increase reflected the company's development activities, corporate expenditure and costs associated with progressing Tumblegum South toward potential gold production.

Cash and cash equivalents stood at approximately AUD 2.10 million at 30 June 2026. By 30 September 2026, the balance had declined to approximately AUD 1.46 million, reflecting continued operating expenditure during the quarter.

The September 2026 quarterly cash flow report recorded net operating cash outflows of approximately AUD 698,000. Based on the company's reported expenditure and available cash, estimated funding coverage was approximately 2.09 quarters.

These figures indicate that the company's available working capital remains limited relative to the potential requirements of continued mining, grade-control drilling and project development.

Although the ore purchase agreement creates a potential source of operating receipts, the timing and value of those receipts remain dependent on successful ore delivery, processing and commercial settlement.

What Are the Main Commercial and Development Risks?

Star Minerals Limited (ASX:SMS) faces several uncertainties as it progresses toward generating revenue from Tumblegum South. The ore purchase agreement provides access to processing infrastructure, but it does not guarantee the delivery of the full 400,000 tonnes or establish the final financial value of the material supplied.

Ore grade is a particularly important consideration because the pricing formula incorporates delivered grade, gold recovery and treatment costs. Differences between estimated and actual grades could affect proceeds, while metallurgical recovery below the contractual maximum may also influence the outcome.

The company remains dependent on third-party processing facilities and the scheduling of ore treatment campaigns. Delays in transportation or plant availability could affect the timing of commercial receipts.

Financially, Star's reported September cash balance indicates that expenditure and funding requirements will remain relevant until meaningful operating receipts are established. The company's FY26 financial statements also identified material uncertainty regarding its ability to continue as a going concern without sufficient future funding.

What Are the Next Milestones for Star Minerals Limited (ASX:SMS)?

The immediate operational milestone for Star Minerals Limited (ASX:SMS) is the transportation and processing of its existing Tumblegum South ore stockpile under the Forrestania agreement. The company had scheduled initial haulage for 23 October 2026, with the first processing campaign expected to provide information about delivered grades, metallurgical recovery and the commercial value of the material.

Confirmation of processed tonnes and gold sales will be important for determining whether the agreement begins generating meaningful operating receipts. The company will also need to reconcile processing results against its geological estimates and mine production records.

At Tumblegum South, further technical work includes a planned 50-hole, approximately 2,500-metre grade-control drilling programme. The programme is intended to improve geological confidence in the remaining open-pit material and assess potential opportunities for additional mining.

Future quarterly financial disclosures will provide information about cash movements, operating expenditure and any proceeds associated with gold ore sales. These developments will help clarify the project's financial contribution and the company's capacity to continue its exploration and development activities.