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Northern Star will pay Alchemy $A1.45 million for the Hermes project, which has a 212,000 ounce gold resource.

Hermes is around 70km by road to Plutonic and can provide additional near-surface mill feed.

Production from Hermes of between 70,000oz and 90,000oz will be subject to a 1% net smelter return.

Plutonic was acquired from Barrick Gold last year and is Northern Star’s highest-cost mine, producing 17,381oz gold at all-in sustaining costs of $1787 per ounce in the December quarter.

But Northern Star is going through a heavy investment phase at the mine to ensure its future.

As part of the deal, Northern Star will also farm-in to parts of Alchemy’s Bryah Basin project, excluding areas under a separate joint venture with Independence Group, by spending $400,000 per year over three years.

The tenements include the Wilgeena gold deposit, which has an indicated resource of 87,000oz gold.

The resources are only JORC 2004, so Northern Star will immediately start work to bring the numbers in line with JORC 2012 standards, as well as expand the resources.

Northern Star will also acquire $500,000 worth of Alchemy shares at 1.5c per share to take a 15% stake and the right to appoint a board member.

Alchemy said Northern Star also intended to introduce the company to projects which may not fit Northern Star’s business model.

“Northern Star is a fast-growing, highly profitable Australian gold company with a market capitalisation in excess of $1 billion,” Alchemy chairman Oscar Asmodt said.

“Alchemy is very pleased to have attracted the support of Northern Star, both to help unlock the gold potential of the Bryah Basin project through the access to their processing plant at Plutonic, and to secure new opportunities to grow the company.”

Alchemy shares jumped 17% to 2c, while Northern Star shares rose 1% to $2.10.