WA-focused explorer Horizon Minerals has executed a binding term sheet with US-based resources financer, Nebari Partners LLC, for a US$5 million senior secured credit facility to develop the company’s Cannon gold project in WA. The funding agreement comes hot on the heels of Horizon’s A$300,000- sale of its Kangaroo Hill and Phoenix gold projects to Greenstone Resources earlier this month as it looks to lean down and focus on the more-advanced assets in its portfolio.
The credit facility is comprised of two tranches with US$2 million in the first and US$3 million in the second.
In addition, the company has executed a deed of variation with private company, Aurenne Cannon for deferred payment of the Cannon gold project acquisition. As per the terms of the deed, $500,000 has been paid with a final $2 million payable by December 31 – inclusive of a deferred payment fee of $100,000.
Proceeds from the newly secured funding facility will be used to settle the $2.1 million deferred payment to Aurenne and contribute to the upfront capital costs of the proposed Cannon underground mine. A pre-feasibility study into the development of an underground operation at Cannon tabled in March demonstrated positive economic results under a contract mining and toll milling model.
The study found the operation could generate a net free cash flow of $10.1 million over a 16-month mine life at an Australian gold price of $2600 per ounce whilst requiring a capital investment of just $4.3 million.
Horizon continues to advance the project with regulatory approvals and tender review the main focus and a development decision expected in the March quarter of 2023 once approvals are granted.
It also plans to utilise the contract and toll milling model to forge ahead with a sequence of underground developments with its Cannon, Penny’s Find and Rose Hill assets all under evaluation. Using the model, Horizon aims to generate cash to support the large-scale exploration program and future mine developments across the company’s core assets in Kalgoorlie and Coolgardie.
The spot price of the precious yellow metal appeared to show signs of life in early October after climbing to a 30-day high of US$1726 per ounce on October 4, having bounced from a two-year low of US$1621 only a few weeks earlier. More recently however, the spot price has tracked south again back to around US$1650 per ounce – a far cry from the US$2502 high hit a mere seven months ago.
No doubt there are panhandlers all over the world hoping the early October surprise for the gold price was not just a dead-cat bounce.
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By Matt Birney
