The Supreme Court of Western Australia has given the much-anticipated $30 million scheme of arrangement between Kalgoorlie-based Horizon Minerals and Poseidon Nickel the final tick of approval.
The deal paves the way for Horizon to pick up Poseidon's 422,000-tonne contained nickel resource grading 1 per cent, its 18,300 tonnes of copper, 7800 tonnes of cobalt and the mothballed Black Swan nickel processing plant 40km east of Kalgoorlie which the company says would cost $150 million to replace.
Horizon recently revealed it had issued 213 million new shares at 4.5 cent a share in a strategic placement to Golden Crane Holdings to raise $9.625 million in fresh equity.
The company has stated that the new funds would go towards further project development and potentially debt retirement. If, however, Horizon wants to deliver on plans to do its own gold processing - the main reason for its latest acquisition – it will also need to deploy some capital on refurbishing the front end of Poseidon's plant and installing gold processing facilities at the back end to make it fit for use.
With the court’s endorsement locked in, the scheme will take full legal effect once the court orders are lodged with the Australian Securities and Investments Commission, expected by Monday.
At record-high gold prices, currently trading just shy of A$4600 per ounce, Horizon is intent on making hay while the golden sun shines. The company has moved ahead with toll treatment plans at its Boorara deposit directly south of the Kalgoorlie Super Pit and Phillips Find just outside Coolgardie in Western Australia.
Boorara hosts a resource of 1.24 million tonnes of ore grading 1.24 grams per tonne (g/t) for 49,500 ounces of gold. Hamptons Transport has been signed up by the company to run the mining operations at site while Norton Gold Fields’ nearby Paddington plant has been commissioned to process the ore over the next year.
Horizon estimates the operation could generate as much as $30 million in revenue over that period, even at a conservative gold price of AU$3,600 per ounce. With gold currently sitting at a near-record AU$4,600 per ounce, the potential for even higher returns is significant.
At Phillips Find, Horizon is shovel-ready, with contractors BML Ventures currently on site preparing to mine and remove ore from two open pits. BML has also locked in a contract to process the mineralised dirt at FMR Investments-owned Greenfields Mill near Coolgardie.
Similar to Auric Mining’s deal with the mining contractor at its nearby Jeffreys Find deposit, Horizon’s agreement with BML at Phillips Find appears a low-risk play, placing all project costs, management and operational responsibilities on BML’s shoulders, while splitting net profits before tax down the middle.
The plans take over Poseidon bear all the signs of a company-making move for Horizon. In little more than 12 months and helped along by a healthy dose of rampant gold prices rises, the company has gone from being a junior explorer to toll treating two mines and buying a processing plant, putting it well on the path to becoming a key producer in the gold-rich Kalgoorlie region of Western Australia.
Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au
