Horizon Minerals has moved to build further on its mission to become a mid-tier gold producer in Western Australia’s renowned Goldfields region through a proposed merger with Greenstone Resources.
The merger would create a combined entity with a significant landholding containing 1.8 million ounces of gold near a toll treatment mill in the historic WA town of Coolgardie.
The merged entity will be sitting on 939 square kilometres of tenements with a serious in-ground gold resource and further exploration potential in the hallowed turf around Kalgoorlie and Coolgardie – not to mention a cash and investments balance of about $14.9 million.
As part of the deal, Horizon will acquire 100 per cent of Greenstone’s fully-paid ordinary shares, in addition to all of its listed options. Greenstone shareholders will receive 0.2868 Horizon shares for every each share held. There will also be 0.2868 new Horizon options with an exercise price of 8.7c each for every Greenstone listed option held.
Horizon says the exchange ratio represents an 89 per cent premium to Greenstone’s last traded price of 55c on February 9 and a 40 per cent premium to the 30-day volume weighted average price. The completion of the schemes of arrangement is targeted for June this year.
Once the merger is complete, Horizon shareholders will own 63.1 per cent of the merged entity, leaving Greenstone shareholders with the remaining 36.9 per cent.
Horizon Minerals chief executive officer Grant Haywood said: “We believe this proposed merger represents a unique opportunity to build our resource base in the WA Goldfields with higher-grade deposits near established mining and processing infrastructure. This really is a logical consolidation of complementary assets, which creates greater potential for Horizon to unlock the value within our longer project pipeline.”
Haywood said the merger with Greenstone would tighten the company’s focus on its pipeline of near-term mining opportunities following its recent divestment of non-core assets. He said it would also bring greater scale to its baseload assets.
Horizon says the merger is strategic and supports a double-pronged approach focussed on providing low-capital, near-term cashflow to support the development of long-life cornerstone assets.
That cashflow is planned to be driven by combining Horizon’s baseload ore feed with Greenstone’s high-grade resource in an area where gold mining and processing infrastructure is just a stone’s throw away at the FMR Investments toll treatment mill in Coolgardie.
The merged entity, which will continue to trade on the ASX as Horizon Minerals, will have a combined resource of 30.17 million tonnes grading 1.86 grams per tonne for 1.8 million ounces of gold. Of that, Greenstone contributes 520,134 ounces from four projects – the Burbanks open pit and underground operations and Phillips Find open pit and underground.
Horizon says the Burbanks project is the most substantial with 297,649 ounces in its open pit and another 167,918 ounces accessible through underground mining. Burbanks sits on a shear zone of the same name that has historically been the most significant gold-producing structure within the Coolgardie goldfield.
Interestingly, the Burbanks project area has a long history in gold mining dating back to 1885. Between that year and 1961, a total of 444,600 tonnes of ore was mined grading a massive 22.7g/t gold for 324,479 ounces from the first 140m of ground.
Intermittent open pit and underground mining campaigns between the early 1980s to the present day has seen total production from the Burbanks area exceed 420,000 ounces.
Horizon brings 15 projects to the deal and a mineral resource of 23.4 million tonnes at 1.71g/t for 1.282 million ounces of gold. The biggest contributor is the Boorara open pit operation that boasts 448,240 ounces of gold.
Management says the merged entity will have a cornerstone of 914,000 ounces of gold across its combined Boorara and Burbanks projects grading 1.7g/t, providing the potential to support a profitable long-life operation.
Horizon says the combined portfolio represents multiple small mining opportunities with the potential to deliver cashflow through toll treatment to fund growth. It also says exploration opportunities across the portfolio will be addressed by the combined geological knowledge of the newly-formed team.
The news of the new gold entity will be spread this week in Fremantle at the RIU Explorers Conference where Greenstone managing director Chris Hansen will be presenting to the who’s-who of WA’s mining sector tomorrow afternoon.
And with the significant increase in critical mass and scale through the new collaboration, there are likely to be some eager ears listening in.
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By Andrew Duffy
