Horizon pours first gold from second cash cow project in WA

Horizon Minerals has poured its first gold bar from ore mined at the company’s Phillips Find project amid a strong gold price environment, which has seen the precious yellow metal rise by more than 11 per cent this year to touch a stellar US$2925 (A$4605) per ounce. 

The Phillips Find ore was hauled to the nearby Greenfields mill from the project that sits 45 kilometres west of Coolgardie, near the famous gold mining town of Kalgoorlie.

Horizon entered a toll milling agreement with mill owner FMR Investments to process 200,000 tonnes of ore across the next four months. The Greenfields mill is about 50km east of Phillips Find.

Processing of the first stockpile of ore estimated at 40,000t began on February 19. The ore is expected to be processed across the next two weeks.

The company’s mining and processing campaign is anticipated to produce almost 15,000 ounces of gold.

Horizon approved the development of Phillips Find last August and executed a joint venture agreement with specialist private mining firm BML Ventures to develop and mine two open pits.

Management says the cutbacks at its Newhaven and Newminster pits are tracking well and that Horizon is building a further stockpile scheduled for processing in April. Under the milling agreement, BML is covering all the project’s upfront costs and managing all its operational, technical and maintenance aspects.

The joint venture partners are aiming for a cost-efficient mining campaign timed to cash in on the sky-high gold price, particularly when converted to Aussie dollars. Net cash flow, after cost recovery, is to be split equally between the two partners.

Management will be eagerly awaiting the first payment from the initial processing campaign, which should amount to a substantial cash injection to Horizon’s coffers in the coming months.

When the processing is completed and reconciled, the company will provide details on the tonnes milled and the accompanying grade, the gold ounces produced, and the average gold price achieved for the first campaign.

Horizon Minerals managing director and chief executive officer Grant Haywood said: “The first gold pour from Phillips Find marks another significant milestone for our team and stakeholders. This follows pouring our first gold bars and receiving revenue from our Boorara gold project last month. We are excited to build on this success as we continue ramping up production at Phillips Find and Boorara to generate value in a very high gold price environment.”

Horizon’s first gold bars from ore at its Boorara project were generated under an ore sale agreement revealed last year with Norton Gold Fields’ Paddington mill. 

The company entered into the ore sale agreement with Norton for 1.24 million tonnes of material from Boorara to be processed across 18 months, after revealing details of a tie-in with Kalgoorlie firm Hamptons Transport. 

The contract with Hamptons is expected to comprise mining of four open pits at Boorara, containing 1.24mt of ore grading 1.24 grams per tonne (g/t) gold for 49,500 ounces.

When the news of the link-up with Hamptons was revealed, the project was expected to generate $30 million in expected free cash flow at $3600 per ounce gold. However, with today’s local gold price exceeding $4600 per ounce, the project is set for a significant increase in returns.

Management struck an impressive deal on the mining services and load-and-haul contracts with no payments to Hamptons required until the first gold pour has been sold and the sale proceeds are in the bank.

Boorara sits adjacent to Northern Star’s mammoth Super Pit mine at Kalgoorlie, which has produced more than 60m ounces of gold.

Horizon cleverly got the jump on most of its competitors with its toll milling agreement and there is now a groundswell of support for this cash-generation approach by junior goldies that lack their own infrastructure.

Last week it implemented a merger with Poseidon Nickel, which provides Horizon with access to Poseidon’s mothballed mining plant. This may present the company with a future opportunity to scale up and commercialise its collection of gold deposits scattered around the Goldfields region.

Horizon has recently joined the nation’s gold-producing club at a time when the price of the precious yellow metal is booming. Added to that, it has an opportunity to replicate a similar toll-treating arrangement at its other deposits after Phillips Find and Boorara bring home the bacon.

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au