Horizon Minerals is wasting no time getting the diggers to work at its Phillips Find gold project near Coolgardie in Western Australia following a recent merger with Greenstone Resources.
The company has this morning confirmed that a joint venture (JV) agreement has been finalised with BML Ventures to mine 200,000 of ore, which will be toll treated at the nearby Greenfields Mill during the next 11 months to produce almost 15,000 ounces of gold.
Management is aiming to develop and mine two open pits within the project area, with BML handling all management, excavation, technical, operational and maintenance tasks, while Horizon will provide oversight. The company says the JV structure minimises its financial risk as BML will fund all project costs. Net cash flow, after asset recovery and cost repayment, will be split equally between Horizon and BML.
It is a similar deal to the one BML has at Jeffery’s Find near Kalgoorlie that has netted it and Auric Mining millions of dollars in free cash in the past 18 months.
An existing 200,000-tonne toll milling agreement with FMR Investments at its Greenfields Mill – which had been intended to be used for Horizon’s Cannon underground deposit, 100km to the east – will now be used for processing the ore from Phillips Find.
Mining proposals have been submitted to the Department of Mines, Industry Regulation and Safety (DMIRS) and are currently under assessment. However, Horizon is getting ready for imminent mobilisation and site readiness, with mining expected to start in the September quarter, subject to permit approval.
Grade control drilling is planned to begin shortly in preparation for mining operations, with the first gold production anticipated in December.
Horizon Minerals managing director and chief executive officer Grant Haywood said: “BML will be managing and sole funding the Phillips Find JV, which greatly de-risks the project for Horizon, particularly from a financial perspective. This agreement does not require any capital from Horizon and allows us to keep our focus on our Boorara startup.”
The news to pull the trigger on Phillips Find comes hot on the heels of the company’s recent decision to also mine 1.24 million tonnes of gold ore for 45,800 ounces at its Boorara project. The project, which operates independently of Phillips Find, is producing and ore is being treated at Norton Gold Fields’ Paddington Mill.
Management says it settled on the dual production strategy in a bid to supercharge cash flows from two separate sources at a time of high Australian gold prices that are today hovering at about $3647.
The Phillips Find project spans more than 10km of promising greenstone stratigraphy, including the Phillips Find mining centre that has historically yielded nearly 33,000 ounces of gold from three open-pit operations. The majority of the resource lies within 140m of the surface on granted mining licenses, making it suitable for open-pit mining.
Initial pit optimisations conducted by Greenstone earlier this year revealed significant potential for major cutbacks to the existing Newminster, Newhaven and Bacchus Gift open pits. The pits collectively host a near-surface resource of 732,960 tonnes at a grade of 2.3 grams per tonne gold, totalling 54,360 ounces.
The mining plan involves cutbacks of two of the pits – Newminster and Newhaven – for an 11-month period, utilising a fleet of 120-tonne excavators and 100-tonne rigid dump trucks.
Horizon’s decision to promote Phillips Find for immediate production, however, has come at the cost of mining its Cannon project, which will remain on hold until sufficient cash flow from the company’s other mining activities allows it to sole fund rather than JV the project.
As a high-grade development of 230,000 tonnes at 4.29g/t for 32,000 ounces, the Cannon project is still on management’s priority list and it is on the hunt for a processing partner.
With the high gold price and no upfront costs, Horizon appears to be on a winner with its two-mine strategy. The cash flow from both Boorara and Phillips Find could be substantial and allow it to move quickly onto other cash generators such as Cannon and Burbanks – which it regards as a cornerstone asset, with a 465,000-ounce resource and plenty of exploration upside.
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By James Pearson
