Horizon Minerals has fired the starting gun on its second gold mine in as many months by kicking off ore processing at its Phillips Find gold project, 45 kilometres northwest of Coolgardie in Western Australia.
Mining of cutbacks at the company’s existing Newminster and Newhaven pits is now well underway, with more than 800,000 cubic metres of material already sitting on the run of mine pad ready for trucking.
The first batch of 40,000 tonnes from Phillips Find has been loaded for transport to the nearby FMR Investments-owned Greenfields mill, with two-week turnaround processing set to begin next week.
Horizon has teamed up with mining specialists BML Ventures under a joint venture agreement to develop and mine the two open pits at Phillips Find. Under the agreement, BML is covering all the project costs upfront.
The mining contractor is also managing all the project’s operational, technical and maintenance aspects to streamline a cost-efficient mining campaign under Horizon’s watchful eye.
The move to optimise output while keeping capital expenditures low is a strategic approach that will allow Horizon to ride out fluctuating market conditions. Net cash flow, after cost recovery, will be split equally between the two partners.
Horizon Minerals managing director and chief executive officer Grant Haywood said: “We are very pleased to be transporting our first ore from Phillips Find for treatment at the Greenfields mill. With operations fully staffed and progressing well, we look forward to our first gold production.”
With the gold price on a tear, up 45 per cent in the last year to its current level of US$2889 (A$4586) per ounce, the rush is on among junior gold miners without processing infrastructure to lock in toll milling deals with their local mills.
Horizon had the foresight to lock in a 200,000t toll milling agreement with FMR Investments nine months ago, guaranteeing the company a reliable processing route for Phillips Find ore.
With haulage of the initial stockpile underway, the first gold pour and subsequent revenue generation are less than a month away.
The joint venture’s immediate focus is to process the first ore batch and generate enough cash from gold sales to cover the upfront expenditure, operational costs and working capital before Horizon and BML can start equally divvying up the profits.
Just two months ago Horizon pulled the trigger to start mining its 49,500 ounce Boorara gold deposit directly south of Kalgoorlie’s fabled super pit.
Using Hamptons Transport as its mining contractor, the company plans to shift 1.24 million tonnes of ore grading 1.24 grams per tonne gold in a 14- month period from four open pits. Horizon celebrated its first pour four weeks ago.
Boorara was initially expected to generate $30 million in free cashflow at $3600 per ounce gold, however, with today’s price marching past $4500 per ounce, the scene is set for a significant uplift in financial returns.
Not satisfied with resting on its laurels, the company has tabled a solid set of numbers from a prefeasibility study into its Pennys Find gold play, 50km northeast of Kalgoorlie in the WA Goldfields.
Pennys Find has a forecast production of 33,500 ounces from 239,000t of ore grading 3.2g/t, which Horizon estimates will generate a free cash flow of $24m at a gold price of $3600 per ounce over 23 months.
To complete a period of frenzied activity, Horizon also closed out an all-scrip takeover of Kalgoorlie-based nickel miner Poseidon Nickel at the start of this week, which was valued at $30m.
The deal delivered a resource of 422,000t in contained metal running at a grade of 1 per cent. More importantly, it came with the mothballed operational Black Swan nickel processing plant Horizon says would otherwise cost $150m to replace.
To deliver on the company’s plans to process its own gold – which was the main reason for its latest acquisition – Horizon plans to spend some money 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 current high gold price environment, Horizon has the gold bit well and truly between its teeth with two gold mines up and running, a third on its way and a plant refurbishment in the pipeline.
The old idiom of “making hay while the sun shines” has never seemed truer than when referring to Horizon’s dreams of becoming a key player in the Western Australian gold mining scene.
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By James Pearson
