Horizon Minerals is on the path to generating its first cashflows from mining its Boorara gold deposit in Western Australia after entering a binding ore sale agreement with the Norton Gold Fields-owned Paddington Gold for the treatment of 1.4 million tonnes of ore at the Paddington mill.
The mill sits about 35km north of the historic gold mining city of Kalgoorlie, 595km east/north-east of Perth. The agreement will start in the next quarter and run for 22 months, with the mill sitting about 56km by road from Boorara.
Within five days of the ore being delivered to the Paddington gold ROM (run-of-mine), Horizon will receive 50 per cent of gross revenue based on the anticipated grade of the ore, less processing costs and State gold royalties.
The company will receive its remaining payment for the ore within five days of treatment, with the amount to be determined by grade, metallurgical recoveries and moisture content and again, minus processing costs and gold royalty payments.
Management will be responsible for arranging all mining and haulage contracting and says it has appointed a consulting firm to undertake preliminary work before progressing its required ore reserve study under the JORC (2012) code that forms part of the agreement. The prompt receipt of cash in two stages from its Boorara ore will greatly assist the company’s cash flow for those financial commitments.
Horizon Minerals chief executive officer Grant Haywood said: “This is a great opportunity for Horizon to generate strong cash flows in this high gold price environment and takes us further down our pathway to sustained gold production. We continue to work on our other projects to bring additional near-term cashflow into the production pipeline, along with the additional resources and optionality of projects to come through our proposed merger with Greenstone Resources.”
Management says the agreed level of ore to be treated is less than 15 per cent of its total Boorara resource that sits at 11 million tonnes grading 1.26 grams per tonne gold for 448,240 ounces.
The agreement also provides for stockpiles of between 10,000 and 50,000 tonnes of a combination of oxide, transitional and fresh material to be supplied for treatment, with Horizon needing to prove that all mining permits and approvals, in addition to mining and haulage contracts, are in place within 45 business days.
It already has all environmental permits in place for Boorara.
Horizon is currently engaged with potential mining and haulage contractors and says that development at Boorara is expected to start this quarter.
Its near-term plans include completion of its proposed merger with Greenstone Resources, which it believes will improve its long-term production profile. It is also looking to proceed with 200,000 tonne of ore being delivered to FMR Investments’ Greenfield mill for processing, to kick off mining at its underground Cannon gold project.
The company has many gold deposits in the Kalgoorlie region, with the majority in proximity to and surrounding Northern Star Resources’ renowned Super Pit project that has produced about 13 million ounces of gold in the past two decades – on all sides. Horizon’s total resources from its deposits comprise 23.22 million tonnes at 1.69g/t for 1.262 million ounces of gold.
Gold has been a stellar performer this year, reaching its highest ever price per ounce, helped greatly by continued central bank buying and driven by geopolitical risk over concerns fuelled by several serious conflicts playing out around the world.
But with Horizon now starting to develop some of its promising deposits and sitting on the cusp of securing another 500,000 ounces from its Greenstone merger, the wheel seems to be turning in its favour at the right time, with gold at record high prices.
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By Craig Nolan
