Horizon Minerals has released positive results from a pre-feasibility study, or PFS, of its Cannon underground gold project. Cannon is projected to generate $10.1m of net cash flow over a 16-month mine life at $2600 per ounce of gold with an all-in sustaining cost of $1873 per ounce forecast in the PFS. Cannon is part of its 1.15-million-ounce Kalgoorlie-Boulder gold resource split over 10 deposits.
Horizon can already fund the $4.3m capital costs and plans an ongoing cash flow with the Cannon underground mine followed by further underground mines Penny’s Find and Rose Hill.
The Cannon PFS shows a mineable ore reserve of 135,000t at 4.1 g/t gold for 17,680 ounces. The PFS anticipates contract mining and transport with ore being toll treated at the nearby Lakewood mill. Testing indicates a 90 per cent recovery, giving a projected gold production of 15,900 ounces during the 16 months. Mining would be conducted from a decline located in the existing open pit mine.
The resource at the Cannon underground project is 226,000 grading 4.4 g/t gold for 32,330 ounces at a cut-off grade of 1.0 g/t gold. Horizon plans surface and underground drilling to test down plunge and along strike where it sees “significant potential for resource growth”.
Horizon expects to make the final development decision for Cannon in the June Quarter of 2022 with first gold production possible as early as the first half of 2023. Cannon sits on an existing mining lease and requires only slight modifications to allow underground mining before production can commence.
Aboriginal heritage survey found no ethnographic sites in the study area.
Flora and fauna studies have not revealed any impediment to the underground mine proceeding.
The PFS anticipates ore will be transported by truck to the Lakewood processing plant where it will be processed over a nine-month period at approximately 15,000t per month.
Metallurgical testing supports ore processing through a conventional crushing, grinding and gravity circuit followed by standard carbon in leach gold extraction. The company said testing and treatment of ore from the Cannon open pit in 2016 and 2017 indicated gold recoveries of 90 per cent are applicable.
The Cannon gold project is located approximately 30km east-southeast of Kalgoorlie. The open pit will need to be dewatered, that is projected to take two months.
Groundwater inflows are 70,000 litres per day and can be managed with conventional pumping techniques. Groundwater not used for mining and processing needs will be pumped to the company’s nearby Golden Ridge pit. The groundwater licence application is pending for the project.
Horizon anticipates a significant contingent of personnel will be sourced from Kalgoorlie-Boulder, with some fly-in-fly-out personnel.
Horizon is continuing toll milling development studies and resource extension and new discovery drilling at its Golden Ridge and Yarmany projects. Testing will include assessing the multi-commodity potential at the projects.
The company has placed the planned consolidated feasibility study on hold citing “significant short-term volatility in capital and operating costs due to labour shortages, materials cost inflation and supply shortages”.
Technical and approvals work continue to ensure limited delays when restarting the consolidated feasibility study and subsequent mine development.
Horizon Minerals Managing Director Jon Price said: “The results of the Cannon underground Pre-Feasibility Study demonstrate the ability to produce solid cash flow of an estimated $10.1 million over five quarters with a proven and relatively low risk operating strategy. We will also continue to evaluate other business development opportunities to facilitate the larger scale development in a lower risk way.”
The company has 1.15m ounces of resources in 10 gold deposits – and bag of mining options – to create cash flow because of the large number of toll treatment options nearby. The Cannon underground mine is projected to return a net $10.1 million.
With an ongoing sequence of projects lined up, the company can develop its mining operations whilst continuing to work towards a larger project to unlock value from its 1.15m ounce resource near Kalgoorlie.
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By Matt Birney
