Horizon Minerals will retain financial exposure to 62 tenements within its Kalgoorlie project area in Western Australia despite entering into a binding asset sale agreement for the ground with Northern Star Resources.
According to the deal, Northern Star will pay Horizon $3.1 million in cash, in addition to receiving discovery payments of $20 per ounce for any JORC-compliant mineral resource at the sites – capped at 2 million ounces. The latter will also receive a net smelter royalty of 0.5 per cent on all metals and minerals extracted from the tenements, which include 62 prospecting licences covering more than 10,000 hectares.
Management says the sale will also save Horizon more than $400,000 of annual holding costs, reducing administration time and allowing it to better focus on core projects.
Completion of the deal is expected to take place this month. The company says the tenements have been subject to limited exploration and drilling both historically and under Horizon ownership.
Horizon Minerals chief executive officer Grant Haywood said: “We see this as a sound divestment for Horizon in gaining $3.1m in cash in challenging market conditions. It continues our divestment of non-core assets to consolidate our portfolio and lower overheads. Importantly, we retain upside to any future success on the ground being divested through potentially lucrative deferred cash payments for resource discovery and production.”
The latest deal follows an agreement made in August when Horizon entered into a binding option and sale deed with Dundas Minerals for the former’s Baden Powell/Scotia and Windanya gold projects near Kalgoorlie. The option covers all mineral rights in 16 prospecting licenses, two mining leases and one mining lease application across 3230ha and about 45km north of Kalgoorlie.
Under the terms of that deal, the option provides for Dundas paying Horizon a $500,000 non-refundable option fee. It must pay $375,000 within five days of signing – $125,000 in cash and $250,000 in Dundas shares. The additional $125,000 in cash is payable one year after the execution date.
Dundas must also spend at least $500,000 on ground exploration within two years prior to exercising the option.
Once the option is exercised, Horizon will sell 85 per cent of its interest in the tenements for $1 million in cash, shares or both and will retain a 15 per cent interest free-carried to a decision to mine, when a joint venture (JV) will be formed with Dundas.
Earlier this month, the company acquired two lithium prospects near the famous Greenbushes lithium mine in the State’s South West region. Management says it paid just $75,000 in cash and about $150,000 in shares to a private operator to secure 100 per cent of two prospects – one about 10km to the south-east of Greenbushes and the other some 20km due south of Greenbushes.
However, Horizon says remains firmly focussed on its existing Kalgoorlie assets and advancing the Cannon underground mining development. The Cannon mine is fully-permitted, while final mining contract and JV negotiations are in progress.
The company has agreed to a toll-milling allocation at the 1-million-tonne per annum Greenfields Mill, 3km east of Coolgardie.
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By Michael Philipps
