Horizon Minerals has inked a toll milling agreement with FMR Investments to process 200,000 tonnes of gold ore from its Cannon underground mine at the Greenfields Mill near Coolgardie in Western Australia.
The binding agreement comes alive in December, with Horizon arranging contract mining and the 67km haulage of ore to Greenfields by road. Milling is expected to take up to eight months to complete.
Horizon has only recently affirmed its objective to develop its near-term production opportunities from its bevy of projects centred around the historic Kalgoorlie-Coolgardie region. An early cab off the rank was its well-advanced Cannon underground operation that contains an indicated and inferred resource of 226,000 tonnes going 4.4 grams per tonne gold for 32,330 ounces.
Management says it has all of the required environmental permits for Cannon and pre-production is already underway, including the dewatering of the open pit in preparation for underground mining.
The new Cannon agreement comes just a week after Horizon entered into a separate ore sale agreement with the Norton Gold Fields-owned Paddington Gold to treat 1.4 million tonnes of ore from its Boorara project at the 3.8 million tonnes per year Paddington Mill, 35km north of Kalgoorlie. Horizon had flagged earlier this month it was evaluating contract mining and toll treatment for Boorara as a possible pathway to early development.
Horizon Minerals chief executive officer Grant Haywood said: “This (Cannon) agreement is in addition to our 1.4Mt ore sale agreement with Paddington announced a week ago. Together this will see us generating cash flow from two fronts in this fantastic gold price environment before the end of 2024.”
Haywood was referring to the raging Australian gold price that was today still sitting at about $3566 an ounce.
In line with the Cannon deal, Horizon will also arrange contract mining of Boorara and the 57km ore haulage to the Paddington run of mine (ROM) pad by road for a 22-month processing period scheduled to kick off in the September quarter. The agreed amount comprises less than 15 per cent of Horizon’s total estimated resource of 11 million tonnes grading 1.26g/t gold for 448,240 ounces at Boorara.
Within five days of the ore being delivered to the ROM pad Paddington will pay Horizon 50 per cent of the gross revenue based on the determined grade for each stockpile and the Perth Mint spot price on the date of the gold pours, minus estimated processing costs and royalties. That arrangement should give Horizon an early cash flow and some assurance that any bumps in future price fluctuations will be ironed out, while it retains all the upside.
The company is examining possible longer-term leaching pathways for an extended operation at Boorara and has also rebooted evaluation of its bigger plans for the deposit, employing a possible combination of heap leach and carbon-in-leach (CIL) processing pathways that it believes have the potential for strong cash flows.
Horizon has also kicked off a prefeasibility study (PFS) on its next envisaged underground development at Penny’s Find, which contains an indicated and inferred resource of 429,000 tonnes running 4.57g/t gold for 63,000 ounces.
In addition to the $12 million the company has on hand, its kitty is in good shape after the recent sale of its Vox Royalty shares for $2.93 million – a position further bolstered by the initial $4 million it received from Vox when it elected to complete the deal via the share package instead of a further cash consideration.
Horizon now has mining in sight and a small tsunami of gold bars is likely to follow before the end of the year, coupled with the further potential for the Penny’s Find development to also take flight and with possible bigger works also in the pipeline at Boorara.
With a gold price that does not look like it will be going significantly south any time soon, due in no small part to assorted geopolitical tensions around the globe, Horizon appears to be timing its development run well.
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