Horizon to pick up quick $6m from toll treating near Kalgoorlie
Horizon Minerals has developed a plan to bank between $2.8m and $5.8m over 8 months from toll treating the gold from its Boorara project near Kalgoorlie. A feasibility study suggests that open pit mining and toll milling of Horizon’s Regal, Crown Jewel and Royal deposits would only cost a paltry $440k in upfront capital costs and Horizon is looking to toll treat the ore at Golden Mile Milling’s Lakewood plant just 7km to the West.
Horizon said it should produce $2.8m in free cash over 8 months, even if the gold price drops from A$2350 down as low as $2000 in that period.
However, the ASX-listed company, said it would bank as much as $5.8m if today’s gold price holds over the initial 8-month mining period.
Horizon has recently completed over 18,000m of grade control drilling across the Regal, Crown Jewel and Royal, all of which are within cooee of Kalgoorlie’s famous super pit gold mine.
Horizon is now looking to cash in on the current strong gold price with it plans appearing to be well advanced for operations to commence later in 2020.
Trial mining and toll milling activities conducted by Horizon in 2016 have been integrated with the recent grade control drill results to produce a feasibility study that offers robust economics for the cluster of deposits that are located only 10km east of Kalgoorlie and only 7km east of Golden Mile Milling’s plant.
The point of Horizon’s preliminary work was to show that it could mine pockets of ore at considerably higher grades than the 0.99 grams per tonne global resource grade at the broader project.
The stage one development of these deposits will extract 159,000t at a fully diluted grade of 1.86 grams per tonne gold for 9,500 contained ounces over an eight month mine life. Toll milling at 91.0% metallurgical recovery is expected to produce 8,700oz of recovered gold, according to the company’s feasibility study.
Management said that it had executed an agreement for ore processing with Golden Mile at its 1Mtpa Lakewood mill and Horizon also said that the statutory approvals process is well advanced. Management expects to make a final development decision in this quarter with mining operations commencing in the June quarter and toll milling in the September quarter.
Horizon Managing Director, Jonathan Price said: "The Boorara Stage 1 Feasibility Study has delivered robust economic results with strong projected cash margins and significantly reduced geological risk with grade control drilling completed ahead of a decision to mine. As with the successful Teal gold mine, the Company has taken a conservative approach to both resource estimation and mine development parameters, adopting conservative cut- off grades, dilution and ore recovery to reduce risk and underpin strong future cash generation.”
“The key drivers for developing Stage 1 of Boorara are to leverage off the current high gold prices to generate cash and to de-risk the larger scale development by confirming the tonnage and grade uplift demonstrated by the infill drilling and previous mining and milling reconciliations.”
All in sustaining costs per ounce to produce are showing at A$1684 per ounce in eth feasibility study at a relatively respectable stripping ratio of 5.5 to 1.
It appears this dynamic mid-tier player is continuing to deliver against its strategic plans with over 1Moz gold resources now on the books, A$8M of cash and investments to draw on and projects at various stages of exploration and development.
Horizon has a proven track record of early, staged developments with phases 1and 2 of the Teal project now complete, having generated a quick A$7M in cash from its initial mine development. Boorara is clearly the next cab off the rank and will represent a coming together of the strategy envisaged by both the Horizon board and the McPhersons board last year when the two companies agreed to merge.
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Horizon Minerals (HRZ)
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