Taking advantage of the strong gold price and an opportunity to generate cashflows, Horizon Minerals Ltd (ASX:HRZ) has entered a binding ore sale agreement with Paddington Gold Pty Ltd, a subsidiary of Norton Gold Fields Ltd, to treat 1.4 million tonnes of ore from Horizon’s Boorara Gold Project at the Paddington Mill.
Horizon will arrange contract mining and hauling of the ore from Boorara for ore processing at the 3.8 million tonnes per annum Paddington Mill, which is around 56 kilometres by road from Boorara in Western Australia.
Under the agreement, the 1.4 million tonnes of Boorara ore will be processed at the mill over a 22-month period, commencing in the September 2024 quarter.
Summing up the opportunity, Horizon Minerals CEO Grant Haywood said: “This is a great opportunity for Horizon to generate strong cashflows 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.”
Next steps
Last mining occurred at the Boorara Gold Project in 2020 and the project remains fully environmentally permitted and ready for development, which is expected to recommence within the current quarter.
The company has engaged AMC Consultants and undertaken preliminary work on Boorara with the goal of estimating an ore reserve later this quarter, based on the tonnage going to Paddington, including forecast economics for the ore processing agreement.
Horizon continues to engage with mining and haulage contractors to finalise tenders for Boorara and award contracts, which is also expected during the current quarter.
Also on the company’s to-do list, is finalising the 200,000 tonnes mill allocation with FMR Investments’ Greenfields mill with an executed Toll Milling Contract to support mining at the Cannon Gold Project.
Horizon is also working to complete the proposed merger with Greenstone Resources to enhance the long-term production profile with development-ready high-grade projects.
Horizon’s project locations, regional geology and surrounding infrastructure.
Ore sale agreement explained
Horizon highlighted the competitive ore treatment rates under the ore sale agreement and explained the payment structure, as follows:
- Within five days of delivering ore to the Paddington ROM pad, Paddington to pay Horizon 50% of gross revenue less estimated processing costs and royalties, based on the determined grade for each stockpile.
- The gross revenue will be calculated based on the Perth Mint spot price on the date of gold pours.
- Within five days of Paddington fully treating the stockpile, the final revenue to Horizon will be calculated based on the determined grade, moisture and metallurgical recovery, less agreed costs for processing and state gold royalty payments.
- Stockpiles to be between 10,000 tonnes to 50,000 tonnes from a combination of oxide, transitional and fresh sources, with Paddington having the right to reject any stockpile that does not meet specifications.
- The agreed amount represents less than 15% of the current Boorara mineral resource of 11 million tonnes at 1.26 g/t gold for 448,240 ounces. This amount can be increased or decreased by mutual agreement.
Read more on Proactive Investors AU
