Horizon Minerals Ltd (ASX:HRZ) plans to merge with fellow ASX-listed gold company Greenstone Resources Ltd (ASX:GSR) to create a new emerging producer in the Kalgoorlie-Coolgardie region of Western Australia’s Goldfields.
The combined group would have a global JORC mineral resource of around 1.8 million ounces as well as an enviable exploration holding centred on the gold mining hubs of Kalgoorlie and Coolgardie.
This proposed transaction would bring together complementary assets with both near-term small mining opportunities and larger baseload deposits with potential to develop into long-life cornerstone operations.
To acquire Greenstone
Schemes of arrangement will see Horizon acquire 100% of the fully paid ordinary shares in Greenstone and 100% of the listed Greenstone options.
Each Greenstone shareholder will receive 0.2868 Horizon shares for every Greenstone share held and
each listed option holder will receive 0.2868 new Horizon listed options for every listed Greenstone option held.
Horizon shareholders will own 63.1% of the merged entity while Greenstone shareholders will own the remaining 36.9%.
The schemes are unanimously recommended by the Greenstone board and each member of the board intends to vote all Greenstone shares they control in favour of the scheme as well as all Greenstone listed options they control.
“Logical consolidation”
Horizon chief executive officer Grant Haywood said: “We believe this proposed merger represents a unique opportunity to build our resource base in the WA Goldfields with higher grade deposits near established mining and processing infrastructure.
"This really is a logical consolidation of complementary assets which creates greater potential for Horizon to unlock the value within our longer project pipeline.
"Following a period where we divested non-core assets and brought greater focus onto a pipeline of smaller, near-term cash-generating mining opportunities, this merger with Greenstone will both add to this near-term pipeline and bring greater scale to our baseload assets with the addition of the high-grade Burbanks deposit.”
Greater market scale
The combined group will be pursuing its growth strategy from a position of greater market scale, underpinned by a cash and listed investments balance of approximately $14.9 million and a lower consolidated cost base.
This transaction will result in a strategic consolidation of Horizon’s and Greenstone’s gold assets in the Kalgoorlie-Coolgardie district, with the merged group to have a combined landholding of 939 square kilometres.
The combination of Horizon’s baseload feed with Greenstone’s high-grade resources will be situated amongst a wealth of regional gold mining and processing infrastructure.
There is a strong pipeline of advanced brownfield exploration targets, JORC mineral resource growth opportunities and potential future production sources while the large landholding also presents greenfield exploration opportunities across multiple commodities.
About Greenstone
Greenstone Resources owns the high-grade Burbanks Gold Project just 9 kilometres southeast of Coolgardie.
Burbanks was initially discovered in 1885 and has seen intermittent open pit and underground production over the past century totalling more than 420,000 ounces at 10.9 g/t Au from largely the upper 140 metres, including 180,000 ounces at 27.4 g/t.
Despite this shallow and high-grade production, the Burbanks Mining Centre has seen limited exploration over the preceding decades, with the previous focus having been on small-scale and near-term cash flow opportunities, resulting in limited or no exploration below 250 metres along the 5-kilometre strike of the Burbanks Shear Zone.
Total indicated and inferred mineral resources for Burbanks are 1.2 million tonnes at 3.7 g/t for 145,700 ounces.
The merged entity’s cornerstone Boorara and Burbanks assets have a combined resource inventory of 914,000 ounces at 1.7 g/t with potential to support a profitable long-life operation.
Dual-track strategy
This proposed transaction supports a dual-track strategy, focused on low-capital and near-term cashflow to support the development of long-life cornerstone assets.
It builds critical mass in support of Horizon’s aspirational goal of becoming a producer while the combined geological knowledge of the region will facilitate an optimised exploration program prioritising standout targets across the group’s portfolio.
“Strong alignment”
Greenstone’s managing director & CEO Chris Hansen said: “There is strong alignment between Greenstone’s strategy and that of Horizon, which is one of the core pillars underpinning this regional consolidation.
"Together we have greater capability to deliver on near-term cashflow generation which provides a stepping-stone to delivering a longer-life, cornerstone operations fitting for an emerging mid-tier producer.
"Through the combination of our teams, we are also able to bring all the necessary skillsets at a Board and senior management level which will enable us to achieve our ambitions.
"When put together, the merged entity will be in a much stronger position to deliver value for both sets of shareholders.”
Board changes
Upon implementation of the schemes, Horizon’s CEO Grant Haywood will assume the role of managing director and CEO and join the board of the merged entity
Horizon non-executive director Peter Bilbe has indicated his intention to step down from the board on implementation of the schemes.
In these circumstances, Greenstone has been invited to nominate a director to the board and current managing director and CEO Chris Hansen will replace Bilbe as a non-executive director.
Horizon’s current CFO and company secretary Julian Tambyrajah will continue in his roles.
Following these upcoming changes on implementation of the schemes, the Horizon board and executive management will consist of:
- Ashok Parekh as non-executive chairman;
- Grant Haywood as managing director and CEO;
- Jon Price as non-executive director;
- Chris Hanson as non-executive director;
- Julian Tambyrajah as CFO and company secretary; and
- Glenn Poole as chief geologist.
Completion of the schemes is targeted for June 2024 and the schemes remain subject to various customary closing conditions.
Post implementation, the merged entity will continue to trade as Horizon Minerals Ltd under the ticker ASX:HRZ.