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Horizon Minerals on path to midtier status in tenement swap with Northern Star

Horizon Minerals Ltd.'s ASX stock rose 12% on Sept. 12 after it agreed to swap five tenements for seven of Northern Star Resources Ltd.'s in the historic gold mining towns of Kalgoorlie and Coolgardie which the former's managing director Jon Price says is key to it becoming an emerging mid-tier gold producer.

Horizon's share price had fallen by over 13.7% over the week prior to Sept. 11 after it had to increase its offer for the Coolgardie project and its Three Mile Hill processing plant — key to its aggregation strategy — from Focus Minerals Ltd., which had received a superior offer from a third party.

SNL Image
Horizon Minerals Managing
Director Jon Price.
Source: Horizon Minerals

Price says he is now squarely focused on entering into binding written documentation with Focus on the Coolgardie asset, having announced Sept. 12 the asset swap with Northern Star which should be wrapped up in the fourth quarter of 2019.

Horizon will swap its Anthill, Blister Dam, New Mexico, White Flag and Kanowna North tenements for Northern Star's Rosehill, Brilliant North and Gunga West projects in Coolgardie and the Golden Ridge, Balagundi, Abattoir and Mount Monger projects in Kalgoorlie.

Rosehill, Brilliant North and Gunga West are contiguous to Focus' Coolgardie project. Blue Tiger Mines mined 137,000 tonnes at 1.86 g/t gold for 8,170 ounces at Gunga West in 2013.

Golden Ridge was first developed from 1901 to 1927 when 249,356 tonnes at 17.1 g/t was mined for 139,546 oz to an underground depth of 174 meters.

Little exploration work has been done there since more recent open cut mining at Golden Ridge — now part of the South Kalgoorlie property — from 1998 to 2004 produced 1.78 million tonnes at 1.98 g/t for 113,520 oz, so Horizon will do a more detailed geological review there.

Aggregating goldfields assets then consolidating them into a mining plan through a plant is the same model Price used at Phoenix Gold Ltd., which was taken over by Evolution Mining Ltd. in 2015.

While Price is on the path to similar success with his Phoenix COO Grant Haywood on board Horizon in the same role, Price said the bigger fish in the Australian gold scene looking for reserves replacement would not be interested in Hoziron until it declares reserves when the feasibility study is done by mid-2020.

SNL Image
Geologist David O'Farrell at Horizon Minerals' Teal gold project.
Source: Horizon Minerals

Jewel in the crown

Price said in an interview that Horizon has built "critical mass" in asset consolidation since 2015 to aid its strategy to have around 500,000 oz of reserve and up to 3 million oz of resource with a four- to five-year mine life plan, with visibility out to seven.

The Boorara gold project 10 kilometers from the Kalgoorlie Super Pit will provide base load feed to underpin a mill development, which was the strategy that triggered the merger between Horizon's prior iteration Intermin Resources Ltd. and MacPhersons Resources Ltd.

Though Focus' Coolgardie mill will need refurbishing and restarting, Price described it as the "jewel in the crown" of Horizon's strategy, along with the Brilliant area which is expected to feed it when production is planned to start in 2021 with Boorara and Binduli.

By the time that happens, Price said Horizon expects the gold price to be as high as A$2,300/oz, but is conservatively modelling A$1,800/oz, which delivers a cash margin of A$400/oz to A$500/oz on the operation.

The feasibility study is underway on Boorara, which will become a consolidated study incorporating the other assets Horizon is acquiring.

So at this early stage of studies, Horizon estimates reportable all-in sustaining costs of A$1,300/oz to A$1,400/oz, on an initial estimated production profile of between 40,000 oz to 60,000 oz per annum in the first three years of production.

That production profile climbs to between 90,000 oz to 110,000 oz per annum by the fourth year with the introduction of the underground development, for which capex is currently estimated at around A$25 million to A$30 million.

"The aim now is that the open cut developments and production can deliver sufficient margin to fund the underground, but a lot of work needs to be done between now and then," Price said.

The general understanding in the Australian gold space is that an output of around 100,000 oz per annum with a demonstrated five- to seven-year mine plan ahead of you constitutes being an "emerging midtier gold producer," he said.