Horizon Minerals Ltd (ASX:HRZ) has extended its near-term gold production strategy on signing a binding Toll Milling Agreement (TMA) with FMR Investments Pty Ltd (FMR) to treat 200,000 tonnes of ore from the Cannon underground project starting later this year.
The TMA, which will see ore processed at FMR’s Greenfields Mill northeast of Coolgardie and 30 kilometres southwest of Kalgoorlie-Boulder in Western Australia, follows a TMA last week with Paddington mill for 1.4 million tonnes of ore.
200,000 tonnes to be processed
Horizon will arrange contract mining and hauling of ore from Cannon for ore processing at FMR’s 1 million tonnes per annum Greenfields Mill, 67 kilometres by road from the Cannon Project.
This will see 200,000 tonnes of ore processed over a period of eight months and starting in the December quarter of this year.
Chief executive officer Grant Haywood said: “We are very pleased to have converted our 200,000 tonnes allocation with FMR into a formal Toll Milling Agreement and look forward to working closely with them as ore deliveries will commence later this calendar year.
In addition to Paddington agreement
“This agreement is in addition to our 1.4 million tonnes 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.”
Horizon’s project locations, regional geology and surrounding infrastructure.
An ore reserve for Cannon has been established including forecast economics for the ore to be processed via a TMA.
Horizon said the TMA with FMR contained competitive ore treatment rates with the following payment structure:
- Horizon is responsible for delivery of each stockpile to the Greenfields Mill ROM near Coolgardie.
- Payment of processing costs must be made before the value of the processed and refined gold at the Perth Mint is transferred from FMR’s metal account to Horizon.
- If the delivery schedule is missed Horizon will forfeit its allocated tonnes for that month and from the overall 200,000-tonne allocation.
The TMA has flexibility that Horizon can treat Horizon ore other than Cannon, including Horizon’s own current resources or those acquired through the proposed merger with Greenstone Resources, provided sufficient notice is provided to FMR.
Next steps
The Cannon project is fully environmentally permitted and was last mined in 2017. Horizon has pre-production activities underway, including dewatering of the open pit in preparation for underground mining.
AMC Consultants has been engaged and is undertaking a review of the Cannon ore reserve with the revised key financial outcomes to be put forward during the current quarter.
Horizon is also engaging with underground mining and haulage contractors in order to finalise tenders for Cannon.
The company is working to complete the proposed merger with Greenstone Resources to enhance its long-term production profile with development-ready high-grade projects.