In a move that will facilitate the next phase of work at the Cannon underground gold mine, Horizon Minerals Ltd (ASX:HRZ) is clear to draw down US$3 million in funding to expedite development.
The Perth-based gold stock met all conditions precedent to secure the cash injection, which will kickstart underground development at its WA Goldfields asset later this year.
Horizon has all necessary endorsements in tow to support Cannon’s development, including a government-approved mining proposal and mine closure plan, a groundwater licence and works approval for dewatering and pipeline construction.
All cashed up
Back in November last year, Horizon struck a loan agreement and general security deed with US-based fund manager Nebari Partners LLC, minting a US$5 million funding facility.
The loan was split into two tranches — a US$2 million stipend (drawn down in November 2022) that helped Horizon defer payment and complete the Cannon project acquisition and the US$3 million tranche that Horizon has now received.
Incoming Horizon CEO Grant Haywood said the company was pleased to receive the funding on “competitive commercial terms”.
“This now leaves Horizon with the startup capital and approvals needed to advance the Cannon gold project into development and production in the second half of 2023.”
The funding further bolsters the bank balance after Horizon completed a A$3.34 raise in March 2023, earmarking cash for Cannon and its Penny’s Find drilling campaign.
Putting strategy in place
As part of its mission to become WA’s next standalone gold producer, Horizon weighed Cannon’s best development scenarios in a March 2022 pre-feasibility study.
Leveraging a maiden 135,000-tonne ore reserve (weighing in at 4.1 g/t for 17,680 ounces), the company set its sights on an underground mine that would monetise Cannon’s low-tonnage, high-grade gold bounty.
At the time, managing director Jon Price said Cannon would generate A$10.1 million in cashflow over a 16-month mine life.
“Our location gives us the opportunity to monetise low tonnage high-grade assets through a contract mining and toll milling model as we have done successfully in the past.”
Accelerating development
In June 2022, Horizon shook hands with FMR Investments and gained access to its greenfields toll mill in Coolgardie, clearing the course to treat 200,000 tonnes of ore from 2023.
This deal sparked a partnership between the two companies, with formal mining processing contract and joint venture negotiations officially underway.
Amid the talks, the Horizon board is gearing up for a final investment decision at Cannon — activity that will pave the way for formal development later this year.
Ultimately, however, Cannon is just one in a sequence of WA mines that the gold stock hopes to transform into high-grade, low-tonnage assets, leveraging nearby infrastructure to monetise the gold via toll milling.
Other underground projects include the Penny’s Find and Rose Hill assets — both of which are under evaluation.
Capitalising on robust gold prices, Horizon remains focused on translating its JORC resources into continuous cash flow so it can further its large-scale exploration and mine development vision.