Horizon Minerals Ltd (ASX:HRZ) has successfully secured debt and equity funding for a total of $6 million for development of the Boorara Stage 1 gold project and an accelerated resource growth and exploration drilling program.
The funding comprises a $4 million working capital facility for Boorara Stage 1 mine development and a $2 million equity placement to new and existing institutional and sophisticated investors both in Australia and overseas - in addition to the company’s current cash reserve of $2.2 million.
Horizon managing director Jon Price said: “A balance of debt and equity in these extremely volatile market conditions minimises dilution to our shareholders while enabling the company to bring Boorara into production rapidly to capitalise on the high Australian dollar gold price, accelerate a resource growth and exploration drilling program and complete the feasibility study in 2020.”
Working capital facility
Formal documentation for the working capital has been executed with German investment company Sparta AG, which is associated with DELPHI Unternehmensberatung AG.
Price said: “We welcome Sparta AG as a new international strategic financier and thank all other new and existing domestic and international institutions and sophisticated investors for their support as we move into a very exciting growth phase for the company in a world class gold producing region.”
The key terms of the working capital facility reflected in the formal documents include:
- Provision of a $4 million facility secured by a first ranking mining mortgage over the Boorara Gold Mine
- Upon registration of the mining mortgage at the Department of Mines, the loan may be drawn down as a single borrowing within one month
- Repayment/maturity date is 18 March 2021 and Horizon may elect to repay early without penalty
- Interest rate of 20% per annum calculated quarterly and payable on maturity
Funds from the facility will be used as a working capital cash buffer for the development of the initial stage of the Boorara gold mine to effectively manage cash flow from the planned commencement of mining in the June Quarter to first gold production and revenue in the September Quarter 2020.
Horizon’s gold project locations
Placement details
The placement consists of 25 million new fully paid ordinary shares to be issued at a price of 8 cents per share to raise a total of $2 million, representing an 8% premium to the last closing price as at 10 March 2020.
Proceeds from the placement and existing cash reserves will be used for the accelerated reserve conversion and resource growth exploration drilling program which will commence early in the June Quarter 2020 and will be incorporated into the consolidated feasibility study which is due for completion in the December Quarter 2020.
New discovery drilling will also be conducted across the portfolio.
Next steps
The company is now fully funded with Board approval expected in coming weeks to bring Boorara Stage 1 into production for cash generation in 2020.
Horizon will also complete the consolidated feasibility study evaluating all advanced open cut and underground development projects to deliver a robust four to five year mine plan and underpinning a standalone processing plant at Boorara.