Horizon Minerals Ltd (ASX:HRZ) has revealed positive economic results from its pre-feasibility study of the Cannon underground gold project near Kalgoorlie-Boulder in Western Australia.
The results include:
- Maiden Ore Reserve of 135,000 tonnes grading 4.1g/t gold for 17,680 ounces
- Underground decline development from a portal within the historical open pit
- Ore processing at the Lakewood toll mill at 90% recovery produces 15,900 ounces
- Upfront capital costs of A$4.3 million
- AISC (all-in sustaining cost) of A$1,873/oz using contract mining and haulage
- Generates net cash flow of A$10.1 million over 16-month life at A$2,600/ounce
Horizon has also identified the potential for resource growth down plunge and along strike on the Cannon shear zone with further drilling planned from both surface and underground drilling locations.
The development decision for Cannon is expected in the June Quarter of 2022 with the potential for the first gold production in the first half of 2023.
While the Cannon underground gold project has been prioritised for development, the Penny’s Find and Rose Hill underground projects are under assessment for potential sequential development.
Meanwhile, the consolidated feasibility study for the Boorara Project has been placed on hold due to significant short-term volatility in capital and operating costs due to labour shortages, materials cost inflation and supply shortages
“Opportunity to monetise low tonnage high grade assets”
Following the release of the pre-feasibility study results, Horizon managing director Jon Price said: “We commenced the consolidated Feasibility Study for a standalone development centred around our baseload Boorara project near Kalgoorlie at the onset of the global pandemic.
“Our team and our potential contracting partners and suppliers have done an excellent job in managing the operating challenges and we have continued to run our business without interruption.
“Unfortunately, we’ve seen inflation and volatility in cost estimates increase materially since the second half of last year to a point where we now believe too much risk and potential for value destruction exists making it reckless to pursue a large-scale development in such an uncertain operating environment.
“We are fortunate to have a +1.1 million ounce resource within close proximity to the mining centre of Kalgoorlie-Boulder which provides significant opportunity and flexibility.
“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.
“The results of the Cannon underground Pre-Feasibility Study demonstrate the ability to produce solid cash flow of an estimated $10.1 million over five quarters with a proven and relatively low risk operating strategy.”
Summary of PFS key outcomes.
Price added: “By maintaining our technical and approval workstreams for the consolidated development we retain the ability to quickly update and finalise the feasibility work when more predictability returns to the cost, labour and material supply environment.
“We will also continue to evaluate other business development opportunities to facilitate the larger scale development in a lower risk way.
“We now look forward to continuing our drilling program and advancing the project to a development decision in coming months, completing mining studies on Penny’s Find and Rose Hill to deliver a potential sequence of underground projects and testing the depth and strike extensions at Cannon.”