Western Australian gold explorer and producer Horizon Minerals (ASX:HRZ) is selling off a string of non-core assets to listed mining giant Northern Star Resources (ASX:NST) for $3.1 million cash.
Horizon, which has a $21.73 million market capitalisation, plans to divest 62 prospecting licences covering more than 10,000 hectares east of Kalgoorlie under an asset sale agreement and royalty deed.
On top of the $3.1 million cash payment, Northern Star will issue deferred payments of $20 per ounce for any mineral resource located on the tenements, capped at 2 million ounces, and grant Horizon a net smelter royalty of 0.5% on all metals and minerals extracted from the tenements.
Horizon says once it’s rid of the non-core tenure, it will save more than $400,000 per year in holding costs and have a greater ability to focus on its core projects, which include the gold-producing, 507,000-ounce Boorara Project just 10km east of the Kalgoorlie superpit.
The asset sale agreement is unconditional, and Horizon expects the deal to be completed before the end of the month.
According to Horizon, the tenements have been subject to limited exploration and drilling, with no mineral resources or ‘results of significance’ coming back from the area so far.
Horizon will retain 9 tenements at its Kanowna South project, which lies north of the tenements being sold to Northern Star. Recent work has reportedly highlighted the potential for ‘significant’ new mineralisation in the Kanowna South area.
Horizon CEO Grant Haywood says the company sees the deal with Northern Star as a ‘sound’ divestment in ‘challenging’ market conditions.
“It continues our divestment of non-core assets to consolidate our portfolio and lower overheads.
Importantly, we retain upside to any future success on the ground being divested through potentially lucrative deferred cash payments for resource discovery and production.”
“Importantly, we retain upside to any future success on the ground being divested…”
Horizon Minerals is working to become a mid-tier gold producer through its ‘high-quality’ projects in the heart of the Western Australian goldfields.
The company had $3.77 million cash and cash equivalents at hand as of 30 June, according to its latest quarterly report.
Write to Joshua Smith at Mining.com.au
Images: Horizon Minerals
