Horizon Minerals (ASX:HRZ) has secured a binding toll milling agreement with FMR Investments to process 200,000 tonnes of gold ore from the Cannon underground project in Western Australia.
The news pushed shares up over 19% to an intra-day high of $0.05 on Monday (13 May) morning.
Horizon, which has a market capitalisation of just under $30 million, will process the ore at FMR’s Greenfields mill, located 67km from the Cannon Project, starting in Q4 2024.
Horizon will arrange contract mining and the hauling of the ore to the mill.
The agreement comes close on the heels of an ore sale agreement executed with Norton Gold Fields subsidiary, Paddington Gold, last week covering the processing of 1.4 million tonnes per annum from Horizon’s Boorara Gold Project.
The Paddington mill sits around 56km from Boorara.
CEO Grant Haywood said the two agreements will see Horizon generating cash flow from two fronts in a high gold price environment.
The price of the precious metal is sitting up over US$2,350 ($3,565) an ounce, having advanced nearly 19% since mid-February this year.
The 200,000t from Cannon, or other deposit, will be processed over a period of eight months.
Horizon says the toll milling agreement contains “competitive ore treatment rates”.
The company is responsible for getting the ore to the mill on time and if the delivery schedule is missed, Horizon will forfeit its allocated tonnes for that month and from the overall 200,000t allocation.
Horizon is in the process of undertaking a review of the reserve for the Cannon Project with the goal of progressing revised key financial outcomes in Q2 2024.
Cannon has a maiden reserve of 135,000t @ 4.1 grams per tonne for 17,680 contained gold ounces.
The company is also working to finalise the merger with Greenstone Resources (ASX:GSR) as a means of speeding up its path to production.
Both companies are in support of the merger, under which each Greenstone shareholder will receive 0.2868 Horizon shares for every share held.
Write to Angela East at Mining.com.au
Images: Horizon Minerals
