Horizon owns a number of royalties linked to producing, development and exploration projects which provide current or potential revenue streams to support ongoing activities.
M26/446 (Janet Ivy) Production Royalty
Horizon owns a $0.50 per tonne mining royalty that relates to ore mined and treated from Mining Lease M26/446 located approximately 10 km west of Kalgoorlie-Boulder in Western Australia.
The Company entered into a Deed for the sale of M26/446 in 2001 and it is now owned by Norton Gold Fields Ltd (“NGF”) which was delisted from the ASX on 1 July 2015.
As part of the sale, Horizon was prepaid $1,380,000 of the royalty as part of the acquisition cost, equivalent to a mining and treatment tonnage of 2.76 Mt ($0.50 per tonne). Mining has been conducted on a semi-continuous basis at the Janet Ivy deposit which is the largest of known deposits on M26/446 since 2009.
Horizon anticipates further royalty payments on a quarterly basis for material scheduled by NGF to be treated.
Otto Bore (Saracen) Production Royalty
Horizon, through its 100% owned subsidiary Black Mountain Gold Pty Ltd, previously held a 10% interest in 14 tenements to the north of Saracen Mineral Holdings Thunderbox operation near Leinster in the northern goldfields of Western Australia, and includes the Otto Bore deposit, located 9 km from the Thunderbox mill, with the tenements free carried to a decision to mine. Horizon receives a 2.5% net smelter royalty from production between 42,000 to 100,000 ounces through the divestment of this interest to Saracen.
The Company also owned an exploration licence to the east of the joint venture tenements on a 100% basis, which has also passed to Saracen as part of the sale.
The parties agreed to terminate the joint venture and Horizon agreed to divest its 100% interest in the exploration license to Saracen on the following terms:
- Payment to Horizon of A$250,000 in cash on execution (received)
- Payment to Horizon of A$2.25 million in cash on completion (received)
- A 2.5% Net Smelter Royalty that is payable by Saracen once Saracen has produced 42,000 ounces of gold from the transaction tenements, and ending once Saracen has produced 100,000 ounces from the transaction tenements
Proposed Menzies and Goongarrie Divestment (Kingwest)
Horizon has reached an agreement with Kingwest Resources Limited (ASX: KWR) (“Kingwest”) to divest its Menzies and Goongarrie gold projects 80 to 130 km north of Kalgoorlie-Boulder in Western Australia for a total consideration of A$8 million.
The divestment comprises 38 mining, prospecting and exploration licences with a current JORC resource of 195,000 ounces. Under the agreement, Kingwest will pay A$3.375 million in cash and $4.625 million in Kingwest shares on the following terms:
- A$750,000 in cash on execution (received), A$1 million in cash and $3 million in Kingwest shares (at a deemed price of $0.15 per share and held in voluntary escrow for 18 months) on settlement expected in the current September 2019 Quarter; and
- A$1.625 million in cash and A$1.625 million in Kingwest shares (the lower of the 30 day VWAP or $0.15 per share) 18 months after settlement.
Horizon will become a substantial shareholder in Kingwest with Board representation in a non-executive capacity and will have a right to process or purchase any gold bearing ore from the sale tenements under standard commercial terms. The transaction is subject to Kingwest completing a $4 million capital raising and other standard conditions customary for a transaction of this nature.
Horizon also attains a subordinated right to process ore from the divestment package at the proposed Boorara Processing Facility.