Emerging mid-tier gold producer Horizon Minerals (ASX: HRZ) has reached an agreement with Northern Star Resources (ASX: NST) to stage a cash-free “strategic swap” of tenements in the Western Australia goldfields region.
Under the terms of the deal, Horizon will divest all of its interests in the Anthill, Blister Dam, New Mexico, White Flag and Kanowna North tenements to Northern Star.
In return, it will acquire 100% of Northern Star’s interests in the Rosehill, Brilliant North and Gunga West projects in Coolgardie and the Golden Ridge, Balagundi, Abattoir and Mt Monger projects in Kalgoorlie.
The “sensible transaction” will be completed by year end and will place assets within each company’s area of interest.
For Horizon, the swap would add contiguous tenure to the Boorara gold project area in Kalgoorlie and additional strategic assets in Coolgardie including the Rose Hill and Brilliant North tenements.
It would also enable the company to “unlock the full value” of the Coolgardie gold project as it continues to pursue a potential acquisition from current owner Focus Minerals (ASX: FML).
The Coolgardie project package comprises a gold deposit hosting 2.1 million ounces in estimated mineral resources; a 1.2 million tonnes per annum processing plant (currently on care and maintenance); and significant open cut and underground mining infrastructure.
Also included is the newly-discovered Bonnie Vale underground project with a completed pre-feasibility study and an indicated resource of 153,000oz grading 9.1 grams per tonne gold; the Brilliant open cut and underground project with a mineral resource of 475koz grading 2.5g/t gold; and significant open cut and underground resource growth potential across 235 square kilometres of regional tenure.
Last week, Horizon exercised its right to match a proposal from a third party to purchase the Coolgardie project, earned under an Exclusivity Deed signed with Focus in February.
The Deed included “no shop” and “no talk” restrictions in favour of Horizon, as well as notification and matching rights in respect of any competing proposals for the project, subject to customary fiduciary carve outs for Focus’ benefit.
Horizon’s counter proposal totalled $55 million as a combination of cash and newly-issued, fully-paid ordinary Horizon shares, payable to Focus in tranches.
It supercedes the February proposed sale price of $40m (combined cash and shares).
Horizon’s counter proposal remains subject to negotiation with Focus Minerals and necessary approvals.
Rose Hill is located 500m southeast of Coolgardie on the western margin of the Archean Norseman-Menzies Greenstone Belt.
Mineralisation is hosted within the main Rose Hill porphyry, adjacent to the hanging wall ultramafic and an eastern porphyry unit.
Gold is associated with stockwork veining throughout the porphyry and disseminated within altered porphyry.
The tenement has been subject to several small-scale mining operations since 1898 with reported production of approximately 5000 tonnes grading 8.3g/t gold for 1340oz.
The most recent operation was a small open-cut mine in 1983.
The Brilliant North lease is 500m to the southeast of Rose Hill and partially overlies the Brilliant North project currently owned by Focus Minerals.
It is also known as the State Battery deposit due to its close proximity to the historic Coolgardie State Battery – a heritage-listed ore-crushing facility built by the WA government in 1902 to assist gold prospectors and small mines.
Past development of the Brilliant North project area has been impeded due to fragmented ownership of the leases however Horizon said the consolidation transaction would be “consistent with its intentions in the region”.
The Gunga West leases are located 10km north east of Coolgardie and in close proximity to processing infrastructure including the Three Mile Hill plant.
Gunga West is hosted within an ultramafic unit bounded by high magnesium basalts.
The mineralisation is in a shear zone with quartz-carbonate veining and minor sulphides.
Prospectivity and potential
The Coolgardie assets being acquired from Northern Star have been considered highly-prospective for further resource extensions, with potential for open cut and underground development on a standalone basis or as part of the potential acquisition of the Coolgardie gold project.
Should the tenement swap transaction and acquisition go ahead, Horizon would become the sole developer of the Rose Hill / Brilliant North project area.
The swap agreement would also see Horizon acquire Northern Star’s interests in the Golden Ridge, Balagundi and Mt Monger projects nearby to its Boorara and Nimbus projects, 10km west of Kalgoorlie-Boulder.
The historic Golden Ridge gold mine was first developed from 1901-1927, mining 249,356t at 17.1g/t for 139,546oz to an underground depth of 174m.
Renewed mining from 1998-2004 produced 1.78 million tonnes at 1.98g/t gold for 113,520oz, after which very little exploration work had been conducted.
Horizon said it would undertake a more detailed geological review of the Golden Ridge mining leases upon acquisition.
At mid-afternoon, shares in Horizon Minerals were trading 12% higher at $0.140.
Northern Star Resources shares were steady at $10.58, while Focus Minerals was down 6.35% to $0.295.