Horizon Minerals Limited (ASX: HRZ) has strategically entered into a binding Asset Sale Agreement (ASA) and royalty deed (RD) with Northern Star Resources Limited (ASX: NST), facilitating the sale of 62 tenements within Horizon’s eastern Kalgoorlie project area to Northern Star, with the transaction expected to finalise in October 2023, yielding $3.1 million in cash for Horizon, alongside prospects for supplementary deferred payments contingent on resource discovery and mineral extraction.
Figure 1: Horizon’s project area locations and surrounding infrastructure following completion of the ASA
Unlocking Value in Non-Core Tenure
The divested tenements cover an area of approximately 10,170 hectares, situated 10 kilometres east of Kalgoorlie.
While this land is undoubtedly valuable, Horizon has recognised that it falls outside its core focus and has decided to streamline its operations by divesting it to Northern Star.
Financial Aspects of the Deal
The primary facet of this strategic transaction involves Northern Star’s commitment to pay Horizon $3.1 million in cash upon the successful completion of the Asset Sale Agreement.
Figure 2: Asset Sale Agreement Tenements
Beyond this immediate cash infusion, Horizon stands to gain additional revenues through innovative deferred payment structures.
Northern Star has agreed to provide discovery payments of $20 per ounce for any JORC-compliant Mineral Resource identified on the divested tenements.
Importantly, these payments are capped at two million ounces, presenting Horizon with substantial upside potential.
Furthermore, a Net Smelter Royalty (NSR) of 0.5% on all metals and minerals extracted from the tenements will contribute to Horizon’s ongoing revenue streams.
Strategic Portfolio Optimisation
The divestment of these non-core tenements underscores Horizon’s commitment to optimising its portfolio and concentrating its resources on projects of higher strategic importance.
While under Horizon’s ownership and historical exploration, these tenements yielded no JORC Mineral Resources or significant results warranting further investment.
The Company also recently expanded its portfolio by acquiring 100 percent ownership of two greenfield lithium prospects in Bridgetown from private company, Charter Minerals, enhancing the Company’s presence in the lithium sector.
Retaining Opportunities for Future Growth
Horizon will retain nine tenements in the Kanowna South Project, located to the north of the divested properties, where recent assessments have revealed promising mineralisation potential in the late-stage Panglo Basin.
This strategic decision underscores Horizon’s forward-thinking portfolio management, positioning the Company to seize future opportunities in the region.
Horizon Minerals CEO Grant Haywood emphasised the significance of this divestment.
“We see this as a sound divestment for Horizon in gaining $3.1m in cash in challenging market conditions,” he said.
“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.”
HRZ’s Australian Stock Exchange-listed share price has risen 12.9% and is currently trading at $0.035 (1.00pm UTC+ 8 hours).