A new mid-cap, 100,000-ounce-per-annum gold producer is set to be formed in Western Australia through the merging of Horizon Minerals and Poseidon Nickel.
As per the deal, Horizon will acquire 100 per cent of Poseidon’s fully paid ordinary shares in exchange for 0.1156 of a Horizon share for every one Poseidon share held.
The offer equals $0.006 per share, representing a 40 per cent premium to the 30-day volume weighted average price of $0.0042 per Poseidon share.
If the deal is successful, Horizon shareholders will own 69.8 per cent of the combined group and Poseidon shareholders will own the remaining 30.2 per cent.
The combined entity will have a mineral resource of approximately 1.8 million ounces (Moz) at an average grade of 1.84 grams per tonne (g/t) of gold and about 422,700 tonnes (t) of nickel at an average grade of one per cent nickel.
It will also have a combined exploration ground of 1309km2 and two processing facilities in the Goldfields region of WA, including Poseidon’s Lake Johnston processing plant and associated infrastructure – a site which has potential to be developed into a lithium processing hub.
The merger will also combine Horizon’s large gold resource and Poseidon’s Black Swan processing infrastructure in the Kalgoorlie-Coolgardie districts of WA.
“We believe this proposed merger represents a unique opportunity to unlock the value of our significant gold resource in the WA Goldfields and leverage strategically located processing infrastructure,” Horizon managing director Grant Haywood said.
“This really is a logical consolidation of complementary assets, delivering a near term and cost-effective processing pathway and creates greater potential for both sets of shareholders to create value from the cashflow generation potential of a long project pipeline and wholly owned processing infrastructure.”
Poseidon’s Black Swan processing plant has a 2.2 million tonnes per annum nickel sulphide concentrator and associated infrastructure, ideally located as a central processing hub for Horizon’s gold projects and for regional toll treatment opportunities.
It is believed the Black Swan concentrator will unlock value for its high-grade Nimbus silver, zinc and gold project, which contains 20.2Moz of silver, 78,000oz gold and 104,000t of zinc.
Horizon said the refurbishment of the front end of the Black Swan processing plant and conversion of the back end to facilitate gold production presents a significantly faster, lower capital pathway to gold production compared to building a new gold processing plant in the region.
The gold company’s 465,000oz Burbanks and 428,000oz Boorara gold deposits will be the cornerstone assets in a project pipeline aiming to deliver a five-year mine plan to fill the Black Swan processing plant.
“Outside gold, the merged nickel and silver assets enhances the respective asset values of both parties and retains full exposure for the combined shareholder group to crystalise value in any future sustained price upturn for these commodities,” Haywood said.
A feasibility study on the refurbishment and conversion of the Black Swan processing plant to gold production will be undertaken, which is expected to be completed in the second half of 2025, with first gold production from Black Swan currently targeted for mid-2026.
“The schemes announced [on October 25] are a pivotal step towards establishing a significant gold business and provides Poseidon shareholders and holders of Poseidon options with an exciting opportunity to become part of an emerging gold producer at a time when the gold price is at all-time highs,” Poseidon Nickel chief executive officer Brendan Shalders said.
“There is strong alignment between Poseidon’s strategy and that of Horizon, which is one of the core pillars underpinning this regional consolidation. Together we have greater capability to deliver on longer term cashflow generation from cornerstone operations fitting for an emerging mid-tier gold producer.”
To fund the merger, Horizon has received firm commitments from investors to raise $14 million at $0.045 per share, with the proceeds to go towards the aforementioned Black Swan feasibility study, 50,000m of extensional and resource definition drilling, mining studies and working capital.
The merger is expected to be completed between late January 2025 and early February 2025.
Subscribe to Australian Mining and receive the latest news on product announcements, industry developments, commodities and more.
