Horizon Minerals (ASX: HRZ) Reports Outstanding Outcomes of PFS and Maiden Ore Reserve on Richmond-Julia Creek Project

  • October 29, 2020 09:18 PM AEDT
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Horizon Minerals (ASX: HRZ) Reports Outstanding Outcomes of PFS and Maiden Ore Reserve on Richmond-Julia Creek Project

Summary

  • Positive Pre-Feasibility Study is completed for the Richmond-Julia Creek vanadium joint venture project.
  • The Pre-Feasibility Study is based on an initial 20-year life indicating a financially viable project. 
  • PFS indicates Modest up-front capital costs of USD 157.4 million and operating cash costs of USD 5.53/lb of 98% V2O5 flake
  • Joint venture partners (Richmond Vanadium Technology) are reviewing costs and timing for the advancement of the Definitive Feasibility Study as PEA (Preliminary Environmental Assessment) is completed.

Australian explorer and producer, Horizon Minerals Limited (ASX: HRZ) appears to be sitting on the sweet spot with the rollout of results of the Pre-Feasibility Study on Richmond – Julia Creek vanadium Joint Venture project, located in Central North Queensland. The PFS outcomes have demonstrated the quality and viability of the world-class oxide vanadium resources hosted by the Joint Venture Project. 

Horizon entered a strategic development Joint Venture (JV) with Richmond Vanadium Technology Pty Ltd (RVT) in March 2017. Significantly, the JV covered the Company’s 100% stake in the Richmond vanadium project, which encompasses 1,550km2 of Cretaceous Toolebuc Formation. Furthermore, RVT which completed its initial $1 million commitment to earn 25% interest back in March 2018, have begun the second stage expenditure commitment of $5 million over three years. The second stage includes a Feasibility Study to earn a further 50% interest in the project.

ALSO READ: Horizon Minerals’ (ASX: HRZ) Solid Project Pipeline makes it Shine during September 2020 Quarter

The robust outcomes of the PFS and the upgraded Mineral Resource Estimate together put the Company in a strong position to leverage off the growing potential of the emerging battery storage and steel markets. 

Excellent Pre-Feasibility Results

The Pre-Feasibility Study targeted the higher grade Lilyvale deposit post the successful infill drilling program in late 2019, which consisted of 333 aircore holes for an advance of 7,817m. 

8.4Mt of total rock is mined annually, generating mined ore of 4.06Mt from the open pit for concentration. At Lilyvale, the mining rate yields a nominal mine life of over 100 years. 

DO READ: Horizon Minerals Unlocking Value Creation Potential with Strategic Review of Nimbus

Source: HRZ ASX Update, 28 October 2020

Source: HRZ ASX Update, 28 October 2020

Source: HRZ ASX Update, 28 October 2020

Source: HRZ ASX Update, 28 October 2020

The PFS has an annual concentrate production of 0.79 million tonnes, producing over 12.7k tonnes of 98% V2O5 flake. 

Mineral Resource Update

The drilling program was undertaken in 2019 lead to the updated JORC 2012 Mineral Resource Estimate (MRE) of 0.56Bt grading 0.48% V2O5 for 2.6Mt V2O5 at a 0.30% lower cut-off. The Mineral Resource update not only led improved grades over the previous MRE but also resulted in an increase of 76% in the Mineral Resource upgraded to the Indicated JORC Category for estimating maiden Ore Reserves.

Source: HRZ ASX Update, 28 October 2020

Source: HRZ ASX Update, 28 October 2020

ALSO READ: Horizon Minerals (ASX:HRZ) Leveraging off Competitive Advantage, Poised to Become Mid-Tier Gold Developer

Key Metrics Defining the Project’s Viability

Mining

A mining contractor will be engaged to conduct the mining activities with technical and managerial oversight provided by RVT. Mining will utilise conventional open-cut methods which shall be 100% free dig of the ore and waste. Total movement of rock is 951.7Mt from the LOM pit at a strip ratio of 1.07.

Ore Reserve

An independent consultant was engaged by RVT for conducting the Ore Reserve Study based on preliminary pit designs, completed with some material assumptions. 

Source: HRZ ASX Update, 28 October 2020

Source: HRZ ASX Update, 28 October 2020

Ore processing and production

A two-step process has been determined for the concentration of the V2O5 into a commercial-grade product. 

The pentoxide in the first stage would be upgraded from a mined grade (0.49% V2O5) to a shipping grade concentrate (1.82% V2O5). The second stage consists of extracting through refining for producing V2O5 flake.

Mining rate of ore is 4.06Mt per annum, which would generate 0.79 million tonnes of concentrate at 1.82% V2O5. Annual production of 98% V2O5 flake post the refinement is over 12.7k tonnes.

ALSO READ: Exploration Endeavours of Horizon Minerals Climb Up a Ladder, Largest-Ever Drilling Program Commences

Infrastructure, Transport and Services

The access to project area consisting Lilyvale deposit which is located ~50kms north-west of Richmond is provided by the east-west Flinders Highway as well as the main arterial road between Mt Isa and Townsville. 

Pastoral station tracks and Shire roads head north from the highway, offering access to tenement areas. Other site infrastructure consists of the construction of a Tailings Storage Facility (TSF), mining offices, internal roads, bores for water supply to the concentrator and hardstand areas.

31.5 hectares of land owned by Richmond JV on Finders Highway can also be used to fulfil project needs.

Capital Expenditure

Capital expenditure totals USD 157.4 million comprise of the concentrator plant, which includes the TSF, power station, water supply, access road to the site, camp, and other associated infrastructure for establishing and commissioning the site. Offsite capital consists of a refining plant built offshore in China.

Source: HRZ ASX Update, 28 October 2020

Source: HRZ ASX Update, 28 October 2020

Operating Expenditure

Mining expenditure is based on the calculations of total tonnage mined of 8.4Mtpa. Mining rate is averaged at A$2.93/t and waste rate is averaged at A$2.93/BCM. Richmond Vanadium Technology will hire about 97 people on contract and 13 direct employees for mine planning and resource development. Mining agreement is provided as a contract with the capital amount based on establishment fees and pre-strip tonnage. Overall operating cost of the project is determined to be US$5.53/lb of 98% V2O5.

Environmental and Permitting

The Richmond-Julia Creek Vanadium Project is located on granted Exploration Permits for Minerals in the Richmond and McKinlay Shires. 

Any significant environmental constraints are not present that would prohibit the development from proceeding. Meanwhile, approvals are sought for minimising or avoiding any potential environmental impacts. The project is regarded to bring positive impacts to both the local communities and business. 

The Project’s Preliminary Environmental Assessment (PEA) Report has been compiled, entailing investigations concerning environmental issues such as heritage, flora, fauna, surface and groundwater and soils.

Economic Evaluation

The compilation of the capital and operating cost estimates in the PFS is based on the Australasian Institute of Mining and Metallurgy (AusIMM) and the Capital Cost Estimator (ACCE) standards for levels of study.

The economic evaluation of the project was conducted by Fault zone on behalf of RVT. It is derived from preliminary take-offs as well as budget prices from a single source and factoring of previous projects as part of the Feasibility Study.

Funding

As of the end of September 2020, Horizon has $17.3 million cash at bank, investments totalling $4.1 million in ASX listed companies and debt of $4.0 million. The Company also anticipates a generation of a further $1.625 million in cash and $1.625 million in shares within six months concerning the Menzies Gold Project’s divestment to Kingwest Resources in 2019. 

The Board is confident Horizon can finance their share of the subsequent steps of the Richmond-Julia Creek Vanadium project. 

Next Steps at Richmond-Julia Creek Vanadium Project

  • Finalising the optionality within the PFS to the next level of study, with future works such as:
    • Determination of the project’s optimal power supply. 
    • Advancing environmental studies
    • Preparation of the documents for government permitting and approvals.
  • Continued discussion with potential offtake partners
  • Evaluating financing or assessing other options for value creation from the project

HRZ stock traded at $0.110 on 29 October 2020.

 

 


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