Horizon Minerals (ASX:HRZ) and Poseidon Nickel (ASX:POS, OTC Pink:PSDNF) have announced a merger via a scheme implementation deed, aiming to create a new Western Australian mid-cap gold producer.
The merger will bring together Horizon’s extensive gold resource and Poseidon’s Black Swan processing infrastructure, both located in the Kalgoorlie-Coolgardie districts.
Under the agreement, Horizon will acquire 100 percent of Poseidon’s fully paid ordinary and unlisted options, with each Poseidon shareholder receiving 0.1156 Horizon shares for every Poseidon share held.
According to Poseidon CEO Brendan Shalders, the alignment between the two companies’ strategies is a core pillar of this regional consolidation, providing greater capability to achieve long-term cashflow generation from key operations typical of an emerging mid-tier gold producer.
The combined company will focus on utilizing Horizon’s Burbanks and Boorara gold deposits as cornerstone assets to deliver a five-year mine plan to optimize Poseidon’s Black Swan processing plant.
The conversion of the Black Swan processing plant into a gold plant is expected to unlock latent value in Horizon’s portfolio, enabling opportunities for toll milling and further consolidation in the region.
When combined, Horizon and Poseidon’s projects boast a JORC mineral resource of 1.8 million ounces of gold at an average grade of 1.84 grams per tonne, alongside 422,700 tonnes of nickel at an average grade of 1 percent.
Upon completion of the merger, Horizon shareholders will hold a 69.8 percent stake in the new company, with Poseidon shareholders owning the remaining 30.2 percent.
Horizon’s recent plans to advance development at Boorara, including its first gold pour in October, are projected to generate AU$30 million in cashflow at an AU$3,600 per ounce gold price over the mine’s lifespan.
The Black Swan processing plant, with a capacity of 2.2 million tonnes per year for nickel sulphide, is strategically positioned as a central processing hub for Horizon’s gold projects and other regional opportunities.
Additionally, the concentrator is anticipated to enhance the value of Horizon’s high-grade Nimbus silver-gold-zinc project, containing significant mineral deposits of silver, gold, and zinc.
Horizon Managing Director and CEO Grant Haywood highlighted that the consolidation of nickel and silver assets alongside gold assets will provide full exposure for shareholders to capitalize on potential value increases in these commodities in the future.
The merger is set to be finalized by late January or early February 2025, pending customary closing conditions.
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Securities Disclosure: I, Gabrielle de la Cruz, hold no direct investment interest in any company mentioned in this article.
