I just crunched some numbers on cash flow from Boorara toll treatment Alone… over the contracted timeline.
I will do another on our other toll treatment agreement which is a different agreement 50/50 (Philips Find)
To forecast Horizon Minerals’ (ASX: HRZ) free cash flow based on the current gold price of A$5,000 per ounce, using the A$30 million free cash flow projection at A$3,600 per ounce as a baseline, we can estimate the potential increase driven by the additional A$1,400 per ounce. Here’s how we can approach this:
Baseline Information
- Horizon projected A$30 million in free cash flow from the Boorara project at a gold price of A$3,600/oz.
- This was based on producing 49,500 ounces of gold from 1.24 million tonnes of ore at 1.24 g/t over 14 months of mining and 19 months of processing.
- Current gold price: A$5,000/oz, which is A$1,400 above the A$3,600/oz baseline.
Step 1: Calculate Revenue at Baseline Price
- At A$3,600/oz, total revenue = 49,500 oz × A$3,600/oz = A$178.2 million.
- Free cash flow of A$30 million implies operating costs, royalties, and other expenses totaled A$148.2 million (A$178.2M - A$30M), assuming all 49,500 ounces are sold at that price.
Step 2: Adjust Revenue for Current Gold Price
- At A$5,000/oz, total revenue = 49,500 oz × A$5,000/oz = A$247.5 million.
- If costs remain fixed at A$148.2 million (a simplifying assumption, as costs like royalties or fuel might scale slightly with price), the additional revenue directly boosts free cash flow.
Step 3: Calculate Additional Free Cash Flow
- Additional revenue from the A$1,400/oz increase = 49,500 oz × A$1,400/oz = A$69.3 million.
- Assuming costs don’t scale significantly with price (common in toll treating where processing fees are fixed), this A$69.3 million would largely flow to free cash flow.
- New free cash flow = A$30 million (baseline) + A$69.3 million = A$99.3 million.
Forecast
- Boorara Alone: A$99.3 million in free cash flow at A$5,000/oz.
Caveats
- Costs may rise with higher gold prices (e.g., royalties, labor), reducing the margin above A$3,600. If costs scale by 5-10%, free cash flow might drop to A$95-98million for Boorara alone.
- Production timelines and actual ounces recovered could differ from plans.
- This assumes all ounces are sold at A$5,000/oz, which may fluctuate.
For a more precise figure on overall cashflow , we’d need detailed cost breakdowns per project, but this range aligns with current data and price dynamics for Boorara.
(20min delay)