Horizon Gold flags massive $1.8B earn for WA gold mine
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Murray Region
Horizon Gold has set a serious goal for its Gum Creek project in Western Australia. A newly tabled definitive feasibility study (DFS) has flagged a major new gold operation that could generate a whopping A$1.854 billion in pre-tax free cash flow, based on an Australian dollar gold price of $5500 per ounce.
The mine is planned to produce 98,000 ounces of gold per year for the first five years and 880,000 ounces of free-ground gold over the 10-year mine life.
The study puts some seriously impressive figures on the table; It projects a pre-tax net present value (NPV) of $1.307 billion, with a 5 percent discount for an internal rate of return of 53.1 percent (an impressive payback in less than two years).
Total sustainable costs were determined to be $2995 per ounce; That suggests there’s a solid margin on the working price of more than $2,500 for every ounce pulled from the ground, with construction capex pegged at a modest $350 million.
‘Gum Creek is one of the most developed undeveloped gold projects in Western Australia.’
Scott Williamson, managing director of Horizon Gold Limited
The development is supported by an initial ore reserve of 18.2 million tonnes grading 1.24 grams per tonne (g/t) gold for 728,000 ounces, providing a solid basis for financing discussions and project implementation.
The first gold from Gum Creek near Meekatharra, 640 km northeast of Perth, is scheduled for the second half of 2028.
Horizon Gold managing director Scott Williamson said: “Completion of this definitive feasibility study is a decisive milestone for Horizon Gold and confirms that Gum Creek is a robust, simple and technically de-risked development project that is ready to progress rapidly towards a final investment decision.”
Horizon’s project is the consolidation of the Gum Creek greenstone belt, a historically fragmented but promising gold field. Today, it covers 720 square kilometers of contiguous tenures along approximately 80 km of the Gum Creek greenstone belt.
The company’s DFS has also incorporated plans for a new, centralized processing plant with a capacity of 2.4 million tonnes per annum, which will be fed from a series of open-pit mines.
This is where things can get even more interesting. DFS only models the first 10 years of mine life. Beyond the current mine plan there is a sulphide inventory of 9.3 million tonnes grading 2.3 g/t gold for 698,000 ounces, including the permitted Wilsons underground deposit containing 400,000 ounces at an impressive 4.31 g/t gold. If ongoing metallurgical studies identify an economical processing route, these ounces could significantly extend mine life and expand production far beyond current plans.
There are also positive developments from many other established underground mines. Recent drilling at the company’s Omega and Kingfisher deposits has yielded a number of high-grade stoppages, indicating the potential to feed the new mill for years to come.
In the drillings carried out in Omega at the beginning of this year, a depth of 10 meters was reached with 5.5 grams of gold per ton (g/t). Recently, follow-up work at the Howards deposit yielded a high-grade hit of 5 million grading 9.3 g/t gold.
The results highlight the potential of Gum Creek’s broader tenure and the potential to continually renew and grow its resource base.
Current free-milling underground resources include Swan at 233,700 ounces, Kingfisher at 113,500 ounces, and Swift at 68,800 ounces.
While the new study is based on a firm gold price of $5,500, the spot price has recently traded near $5,800, providing a potential cushion and further upside to the project’s already challenging economics.
The company, which filled its coffers with a $30 million equity capital raise in March, appears well positioned to move Gum Creek forward.
Next steps include remediation of the existing camp, completion of project approval pathways for a final investment decision in the second quarter of 2027, and discussions with engineering, procurement and construction contractors.
With a net worth currently stamped on the project of A$1.3 billion, a clear path to a final investment decision in 2027 and a pipeline of exploration targets screaming for drilling, Horizon appears to have a firm grip on its flagship asset.
DFS appears to be the key to unlocking the value of the entire Gum Creek belt and transforming Horizon from an explorer to WA’s next major gold producer.
Is your ASX-listed company doing something interesting? Contact: mattbirney@bullsnbears.com.au
