Horizon Gold flags massive $1.8B earn for WA gold mine

Horizon Gold has laid down a serious marker for its Gum Creek project in Western Australia. A freshly 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 cashflow, based on an Australian dollar gold price of $5500 per ounce.

The mine is slated to produce 98,000 ounces of gold annually for the first five years and 880,000 ounces of free-milling gold across its 10-year mine life.

The study puts some seriously impressive numbers on the table, projecting a pre-tax net present value (NPV) of $1.307 billion, discounted at five per cent, for an internal rate of return of 53.1 per cent – an impressive payback of just under two years.

The all-in sustaining costs have been pegged at $2995 per ounce, suggesting a solid margin of more than $2500 for every ounce pulled from the ground at the study price, with construction capex set at a modest $350 million.

The development is underpinned by a maiden ore reserve of 18.2 million tonnes grading 1.24 grams per tonne (g/t) gold for 728,000 ounces, providing a solid foundation for financing discussions and project execution.

First gold from Gum Creek, 640km north-east of Perth near Meekatharra, is scheduled for the second half of 2028.

The completion of this definitive feasibility study is a defining milestone for Horizon Gold, confirming Gum Creek as a robust, simple and technically de-risked development project ready to advance quickly toward a final investment decision.

Horizon’s project represents a consolidation of the Gum Creek greenstone belt, a historically fragmented but highly prospective goldfield. Today, it comprises 720 square kilometres of contiguous tenure along roughly 80km of the Gum Creek greenstone belt.

Notably, the company’s DFS has also incorporated plans for a new, centralised 2.4-million-tonne-per-annum processing plant that will be fed by a series of open pit mines.

This is where things could get even more interesting. The DFS only models the initial 10-year mine life. Sitting beyond the current mine plan is a sulphide inventory of 9.3 million tonnes grading 2.3g/t gold for 698,000 ounces, including the permitted Wilsons underground deposit containing 400,000 ounces at an impressive 4.31g/t gold. If ongoing metallurgical studies identify an economic processing route, those ounces could significantly extend mine life and lift production well beyond the current plan.

There is additional upside from several other established underground mines. Recent drilling at the company’s Omega and Kingfisher deposits has already returned a string of high-grade intercepts, hinting at the potential to feed the new mill for many years to come.

Earlier this year, drilling at Omega hit a solid 10m at 5.5 grams per tonne (g/t) gold. More recently, follow-up work at the Howards deposit returned a high-grade hit of 5m grading 9.3g/t gold.

The results underscore the prospectivity of the broader Gum Creek tenure and the potential to continually replenish and grow the resource base.

Current free-milling underground resources include Swan with 233,700 ounces, Kingfisher with 113,500 ounces and Swift with 68,800 ounces.

While the new study is based on a robust $5500 gold price, the spot price has recently been trading closer to $5800, offering a potential buffer and further upside to the project’s already compelling economics.

The company appears well-positioned to advance Gum Creek, having topped up its coffers with a $30 million equity raising in March.

Next steps include upgrading the existing camp, completing project approval pathways aimed at a final investment decision in the second quarter of 2027 and discussions with engineering, procurement and construction contractors.

With a A$1.3 billion NPV now stamped on the project, a clear pathway towards a final investment decision in 2027 and a pipeline of exploration targets screaming to be drilled, Horizon appears to have a firm handle on its flagship asset.

The DFS looks to be the key that unlocks the value of the entire Gum Creek belt, potentially transforming Horizon from an explorer into WA’s next significant gold producer.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au