Horizon Gold (ASX:HRN) completes definitive feasibility study for Gum Creek
Horizon Gold has completed the Definitive Feasibility Study for its 100% owned Gum Creek Gold Project in Western Australia.
The study assesses a proposed open pit development based on free milling ore and includes a maiden Ore Reserve, a 10 year mine plan, financial metrics and a project schedule targeting a Final Investment Decision in Q2 2027, with first gold scheduled for H2 2028.
Highlights
Average annual gold production target of 98koz over the first 5 years and 880koz recovered over a 10 year mine life, with first gold scheduled for H2 2028.
Pre production capital cost of A$350m.
Pre tax free cash flow of A$1,854m, pre tax NPV5 of A$1,307m and pre tax IRR of 53.1%, based on a gold price of A$5,500/oz.
All in Sustaining Cost of A$2,995/oz.
Maiden Ore Reserve of 18.2Mt at 1.24g/t Au for 728koz of contained gold.
Approvals process on track for a Final Investment Decision in Q2 2027.
The study identifies opportunities to grow production and extend mine life by bringing free milling underground ore and sulphide deposits into the mine plan.
The Definitive Feasibility Study is based on free milling open pit mining and delivers a Production Target containing 962koz of mined gold and 880koz of recovered gold.
The Production Target is underpinned predominantly by a maiden Ore Reserve of 18.2Mt at 1.24g/t Au for 728koz of contained gold.
According to the company, the Production Target is underpinned by 76% Probable Ore Reserve ounces, 18% Indicated Resource ounces and 6% Inferred Resource ounces.
The company also states that the first 5 years of the Production Target are underpinned by approximately 97% Probable Ore Reserve ounces and approximately 3% Inferred Mineral Resource ounces, and that the feasibility of the development scenario does not hinge on the current Inferred Mineral Resources.
The study assesses a 2.4Mtpa gold mining and processing facility and concludes that mining and processing at Gum Creek is technically, economically and environmentally viable at that throughput.
The proposed processing plant incorporates conventional three stage crushing, single stage ball milling, gravity gold recovery, Carbon in Leach processing, elution and smelting, with a life of mine gold recovery of 91.5%.
The plant design also includes provision for future expansion to 3.0Mtpa through larger crushing equipment, additional milling capacity and expanded leach and adsorption infrastructure.
Using a gold price assumption of A$5,500/oz, the study estimates life of mine gold sales revenue of A$4,841m, EBITDA of A$2,268m, pre tax free cash flow of A$1,854m, pre tax NPV5 of A$1,307m and a pre tax IRR of 53.1%. The study also estimates a post tax NPV5 of A$894m, a post tax IRR of 41.7% and a pre tax payback period of 23 months from first production.
Horizon Gold Managing Director and CEO Scott Williamson said,
"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."
The study also identifies development opportunities outside the current DFS scope.
The current Mineral Resource Estimate includes 9.3Mt of sulphide mineralisation grading 2.3g/t Au for 698,000oz of contained gold, including the permitted Wilsons Underground deposit containing 2.9Mt at 4.31g/t Au for 400koz.
The company states that studies are ongoing to assess the economic potential of this material and refractory gold processing options, although no forecast is made as to whether those studies will be successful.
The company is also undertaking infill drilling at Kingfisher to convert Inferred Resources at depth to Indicated status.
The announcement states that Kingfisher already has underground infrastructure left by previous owners, which materially reduces the capital required to restart underground mining.
It also states that similar opportunities exist at Swan and Omega, where existing underground development could support mining of higher grade zones at depth with lower upfront capital than a greenfield underground start, subject to the outcome of economic analysis.
To support project development, Horizon has appointed Orimco Pty Ltd as financial adviser and intends to commence formal engagement with Australian and international financial institutions following the release of the study.
The company states that it believes there is a reasonable basis to conclude that project funding will be available when required, while noting there is no certainty that funding will be secured or the form that any future capital raising may take.
The Horizon board has approved progression of the project into the Execution Phase, with planned activities including progressing the approvals pathway, detailed engineering, contractor engagement, procurement activities and project financing ahead of a targeted Final Investment Decision in Q2 2027.
Plant construction activities are expected to commence in Q4 2027, subject to the receipt of required environmental approvals and completion of project implementation activities, with first gold expected in H2 2028.