Horizon Gold Unveils $1.8B Gum Creek Gold Mine Plans

A freshly tabled definitive feasibility study (DFS) has revealed that the Gum Creek gold mine in Western Australia could generate a massive A$1.854 billion in pre-tax free cashflow. The study, tabled by Horizon Gold, flags a major new gold operation.

The DFS projects that the mine, situated 640km north-east of Perth, will 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 also puts forward impressive numbers, projecting a pre-tax net present value (NPV) of $1.307 billion and an internal rate of return of 53.1% at a five% discount rate.

Horizon Gold managing director 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 company has also announced plans for a new centralised processing plant that will be fed by a series of open pit mines.

What makes this project particularly interesting is the massive ore reserve of 18.2 million tonnes grading 1.24 grams per tonne of gold, providing a solid foundation for financing discussions and project execution. The study also flags a sulphide inventory of 9.3 million tonnes, including the permitted Wilsons underground deposit containing 400,000 ounces at an impressive 4.31 grams per tonne gold.

This development has the potential to transform Horizon Gold from an explorer into WA's next significant gold producer. The company has topped up its coffers with a $30 million equity raising in March and is well-positioned to advance the project, with a clear pathway towards a final investment decision in 2027.

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

With a pre-tax NPV of $1.307 billion now stamped on the project, Horizon appears to have a firm handle on its flagship asset. The Gum Creek project represents a consolidation of the Gum Creek greenstone belt, a historically fragmented but highly prospective goldfield. 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.

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