Horizon Gold Ltd (ASX:HRN, OTC:HZGLF, FRA:HO0) earlier this week outlined the results of the definitive feasibility study for its 100%-owned Gum Creek Gold Project in Western Australia, setting out a base-case development targeting around 100,000 ounces of annual gold production.
Managing director Scott Williamson said the study defined an initial 10-year mine life, with production averaging approximately 100,000 ounces per annum, particularly during the first five years.
Williamson said the DFS generated an NPV of around A$1.3 billion at the company’s chosen gold-price assumption and an internal rate of return of about 50%, describing the figures as “some of the best economics I’ve seen in my career”.
The study assumes a 2.4 million tonnes per annum processing circuit and a gold price of A$5,500 per ounce. Williamson said one of the project’s key strengths was its all-in sustaining cost of just under A$3,000 per ounce, which he said allowed Gum Creek to retain attractive margins at lower gold prices.
He said that at a gold price of around A$6,000 per ounce, the project valuation could move rapidly towards A$1.6 billion and potentially A$2 billion, while the project continued to generate positive margins at A$4,000 per ounce.
A number of potential catalysts sit outside the DFS base case. Williamson said Horizon Gold could consider increasing processing throughput from 2.4 million tonnes per annum to around 3 million tonnes, while higher-grade underground resources could lift production beyond the current 100,000-ounce-per-year profile.
He said underground material at grades of around 3–4 grams per tonne could displace lower-grade open-pit tonnes while maintaining a similar cost profile and increasing revenue.
Kingfisher and Swan were highlighted as potential early underground opportunities, while exploration at Swift and Howards could also add resources beyond the company’s current 2.3 million-ounce inventory.
Williamson described the underground potential as “cream on the cake” and said the company intended to bring higher-grade material into the mine plan as quickly as practical.
Horizon Gold is also progressing financing for the approximately A$350 million pre-production capital requirement. Williamson said the company was considering conventional debt and equity funding alongside royalty alternatives.
The company is targeting a final investment decision in Q2 2027, construction from Q4 2027 and first gold in the second half of 2028. Williamson said financing, EPC tendering and permitting remained the key milestones, while early work on the project camp could provide an opportunity to accelerate the schedule.
Interview highlights
- The Gum Creek Gold Project has an initial 10-year mine life, with production averaging around 100,000 ounces of gold per annum, particularly during the first five years.
- The DFS indicates an NPV of around A$1.3 billion and an internal rate of return of approximately 50% at the study gold price.
- The study assumes a 2.4 million tonnes per annum processing rate, with potential to expand this to around 3 million tonnes per annum.
- Horizon Gold sees the DFS as a base case, with additional upside from higher-grade underground material, increased plant throughput and refractory resources.
- The project has an estimated all-in sustaining cost of just under A$3,000 per ounce.
- Williamson said the project remained profitable at a gold price of A$4,000 per ounce, while higher prices could materially increase its value.
- The company is beginning financing discussions for the approximately A$350 million pre-production capital requirement, considering debt, equity and royalty funding.
- Horizon Gold is targeting additional resources beyond its existing 2.3 million ounces, with Swan, Swift, Kingfisher and Howards among the exploration priorities.
- Underground material grading around 3–4 grams per tonne could lift production beyond the 100,000-ounce-per-year base case.
- Key milestones include project financing, EPC tendering and permitting ahead of a targeted Q2 2027 final investment decision.
- Construction is targeted from Q4 2027, with first gold planned for the second half of 2028.
- Early refurbishment or expansion of the accommodation camp could potentially accelerate the development schedule.
Proactive: Horizon Gold Limited, ASX ticker HRN, is advancing its 100%-owned Gum Creek Project in Western Australia. Here to tell us more about the newly completed DFS is Managing Director Scott Williamson. Scott, welcome back. Firstly, can you give us an overview of the Gum Creek Gold Project?
Scott Williamson: Gum Creek operated in the late 1980s, all through the 1990s and into the early 2000s. So, over 15 years of gold production. It was a very successful gold mine. It was previously known as the Gidgee Gold Mine, and it had a number of owners over that period.
Interestingly, it always operated in a fairly low gold-price environment, so it was always less than $1,000 per ounce.
It went into care and maintenance in 2005, so it has now been just over 20 years since the mine was in production. We’re really excited to bring it back into production, but this time in a much better gold-price environment and really going back to where it all started, which was open-pit mining as a focus.
This belt was actually discovered around 100 years ago by the old-timers, but it was in the 1990s and early 2000s when it became a very successful modern-day open-pit mining operation.
It also went into underground mining and had a number of different strategies. But our initial strategy is to go back to where it all started, which is simple metallurgy, free milling and open-pit mining, which is technically the lowest-risk of all the mining methods.
That’s why we’re really excited to restart the Gum Creek Gold Project.
Proactive: The definitive feasibility study is now complete. Can you talk us through the key numbers behind it?
Scott Williamson: We’ve defined an initial 10-year mine life, and through that period we’re averaging around 100,000 ounces per annum, particularly in the first five years. It drops off a little bit towards the end, but we’re expecting to add more ounces through the drill bit.
We’re confident this is 100,000 ounces per annum as a base case just for the open-pit mining.
We also talked about the ability to increase throughput. We used a 2.4 million tonnes per annum CIL circuit. We can look at maybe upgrading that to 3 million tonnes per annum.
More importantly, we’ve got the underground opportunities. The base case has a very strong NPV, around A$1.3 billion at the gold price we chose on the day, but more importantly a really strong internal rate of return.
So, around a 50% internal rate of return for investors. They are some of the best economics I’ve seen in my career, and we’re not alone on that. All of our peers are also coming out with really strong economics. It’s a great time to be in the gold mining industry.
Proactive: Following on from that, what does the Gum Creek DFS mean for Horizon as a company?
Scott Williamson: It’s really a platform for us to expand on. We think it is particularly a base case. We’re happy that we’re going to start at 100,000 ounces per annum. There’s no reason why we couldn’t go to much higher production rates.
To do that, it’s really through throughput and grade. Grade really comes from underground mining, while throughput can be increased by increasing the capex slightly.
If we wanted to increase capex, we could increase throughput.
We also have a number of other opportunities outside of free milling. We’ve got Wilsons, which is what we call a refractory orebody and needs a further processing method.
That’s all upside. Really, the DFS is a foundation for us to build on through increasing grade from underground, increasing throughput and also looking at other processing methods so that we can unlock Wilsons and some of our other orebodies that need further processing through concentration and then refractory processing methods.
Proactive: The study assumes a gold price of A$5,500 an ounce. How sensitive are the economics to the gold price, and how does the project hold up if gold pulls back?
Scott Williamson: It is very sensitive, as most gold projects are.
If we do see higher gold prices like today, in the order of A$6,000 an ounce, we’re pushing quite quickly up to A$1.6 billion and towards A$2 billion.
But we’ve also got the downside covered, where even at A$4,000 an ounce we’re still making really good money.
That’s really driven by the very low all-in sustaining costs of just under A$3,000 per ounce.
We’re pretty confident that at lower gold prices we’re still making really good margins. At today’s gold price, we’re making around A$3,000 an ounce.
So it’s really strong at today’s gold prices, but we can also handle much lower gold prices with this project.
Proactive: Pre-production capital is A$350 million. How is the financing process going?
Scott Williamson: We’re just kicking off that process of what we call project finance.
There are a number of different groups. We’re talking to debt providers as well as royalty providers, so there are a number of different ways you can finance these types of projects.
The most conventional process is really around a debt and equity split of, say, 60:40.
We’re pretty confident that we can go down a conventional process, and that’s our first priority. But we’re also looking at all the other different options out there.
There are many different ways you can finance these projects. It’s a great time to be looking for debt, but also equity. The equity markets are strong and we’re getting a lot of interest from brokers on the equity side.
We’re pretty confident this is bankable and it’s just a matter of time before we start the production and development phase.
Proactive: How much upside sits outside the study, such as the underground resources, a mill expansion, and prospects like Kingfisher and Swan?
Scott Williamson: We’re currently exploring and defining more resources above our 2.3 million ounces.
We’re particularly focused on Swan, Swift and Kingfisher. We’re also extending Howards.
There’s a lot of upside in the open pits, but particularly in the underground. The underground resources allow us to bring in material at 3 to 4 grams per tonne, so much higher grade at a very similar cost per ounce.
That allows us to lift the production profile well beyond 100,000 ounces per annum.
Any underground resources that we bring into the mine plan will displace open pits because they have a similar cost profile, but you get a much stronger revenue line.
We’re looking at bringing those underground resources in quite early, particularly Kingfisher. We like the look of that one.
We’re pretty confident there’s a nice underground mine at Kingfisher. Then we’ll look at Swan. Swan has some historic mining there, as does Kingfisher.
These were previously mined underground, so we can relatively easily dewater and rehabilitate them and be into these mines quickly, bringing in that high-grade material which really lifts the ounce profile.
It’s really cream on the cake, and we’ll be bringing those in as quickly as we can.
Proactive: Lastly, you’re targeting a final investment decision in Q2 2027, construction from Q4 2027 and first gold in the second half of 2028. What are the key milestones between now and then, and what could realistically move the timeline?
Scott Williamson: FID is really driven by the completion of the debt process, EPC tendering and also the completion of permitting.
If that all comes together in Q2, we can do some things before FID. We are looking at early works and potentially doing a bit of work to the camp and getting ahead of it, and that could improve our timeline significantly.
The critical path is to build the camp so we have enough rooms for our construction team. As soon as that camp is ready to go, then we can start the build phase.
We will look to potentially upgrade or refurbish the camp sooner rather than later, get ahead of it, and hopefully that will allow us to be constructing well and truly by this time next year and then in production in two years’ time.
We do have the ability to potentially beat the timeline. We think it’s a timeline that is quite aggressive, but we also want to beat it.
There are a few ways that we can do that, and we’re looking at those at the moment.
Proactive: Scott, thanks so much for the update.