Could Capricorn’s Orion South Underground Unlock New Gold Production at Mt Gibson?

Background and Context

Capricorn Metals Ltd has taken a significant step forward in its Mt Gibson Gold Project (MGGP) by releasing the results of a conceptual underground mining study focused on the Orion South area. This study explores the potential to extend mining operations below the existing open pit design, aiming to increase the project’s gold production profile beyond the current forecast of 150,000 ounces per annum over 15 years.

The Mt Gibson Gold Project, located in Western Australia's Murchison region, already boasts an open pit Ore Reserve of 2.74 million ounces. The new study leverages an updated underground Mineral Resource Estimate (MRE) of 895,000 ounces of gold at Orion South, which lies beneath the open pit.

Study Highlights and Methodology

Conducted with the assistance of underground mining consultants Oreology Group Pty Ltd, the conceptual study assessed the viability of underground mining using long hole open stoping methods. The study identified approximately 6.1 million tonnes at 2.6 grams per tonne gold (equating to 513,000 ounces) within mineable shapes, applying a cut-off grade of 1.75 g/t. Importantly, the study is preliminary, with an accuracy of +/- 35%, and does not yet include financial outcomes or production targets.

Access to the underground resource is proposed via two declines from the Aries open pit, allowing underground mining to occur concurrently with open pit operations. The development timeline anticipates a nine-month period to establish access, with sustained production potentially achievable 18 months after portal commencement.

Strategic Implications and Next Steps

Capricorn’s Executive Chairman, Mark Clark, emphasized the strategic importance of this study, noting that the scale of the underground resource now justifies further assessment of underground mining options. The company plans to pursue a Pre-Feasibility Study (PFS) to refine mine planning and design, supported by ongoing infill and extensional drilling to upgrade resource confidence.

While the underground resource currently comprises 33% Indicated and 67% Inferred categories, Capricorn is committed to advancing technical studies, including metallurgical, geotechnical, and hydrological evaluations. These efforts aim to integrate higher-grade underground zones into the overall mine plan, potentially extending the mine life and enhancing production rates.

Funding for underground development is expected to come from existing cash reserves and cash flow from Capricorn’s Karlawinda Gold Project and MGGP open pit operations, though the company acknowledges potential risks if external financing becomes necessary.

Regulatory and Market Considerations

The project is progressing through advanced regulatory approval stages, with the final Public Environmental Report submitted and public consultation underway. Capricorn’s approach to concurrent open pit and underground mining could position Mt Gibson as a long-life, multi-mining method operation, a prospect that may attract investor interest given the potential for increased production and resource utilisation.

However, the conceptual nature of the study and the predominance of inferred resources mean that investors should exercise caution. No Ore Reserves have been declared for the underground component, and the company has not provided capital cost estimates or production targets at this stage.