Horizon Gold's DFS charts 880,000 ounce Gum Creek gold mine

Robust Open Pit Plan Anchors Gum Creek's Revival

Horizon Gold Limited (ASX:HRN) has delivered a Definitive Feasibility Study (DFS) for its 100% owned Gum Creek Gold Project in Western Australia, confirming the project’s potential to become the state’s next major gold mine. The study envisages a 10-year open pit operation producing 880,000 ounces of gold, with an average of 98,000 ounces annually in the first five years, and first gold targeted for the second half of 2028.

The DFS is underpinned by a maiden Ore Reserve Estimate of 18.2 million tonnes at 1.24 g/t gold, containing 728,000 ounces, and a broader Production Target of 25.1 million tonnes at 1.19 g/t for 962,000 ounces mined. Notably, 76% of the production target ounces are Probable Ore Reserves, with the remainder comprising Indicated and a modest 6% Inferred Resources, the latter carrying inherent geological uncertainty but not critical to project viability.

Strong Financial Metrics and Capital Discipline

The project requires a pre-production capital investment of approximately A$350 million, covering mine development, a new 2.4 Mtpa processing plant, and supporting infrastructure, including accommodation expansions and road upgrades. Operating costs are competitive, with an all-in sustaining cost (AISC) of A$2,995 per ounce, reflecting efficient mining and processing.

Financial modelling at a base case gold price of A$5,500 per ounce delivers a pre-tax net present value (NPV5) of A$1.31 billion and an internal rate of return (IRR) of 53.1%, with a payback period of just under two years from first production. Post-tax NPV5 stands at A$894 million with a 41.7% IRR. Sensitivity analyses highlight the project's resilience to fluctuations in gold price, grade, and operating costs.

Processing and Infrastructure Tailored for Expansion

The processing plant design employs conventional crushing, ball milling, gravity recovery, and carbon-in-leach (CIL) technology, achieving an overall gold recovery of 91.5%. The plant is engineered for future expansion to 3.0 Mtpa, enabling capacity growth without major redesign, should additional ore sources be developed.

Existing infrastructure at Gum Creek, including a 50-person camp, airstrip, and haul roads, provides a solid foundation. Planned upgrades include a new 252-room accommodation village, a hybrid LNG-solar power plant, and enhanced communications. These developments aim to support both construction and steady-state operations efficiently.

Approvals and Funding on Track for Mid-2027 FID

Environmental and heritage baseline studies have been completed, with no significant impediments identified. The project holds an approved Mining Proposal and clearing permit valid until 2029, streamlining the restart of mining activities. Remaining approvals are progressing, targeting a Final Investment Decision (FID) in the second quarter of 2027.

Horizon has engaged Orimco Pty Ltd as financial adviser to secure project financing, expected to be a mix of debt and equity. The company believes the DFS's strong technical and financial outcomes, combined with Gum Creek’s location in a top-tier mining jurisdiction, will attract robust funding interest. However, there is no certainty of funding availability or terms, which may impact existing shareholders.

Upside Potential from Underground and Sulphide Resources

The DFS focuses on free-milling open pit ore, but substantial upside exists beyond this scope. Free-milling underground mineral resources of approximately 3.6 million tonnes at 3.6 g/t gold (416,000 ounces) at Swan, Swift, and Kingfisher, along with a 2.9 million tonne sulphide resource at Wilsons grading 4.3 g/t gold (400,000 ounces), remain outside the current mine plan. Ongoing drilling aims to convert inferred resources to indicated status and assess the economic viability of underground mining, which could extend mine life and lift production profiles.

Additionally, the project hosts 9.3 million tonnes of sulphide mineralisation grading 2.3 g/t gold (698,000 ounces), with studies underway to evaluate refractory processing options. Success here could unlock further value in future project stages.

Exploration and Early Works to De-risk Development

Horizon is advancing early site works, including expanding accommodation and upgrading roads, leveraging substantial legacy infrastructure from previous operations. These initiatives aim to reduce schedule risk and improve readiness for construction and production.

The company is also exploring low-capital early production pathways, such as toll-processing ore at third-party plants or joint ventures, to generate early cash flow while deferring major capital expenditure on the process plant.

Exploration drilling continues along the 80-kilometre Gum Creek greenstone belt, targeting resource extensions and new discoveries, underpinning the project's long-term growth potential.