Capricorn Metals Unveils Mt Gibson Underground Mine with 260,000 Oz Annual Production

Mt Gibson Goes Underground and Scales Up

Capricorn Metals (ASX:CMM) has delivered a seismic upgrade to its Mt Gibson Gold Project (MGGP), unveiling an underground mining operation for the first time. The updated Pre-Feasibility Study (PFS) reveals a 19.25-year mine life with gold production ramping up to a steady-state of 260,000 ounces per annum by year three; a significant leap from previous open pit-only plans.

This ambitious expansion is underpinned by a 34% increase in Ore Reserves to 3.67 million ounces, including a maiden underground reserve of 365,000 ounces at a robust 2.3 g/t grade. Mineral Resources have also grown 20% to 5.67 million ounces, with ongoing drilling expected to further bolster underground inventories, particularly at Orion South and Lexington.

Compelling Economics and Fully Funded Development

Financially, the project is compelling. The PFS forecasts a rapid pre-tax payback of just 14 months, with life-of-mine (LOM) revenue of A$19.3 billion and pre-tax free cash flow of A$12 billion. The post-capex, pre-tax net present value (NPV7.5) stands at a substantial A$6.1 billion, assuming a conservative gold price of A$5,500 per ounce.

Capital expenditure is estimated at A$474 million, covering processing plant, infrastructure, and pre-production mining costs. Importantly, the underground development does not require additional federal environmental permits, and state permitting is advancing smoothly. Capricorn is targeting the start of site development in Q2 FY27, aiming for production commencement by Q3 FY28.

Mining and Processing Details

The underground mine design employs long hole open stoping with rib and sill pillars, a method well-suited to the steeply dipping lodes averaging 5–10 metres wide. Underground ore will displace lower-grade open pit ore in processing, contributing about 14% of total production over the LOM, with potential for growth as drilling continues.

Processing will utilise a conventional 5 Mtpa plant with proven gravity and carbon-in-leach (CIL) technology, designed for high recoveries averaging 92%. The plant design is complete, enabling procurement to start in Q1 FY27.

Karlawinda Expansion and Group Growth Outlook

Alongside Mt Gibson, Capricorn's Karlawinda Gold Project (KGP) is nearing completion of its expansion to 6.5 Mtpa processing capacity, targeting 150,000 ounces per annum. Combined, Capricorn's group gold production is expected to exceed 400,000 ounces per annum within 2.5 years of MGGP operations starting.

The company’s total Ore Reserves have surged 33% to 5.24 million ounces, with Mineral Resources up 29% to 8.66 million ounces, reinforcing Capricorn’s position as a mid-tier Australian gold producer with long mine lives and strong growth potential.

Range 500 Aspirations and Future Expansion

Capricorn has set an aspirational target, dubbed Range 500, aiming to lift annual gold production to 500,000 ounces within five years. This goal hinges on the ongoing success of MGGP’s underground resource definition, the KGP expansion, and a Stage 2 options study underway for a second processing hub at the Golden Range Project, located 65–100 km north of Mt Gibson.

Preliminary results from the Golden Range study are expected in Q2 FY27, with aggressive drilling continuing at both Golden Range open pits and MGGP underground targets. The company plans to culminate these efforts in a Pre-Feasibility Study and Final Investment Decision in calendar 2027.

Risks and Funding

While the project economics are robust, Capricorn flags risks including gold price volatility, resource and reserve estimation uncertainties, funding, regulatory approvals, and operational challenges such as supply chain constraints and labour market pressures. The company is well-positioned financially with A$507 million in cash and bullion as of 30 June 2026, and no debt or hedging, supporting internal funding of MGGP development.

Capricorn's Executive Chairman Mark Clark highlighted the transformative nature of the Mt Gibson update, emphasizing the project's scale, quality, and longevity as key drivers for shareholder value.

Investors should watch closely the permitting progress, underground drilling results, and the outcomes of the Golden Range options study, all of which will shape Capricorn’s ability to realise its Range 500 ambition.