Alice Queen puts Horn Island’s A$706 million study to the drilling test

Horn Island carries the investment case

Alice Queen Limited (ASX:AQX) has spent the year turning Horn Island from an exploration story into a preliminary development proposition. Its June 2026 Project Definition Study outlined an 11-year operating case, comprising seven years of open-cut mining and four years processing stockpiled material, with a pre-tax NPV8 of A$706 million, a pre-tax IRR of 109% and estimated upfront capital of A$126 million.

Those figures are striking for a company with a market-scale exploration balance sheet, but they are not a feasibility result. The study assumes a gold price of A$6,000 an ounce, excludes financing costs and is based on preliminary assessments that do not support an Ore Reserve. Alice Queen says further exploration, evaluation and studies are required before it can provide assurance that the development case will be achieved.

The updated Horn Island Mineral Resource stands at 21.1 million tonnes grading 0.84 grams per tonne gold for 569,000 ounces, including 404,000 ounces in the Indicated category and 165,000 ounces Inferred. The study estimates 466,000 ounces of life-of-mine production, with average output of about 50,000 ounces a year during the mining phase and 29,000 ounces a year while stockpiles are processed.

Drilling must convert potential into confidence

The next test is geological rather than financial. Alice Queen began a drilling program after year-end targeting up to approximately 5,000 metres across resource extensions, higher-grade zones and satellite prospects including Southern Silicified Ridge and Cable Bay. The company intends to use the results to expand the resource, improve confidence in grade continuity and support further feasibility work.

Outside the current resource, the company has identified a conceptual Exploration Target ranging from 34.6 million to 52 million tonnes at 0.88 to 1.32 grams per tonne gold in hard-rock domains, equivalent to 1.22 million to 1.83 million ounces. Stockpiles, tailings and alluvial areas add a separate conceptual range of 310,000 to 460,000 ounces. These figures are not Mineral Resources, and Alice Queen expressly states that further exploration may not result in their conversion.

The proposed processing route combines TOMRA X-ray transmission ore sorting with a conventional carbon-in-leach circuit. The study assumes 86.5% overall plant recovery and an estimated all-in sustaining cost of A$2,877 an ounce after silver credits. Mining Lease Application 100454, covering about 445 hectares and seeking a 15-year term, remains subject to Queensland assessment, while environmental approvals and further stakeholder work are still required.

Funding remains the practical constraint

Alice Queen raised capital aggressively during the year, including A$1 million through convertible notes, a further A$790,894 associated with their conversion, a A$1 million placement and a A$3.56 million rights issue. Its major shareholder, Gage Resource Development, took up its full entitlement and held 51% of the ordinary shares at 22 September 2026. The share count increased to more than 2.32 billion by the end of June, making dilution and future financing part of the development equation.

The financial statements show a group loss of A$3.55 million, operating cash outflows of A$2.74 million and A$3.60 million in cash at 30 June 2026. The auditor identified going concern as a key audit matter. Directors said the group had plans to fund at least the next 12 months through available cash, future capital raisings and the proposed sale of the Yarindury exploration licence for A$900,000 to Alkane Resources, although that transaction had not completed at reporting date.

For now, Horn Island has a sizeable resource, an unusually strong preliminary economic model and a drilling program intended to improve the underlying evidence. The harder question is whether Alice Queen can turn those estimates into a permitted, financeable project without relying on the same favourable gold-price assumptions that made the headline economics so compelling.