Horizon studies, funding unlock 100koz future for WA gold hub

Horizon Minerals has made a strong case for joining the ranks of meaningful Western Australian gold producers after studies confirmed its Black Swan processing hub can underpin a standalone gold operation with serious punch.

Crucially, Horizon has also removed the funding question mark that so often dogs development stories. The company has launched a fully underwritten A$175 million institutional placement, with an additional share purchase plan of up to $10 million on offer to existing holders at the same price as the placement, to fully fund the Black Swan refurbishment and associated mine development.

The freshly completed scoping studies have laid out a compelling blueprint to convert the former nickel plant into a 2.2-million-tonne-per-year gold hub, capable of producing about 102,000 ounces annually over an initial five-year mine life. 

The plan centres around pulling together ore from a portfolio of nearby open pit and underground deposits scattered around the Kalgoorlie region and weaving them into a centralised hub-based processing strategy that keeps capital intensity low while maximising flexibility. 

About three-quarters of the proposed mine feed sits in the higher-confidence measured and indicated categories, giving the production profile a reassuring level of backbone.

At an assumed gold price of A$5,500 an ounce, the numbers don’t just shine brightly, they dazzle. Horizon is forecasting a pre-tax free cash flow approaching A$1 billion, a pre-tax NPV of about A$631 million and an eye-catching internal rate of return north of 80 per cent. 

Even better, the payback period is forecast at roughly 18 months from commissioning.

All-in sustaining costs are estimated at A$3,350 an ounce, leaving plenty of fat in the margins at today’s buoyant gold prices. 

That cost profile is helped by the existing infrastructure at Black Swan, which includes crushers, mills and site services, dramatically reducing the infrastructure bill when compared to building a greenfields plant from scratch.

Horizon Minerals managing director and chief executive officer Mr Grant Haywood said: “The study outcomes demonstrate the quality of our assets and show a robust economic case to support our vision of becoming a meaningful, independent WA gold producer. Our initial plans of achieving a throughput of 1.5Mtpa through the Black Swan processing facility with a minimum 5 year life of mine plan have well and truly been met with the plant study having now being upscaled to its nameplate capacity of 2.2Mtpa.”

The new studies have dovetailed neatly with Horizon’s recently updated ore reserve position, which now stands at 4.3 million tonnes grading 1.54 grams per tonne for 214,000 ounces of gold. 

Those reserves, combined with a broader resource base of about 1.9 million ounces across the company’s Kalgoorlie portfolio, provide a ready pipeline to keep the mill fed well beyond the initial mine plan.

Not wanting to waste any time, board approval has already been granted for early works, including front-end engineering design, long-lead item procurement and contractor engagement, all with an eye to kicking off construction by mid-2026 and commissioning the Black Swan mill in mid-2027.

Significantly, Horizon - in joint venture with BML Ventures – currently has about 15,000 ounces of gold contained in ore stockpiled or on the run-of-mine (ROM) pad at the Phillips Find gold project, about 45km north-northwest of Coolgardie in Western Australia.  

At a current gold price of around A$7000 per ounce, that parcel represents a handsome pre-processing stockpile, with an above-ground value reaching well into nine figures.

That additional financial horsepower allows Horizon to lean on the throttle without needing to rely on future cash flows or rolling the dice on debt markets. In a sector where underfunded plans can quickly unravel, being fully funded from the outset is a major tick in the box.

There is also significant upside simmering beneath the surface. Several deposits, including the high-grade Burbanks underground, are still undergoing resource upgrades and optimisation work, offering scope to increase plant throughput, extend mine life, or boost grades over time.

If Horizon can execute this entire concept to plan, the commissioning and first feedstock into Black Swan could herald the company’s graduation from regional consolidator to bona fide mid-tier gold producer. 

In a market hungry for Australian gold stories with scale, funding certainty and near-term production, this particular Black Swan might just turn out to be a golden goose.
 

Is your ASX-listed company doing something interesting? Contact: matt.birney@businessnews.com.au