Horizon Gold Ltd (ASX:HRN, OTC:HZGLF, FRA:HO0) has continued to outline its growth strategy for the Gum Creek Gold Project in Western Australia as the company advances a final feasibility study aimed at supporting a standalone gold operation.
Speaking with Proactive at the Gold Coast Investment Showcase, managing director Scott Williamson said the company had made significant progress in recent months following a $30 million capital raising that is helping fund an extensive exploration and development program.
Williamson said approximately $20 million would be directed towards exploration, including around 80,000 metres of drilling designed to grow resources and identify opportunities beyond the current mine plan. Recent reverse circulation drilling results have continued to demonstrate the project's potential, while diamond drilling is targeting underground extensions to known mineralisation.
A key near-term catalyst for Horizon Gold is the completion of its final feasibility study. Williamson said the study was in its final stages and represented an important step in transitioning the company from explorer to developer and ultimately producer.
The proposed development centres on a 2.4-million-tonne-per-annum carbon-in-leach processing plant designed to process free-milling ore from the Gum Creek operation. Williamson indicated the project could support annual gold production of approximately 100,000 ounces.
While toll treatment opportunities remain available through several nearby processing plants, Williamson said the company's preferred pathway is to develop its own processing infrastructure. He suggested that additional milling capacity may be required in the region over the longer term and that ownership of processing facilities would provide greater strategic flexibility.
Funding discussions are also progressing. Williamson said Horizon Gold was receiving strong interest from both domestic and international lenders and expected project financing would likely involve a conventional debt and equity structure.
From a valuation perspective, Williamson argued that Horizon Gold remains undervalued relative to several comparable gold development companies. He noted that the company trades at a lower value per resource ounce than many peers despite its advanced development status and significant exploration upside.
One of the more notable comments from Williamson was that "it's a story that hasn't been told, and it's a story that we're now just bringing to market."
Investors are likely to focus on several upcoming catalysts, including continued drilling results, resource growth, completion of the feasibility study, project financing progress and the company's advancement toward a development decision. Success across these milestones could help support a market re-rating as Horizon Gold works toward bringing the historic Gum Creek operation back into production.
Key highlights
- Horizon Gold recently raised $30 million to accelerate development activities.
- Approximately $20 million will be invested in exploration.
- Planned drilling program totals around 80,000 metres.
- Recent RC drilling delivered encouraging results across the Gum Creek Gold Project.
- Diamond drilling is targeting underground resource extensions.
- Final feasibility study is nearing completion.
- Proposed standalone operation includes a 2.4Mtpa carbon-in-leach processing plant.
- Target production rate is approximately 100,000 ounces of gold annually.
- Six nearby processing plants provide potential toll treatment opportunities.
- Strong interest has been received from Australian and international lenders.
- Management expects a conventional debt and equity funding structure.
- Horizon Gold believes it trades at a discount to comparable gold developers.
- Key catalyst is the transition from explorer to developer and producer.
Proactive: Welcome back. I'm your host, Kerry Stevenson. Once again, I'm joined by Scott Williamson here at the Gold Coast Investment Showcase. Horizon Gold has the Gum Creek Gold Project in Western Australia, located in a prolific gold mining district surrounded by major operators. With a number of catalysts approaching, I wanted to discuss what shareholders and potential investors should be watching.
Scott Williamson: It's been a busy few months in the role. We've raised $30 million and plan to invest around $20 million into exploration. That includes approximately 80,000 metres of drilling, so investors can expect a steady flow of exploration results.
We've recently released some strong RC drilling results, and we also have two diamond drill rigs targeting underground extensions. In addition, we're extending the open pits and evaluating oxide material.
We're currently completing a final feasibility study. It's effectively bankable, and we're receiving strong interest from banks. We're moving from the explorer stage into development and ultimately production, and we want to achieve that as quickly as possible.
The asset has missed the last two decades of higher gold prices. It operated from the late 1980s through to the early 2000s, and now is the right time to bring it back into production.
Proactive: As you move toward a final investment decision, are you considering toll treatment or building your own processing plant?
Scott Williamson: The study is based on building our own processing facility. We're looking at a 2.4-million-tonne-per-annum carbon-in-leach plant. It's a free-milling deposit with simple metallurgy and a targeted production profile of around 100,000 ounces per year.
There are toll treatment opportunities available, with six mills located within 150 kilometres. That could provide an avenue for early cash flow. However, our focus remains on developing our own plant because we believe existing mills will become increasingly utilised over time.
We see a need for additional processing capacity in the region and that's why we're pursuing a standalone plant.
Proactive: Building a processing plant can require significant capital. How do you see funding developing?
Scott Williamson: We would expect a conventional debt and equity structure. Typically, that might be around 60% debt and 40% equity, although the final mix will depend on market conditions and our valuation at the time.
Our focus is on managing shareholder dilution while securing the capital required to advance the project. It's encouraging to see strong interest from both Australian commercial banks and international lenders.
It's a good environment for developing a gold project from both a debt and equity perspective.
Proactive: The company's market capitalisation is around $200 million. Why should investors be paying attention?
Scott Williamson: We're trading at a significant discount to many of our peers. On a per-ounce basis, we're valued at approximately $80 to $90 per ounce, while some comparable companies trade at $200 to $300 per ounce.
It's a story that hasn't been told, and it's a story that we're now just bringing to market. As we move through development and toward production, we believe there is potential for a re-rating.
Proactive: That's Scott Williamson from Horizon Gold at the Gold Coast Investment Showcase. Thanks for joining us.
Scott Williamson: Thanks, Kerry.