Horizon Gold Launches Drilling to Expand 2.14Moz Gum Creek Resource

About Horizon Gold Limited

Horizon Gold Limited (ASX: HRN) is a Perth-based exploration company focused on its 100% owned Gum Creek Gold Project in Western Australia’s Youanmi Terrane, a historically productive district with more than 1.1 million ounces previously mined. Since its incorporation in 2016, the company has advanced Gum Creek into a significant JORC-compliant resource of 44.45 million tonnes at 1.50 g/t Au for 2.14 million ounces, with 63% classified as Indicated, and continues to pursue further growth through exploration across multiple prospects. Horizon Gold closed at A$0.55 per share at 4 pm AEST on 8 August 2025.

Resource Expansion Strategy and Projected Mine Life

Horizon Gold Limited has commenced a 4,400-metre reverse circulation drilling program at its 100% owned Gum Creek Gold Project in Western Australia. The program, targeting four prospects—Goldfinch, Robin, Thornbill West and Toucan—sits within three kilometres of the Gidgee Mill site and is intended to generate open pittable, free milling maiden resources in accordance with JORC 2012 standards. This expansion directly builds on the existing mineral resource estimate of 44.45 million tonnes grading 1.50 grams per tonne, equating to 2.14 million ounces of contained gold. Notably, 63% of this inventory, or 1.35 million ounces, is classified as Indicated, providing a higher degree of geological confidence and immediate mine planning potential.

The timing of this program is strategically important. Horizon’s prior scoping study envisaged a 10-year mine life at Gum Creek, and any incremental resource delineation from the current drilling could meaningfully extend this horizon. The company has already flagged that 12 additional open pit resource areas remain outside both scoping and feasibility models, which indicates substantial latent potential to push the project into the upper echelon of mid-tier Australian gold developers. The RC program is expected to conclude by October 2025, with results feeding directly into feasibility work.

Parallel to the RC drilling, Horizon will launch a deep diamond drilling campaign at the Kingfisher and Omega deposits. This program is designed to define high-grade underground resources, advancing a maiden resource at Omega while expanding Kingfisher. These underground assets are critical for long-term project economics, providing higher-margin ounces that can underpin cash flow stability in periods of gold price volatility.

Financial Modelling and Economic Implications

The current mineral resource equates to approximately A$7.1 billion in gross in situ value at a gold price of A$3,300 per ounce, before applying recovery, capital or operating cost assumptions. Assuming a conventional processing recovery rate of 90%—a typical benchmark for free milling deposits—recoverable gold stands at 1.93 million ounces, with a potential recovered metal value of A$6.4 billion. By industry standards, the capital intensity of Western Australian open pit gold projects of similar scale generally ranges between A$150 and A$250 per recovered ounce of annual capacity, implying upfront capital expenditure requirements in the vicinity of A$450 million to A$650 million for a mid-tier production scenario.

Operating costs in the Murchison region typically fall between A$1,400 and A$1,800 per ounce all-in sustaining cost (AISC). If Gum Creek delivers output at the midpoint of this range—say, A$1,600 per ounce—then at prevailing gold prices of A$3,300 per ounce, operating margins of A$1,700 per ounce are achievable. On annual production of 150,000 ounces, this translates into operating cash flows of approximately A$255 million per year. With the potential to sustain production over more than a decade, Gum Creek represents a cash flow engine with cumulative pre-tax free cash flows in the range of A$2.5 billion to A$3 billion, contingent upon further resource definition and development execution.

Horizon’s financial trajectory hinges heavily on the conversion of Inferred resources, which currently account for roughly 790,000 ounces. Success in the current RC and diamond programs could materially shift ounces into the Indicated category, improving debt financing prospects. Historically, lenders assign little value to Inferred resources in project financing, whereas Indicated ounces are bankable. For Horizon, a 20–30% conversion rate in upcoming drill programs could add more than 200,000 ounces to the Indicated category, equating to an additional A$660 million in attributable in situ value at current prices.

Investor Sentiment and Market Positioning

Horizon Gold operates within a highly competitive Western Australian gold sector dominated by established producers such as Northern Star Resources and Regis Resources. While Gum Creek is far smaller in scale, its wholly-owned status and lack of joint venture encumbrances give Horizon strategic optionality, whether through outright development, partnership or future acquisition interest from larger producers seeking district consolidation.

Market precedent provides a useful valuation framework. In 2021, Capricorn Metals’ Karlawinda Gold Project, with a reserve base of 1.2 million ounces, attracted a market capitalisation uplift to more than A$1.4 billion on first gold pour, despite similar operating cost guidance in the A$1,500–A$1,600 per ounce range. Applying comparable valuation metrics to Horizon’s potential production profile, a fully derisked Gum Creek Project could justify an enterprise value of A$1.2 billion to A$1.5 billion, which is materially higher than Horizon’s present market capitalisation of under A$100 million.

Investor confidence is likely to be influenced not only by resource growth but also by the timing of the ongoing feasibility study. With scoping work having demonstrated a 10-year operation, the feasibility stage will provide detailed project economics, capital cost precision and execution schedules. In a market where Australian-listed gold developers trade at enterprise value-to-resource multiples between A$50 and A$90 per ounce, Horizon’s current implied valuation is closer to A$20 per ounce, indicating a steep discount and corresponding upside potential if the drilling program delivers meaningful upgrades.

Strategic Growth Path and Future Capitalisation

The Gum Creek Project is geographically positioned within trucking distance of several operating gold plants, further enhancing its development flexibility. Processing options include stand-alone development or toll treatment agreements, both of which could accelerate time-to-cashflow scenarios. If Horizon pursues an independent mill construction strategy at the historical Gidgee Mill site, the project benefits from existing infrastructure footprints, reducing greenfield development risk and associated permitting timelines.

Capital raising remains the key challenge. With exploration and feasibility work intensifying, Horizon will likely require fresh equity injections in 2026. Assuming a staged financing model of A$30–50 million in near-term equity for drilling and feasibility costs, followed by project-level debt financing for construction, shareholder dilution could be significant unless offset by resource growth and rising market valuations. However, equity injections at higher share prices could limit dilution.

The potential for underground expansion at Swan, Swift, Kingfisher and Omega introduces another layer of scalability. Underground ounces, which typically grade higher than open pit resources, can be selectively mined to enhance project cash margins during weaker gold price cycles. This strategic mix of open pit and underground operations could ultimately position Gum Creek as a multi-decade asset with sustained relevance in Western Australia’s gold sector.