ASX-listed Horizon Minerals has completed the prefeasibility study (PFS) for the Pennys Find gold project, in Western Australia.

The PFS confirms the project’s viability as a high-grade underground mining operation.

Located 50 km northeast of Kalgoorlie-Boulder in Western Australia, the project is fully permitted and set to become a key contributor to Horizon’s gold production pipeline.

The maiden ore reserve stands at 3.2-million tonnes at 3.2g/t gold for 3.3-million ounces, representing 99.7% of the production target. The PFS outlines an underground mining schedule that forecasts the extraction of 3.29-million tonnes at a diluted grade of 3.2g/t gold, resulting in 3.35-million oz over a 23-month life-of-mine.

Metallurgical recovery is estimated at 88.9%, producing 2.98-milion ounces of gold through toll milling, with the project expected to generate A$24-million in free cash flow post-capital expenditure, assuming a gold price of A$3 600/oz.

Development options include processing through third-party infrastructure or Horizon’s wholly owned facilities, which are to be acquired through the proposed merger with Poseidon Nickel.

The Pennys Find project, previously mined as an openpit by Empire Resources in 2018, yielded over 18.3-million ounces of gold at a grade of 4.47g/t gold.

Its high-grade mineralisation is hosted within quartz veins located at the contact between basalt and shale. The PFS integrates metallurgical assumptions based on toll milling agreements within the Kalgoorlie region.

All statutory approvals, including environmental and hydrology studies, are already in place to support the transition to underground mining, the miner said, adding that it was conducted with an accuracy of about 15%.

The study evaluated mining, metallurgical, geotechnical and hydrological parameters, resulting in key metrics such as capital costs of A$23.8-million, operating costs of A$59.5-million and an all-in sustaining cost (AISC) of A$2 794/oz. The net present value (NPV) of the project is estimated at A$21.4-million, applying a 5% discount rate.

Mining operations will use a bottom-up, longhole stoping method, with cemented rockfill providing ground stability. Contractors will handle underground mining, ore and processing, while Horizon provides management and technical oversight.

Development activities, including pre-production dewatering, are scheduled to take place over 13 months, with ore development starting in month three and stoping operations beginning in month five.

Infrastructure such as run-of-mine (RoM) pads, water storage and internal roads are already in place, and operational readiness is further supported by approvals for groundwater extraction and mine dewatering.

Horizon MD and CEO Grant Haywood expresses optimism about the project, describing it as a high-grade gold asset with robust cash flows that can be developed when market conditions are favourable.

He noted that Pennys Find is part of Horizon’s extensive pipeline of near-term development projects, which include Cannon and Kalpini, and ongoing mining at Boorara and Phillips Find.

These projects are ranked based on development potential and cash flow generation, and position Horizon to capitalise on the current strong gold price environment.

Horizon plans to fund the development of Pennys Find using cash flows from its existing operations, further strengthening its financial position while aligning with its growth strategy.