Monsters of Rock: Standout Aussie gold stock reveals next phase of growth

Capricorn Metals delivers maiden reserve and pre-feasibility study for Mt Gibson gold mine
Operation could make the company one of Australia’s 10 biggest listed gold miners, with production across two WA operation of 270,000ozpa
Production at the ~150,000ozpa mine could start as soon as H2 2025

$1.8 billion capped gold miner Capricorn Metals (ASX:CMM) is up a lazy ~1185% over the past five years, owing to the development and solid early days of its Karlawinda gold project in the Pilbara region of WA.

That early form has backed up investors who flocked into the stock on a Cult of Personality play to back Mark Clark, the former Regis Resources (ASX:RRL) and Equigold boss whose Midas touch has yet to really fail him in the ASX gold landscape.

Among the canny moves pulled off by Clark, CEO Kim Massey and their team was the cheap as chips acquisition of the Mt Gibson gold project in WA’s Mid West, which had been wrestled from Chinese control by an enterprising plainter and offloaded to CMM for $40m in cash and shares.

A pre-feasibility study today has laid out the case to make CMM one of Australia’s 10 biggest listed gold miners, with a reserve of 48.7Mt at 0.9g/t gold for 1.45Moz backing a project expected to deliver 152,000ozpa over its first 7.5 years at attractive all in sustaining cost of $1420/oz.

That is on a reserve shell priced at just $1900 per ounce of gold, around $1000/oz shy of current levels, with prices in excess of US$2000/oz ($2966/oz) at the mo.

According to CMM, the development of Mt Gibson would make it a 270,000ozpa miner, with Australia’s seventh biggest company gold reserve of 2.8Moz across it and Karlawinda.

Over the ~$339 million mine’s ten year life — $260m of that on a 5Mtpa processing plant and the rest for pre-development mining — it would deliver 138,000ozpa, $1.5 billion in operating cashflow, $1.2b in free cashflow and $3.6b in revenue at a pre-tax NPV of $828m and two year capital payback.

A feasibility study has been sanctioned, with construction expected to begin between July and December next year and first gold 12 months later (H2 2025).

Just the start?

Mt Gibson is an archetypical Clark project, with low strip ratios and shallow mine plans across seven historic open pits to an average depth of just 140m.

Similar in nature to Karlawinda, it’s the sort of project that was the management team’s bread and butter in the halcyon days of Regis.

90% of ore feed is expected to be sourced from three pits, Orion, Enterprise/Hornet and S2.

The miner says there is a large amount of inferred resources immediately beneath the depth of the planned ore reserve pits.

Clark, Capricorn’s executive chairman, said the miner would be looking to convert inferred resources to indicated in future drilling programs, but could also see underground and regional potential at Mt Gibson.

“We’re probably more back to that $5-7 million for the year, but if we were to hit something particularly if we find something regionally that’d be fantastic, because that could change schedules and make a difference,” Clark said on an analyst call.

“In terms of converting inferred to indicated that’s brilliant, that’s going to add mine life and we’re strong believers in that … but it’d be nice to be able to turn our gaze a little bit further afield.

“If you found something grade, strip or a different profile then that might change … the way you schedule things and could be advantageous.

“We’re definitely keen to try and balance confirming the resource to allow further conversion, extending the resource and then looking further afield.”