A newly released study indicates it would cost $126 million to bring the Horn Island gold project online, and the operation should deliver EBITDA of $1.3 billion over the life of the mine.

Alice Queen today announced the findings of a project definition study (akin to a scoping study), saying the work confirmed compelling economics for the proposed restart of mining operations at the Far North Queensland site.

Staged open-cut mining at Horn Island, in the Torres Strait, would be expected to yield about 466koz of gold over seven years of active mining and four years of additional stockpile processing.

The study points to a pre-tax estimated net present value of $706 million, producing an internal rate of return of 109 per cent at an assumed $6000/oz gold price.

“The project definition study indicates that some very strong cash flows are potentially available to us at Horn Island,” Alice Queen (ASX: AQX) managing director Andrew Buxton said.

“The PDS includes a considerable amount of recent additional work and information; however, it’s merely a snapshot of how attractive the project looks in the current gold price climate.

“Our team is about to commence further exploration drilling at Horn Island and we are confident that we can improve these financial metrics even further as we continue on our pathway to significantly build the Horn Island mineral resource.”

The project definition study was prepared by Australian Mine Design and Development, Mincore, Onward and Dale Sims Consulting.

The Horn Island site hosted small-scale mining from 1894 to about 1920 and an AuGold open-cut operation from 1987 to 1989.

Alice Queen has been exploring and studying the Horn Island deposit since 2014, commencing diamond drilling in late 2015.

It commissioned the project definition study to confirm technical and economic potential and frame the pathway to a mining restart.