The price of gold has been on a blistering run in recent times.
Over the past month alone, the precious metal has surged by about 10% to surpass US$3,600 per ounce for the first time in history.
And leading ASX 200 gold stocks have followed suit.
For instance, the world's biggest gold miner Newmont Corporation CDI (ASX: NEM) has seen its share price climb by 11% in just a month.
Northern Star Resources Ltd (ASX: NST) has fared even better with a 12% ascent, whilst Evolution Mining Ltd (ASX: EVN) has surged by 16% since mid-August.
But another less heralded ASX gold stock has trumped these three gold mining titans.
That company is Theta Gold Mines Ltd (ASX: TGM), with its shares rocketing by 41% over last month to reach $0.24 apiece at the time of writing.
Let's find out what's driving the rally.
Image source: Getty Images
South African gold developer
Theta is an emerging gold producer focused on restarting historical underground gold mining operations at its Transvaal Gold Mining Estates (TGME) project in South Africa.
Here, the company is targeting near-term production from four core mines all situated within 40 kilometres of a central processing plant.
TGME is permitted and development-ready, with key mining rights and infrastructure already in place to support future mining operations.
All up, the project boasts a resource base containing more than 6.1 million ounces of gold.
Robust economic profile
In 2022, Theta completed a feasibility study assessing the merits of bringing TGME to life.
The study outlined production of 1.1 million ounces over a 12.9-year mine life, translating to annual output of between 90,000 and 120,000 ounces of gold.
However, Theta's strategy involves scaling production to 160,000 ounces of gold per annum within five years of commencement of mining.
The study also projected an attractive cost profile, with a targeted all-in sustaining cost (AISC) of around US$1,000 per ounce.
This could position TGME amongst the lowest-cost gold producers in both South Africa and Australia.
Based on those assumptions, the study estimated a pre-tax net present value (NPV) of US$324 million and an internal rate of return (IRR) of 65%.
However, it's important to note that this feasibility study was modelled on an average gold price of US$1,642 per ounce, about 55% lower than current levels.
And that's where things could get interesting for this ASX gold stock.
Building momentum
Theta is now reassessing TGME's economics under today's much higher gold price.
An updated feasibility study will model the project at US$3,000 per ounce and explore extending the mine life beyond 14 years.
In other words, this new evaluation has potential to deliver a significantly stronger economic case than the 2022 study.
Theta expects to unveil its findings in the current quarter.
Furthermore, the group also announced a significant milestone earlier this week with the launch of construction works at TGME.
Here, the start of earthworks and civil engineering activities represent key steps in the path to production for this ASX gold stock.
All up, Theta is targeting first gold pour at TGME in the March quarter of 2027.
Hold your horses
Theta's efforts to become a significant gold producer appear well on track.
However, mining operations and the resulting cash flow remain a long way away for this ASX gold stock.
In essence, the road to production is littered with risks that investors ought to weigh carefully.
The company still needs to secure substantial funding to bring the project to life, and there's no certainty that its feasibility study will translate into a profitable mining operation.
For what we know, gold prices could be substantially lower by the time mining begins.
