Northern Star Resources will consider one of three options to expand its mill at KCGM (Kalgoorlie Consolidated Gold Mines).
Located in Kalgoorlie, Western Australia, KCGM is one of the world’s largest and most significant gold mines with a mineral resource of 27.4 million ounces and an ore reserve of 11.9moz.
The company said growth options for an asset of this size was significant and unmatched across Australia.
Northern Star acquired 50 per cent of KCGM in January 2020 and assumed full control after the merger with Saracen Mineral Holdings in February last year.
Since then, Northern Star has made major progress in enhancing the understanding of the underground resource base as well as optimising the mine through new fleet delivery to enable increased material movements.
The options were arrived at after a mill optimisation pre-feasibility study (PFS) was carried out, which also enhanced Northern Star’s social investment by ensuring KCGM can make a responsible and significant contribution to sustainable mining, and offering broader ESG benefits in the Goldfields region, including in the areas of safety, social performance, employment and infrastructure.
The expansion possibilities were:
• Expand to 17mtpa milling capacity: bolt-on expansion
• Expand to 24mtpa milling capacity: 70 per cent process plant refurbishment
• Expand to 22mtpa milling capacity: full rebuild (greenfield process plant)
Northern Star managing director Stuart Tonkin said all three routes were financially compelling and would deliver meaningful operational benefits.
“We believe Northern Star’s powerful combination of continued operational excellence, the strongest asset portfolio in our history and a commitment to deliver social value, will enable us to provide attractive returns and long-term value growth,” he said.
“The PFS determined that the three options offer significant operational benefits to potentially create substantially more value than maintaining today’s 13mtpa milling capacity.
“It showed an expanded mill capacity, underpinned by a simplified processing circuit flow sheet, could lower KCGM’s AISC by up to $200 per ounce as well as boost annual production by up to 200,000oz.
“The key difference between the three mill expansion options is free cash flow generation, a key strategic pillar for the company.
“We will now embark on the final study phase to optimise the best pathway to generate superior returns for shareholders. We will not grow for growth’s sake but remain focused on the disciplined and transparent allocation of capital and a strong balance sheet.”
Regardless of the outcome of the final feasibility work to determine the most valuable option, the KCGM pathway to 650 kilo ounces per annum by FY26 remains unchanged, with regional synergies and production growth enabling a lower AISC position than being achieving today.