Northern Star Resources Limited’s board has approved the AU$1.5 billion KCGM mill expansion project in Kalgoorlie which will increase production, reduce costs and extend the life of the mine.
Located in Kalgoorlie, Western Australia, the KCGM operation is one of the world’s largest and most significant gold mines with a mineral resource of 28.3 million ounces and an ore reserve of 12.2 million ounces.
The expansion project will increase and modernise KCGM’s processing capacity from 13 million tonnes per annum (Mtpa) to 27 Mtpa. The three-year construction phase has commenced, with ramp-up expected from 2027 towards steady state of 27Mtpa by 2029.
Feasibility study has previously demonstrated that the project is financially compelling and delivers post-tax IRR of 19 per cent and 4.6 year payback (at A$2,600/oz gold price).
Northern Star managing director Stuart Tonkin said the announcement marks an exciting day for Northern Star and a historic new chapter for the asset.
“The board’s decision to approve the KCGM mill expansion and optimisation represents the next stage to revitalise our largest asset as well as the surrounding district for decades to come. This project is financially compelling, and a significant enabling step towards delivering our strategy to generate superior returns for our shareholders.
“Our confidence in the economics of KCGM to remain a long-life, low-cost gold mine has been further reinforced through the feasibility study phase.
“Expanding the processing capacity of KCGM will strengthen Northern Star’s portfolio, materially increase our free cash flow generation and progress our long-term strategy to be within the second quartile of the global cost curve.
“Further, the project is important in our sustainability journey and will also sustain hundreds of local jobs, economic and social investment, and local procurement opportunities in the Goldfields region.”