Northern Star Resources has revealed a transformation plan for its Kalgoorlie Consolidated Gold Mines (KCGM) mill that could add up to 11 million tonnes per annum (Mtpa) of extra capacity.
The major gold miner said three expansions options were considered as part of the KCGM mill optimisation pre-feasibility study (PFS):
- 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 the mill’s current capacity of 13Mtpa would need to be increased to optimise future returns from the asset.
“The PFS determined that the three mill expansion options are financially compelling and offer significant operational benefits to potentially create substantially more value than maintaining today’s 13Mtpa milling capacity,” he said,
“The PFS work showed an expanded mill capacity, underpinned by a simplified processing circuit flow sheet, could lower KCGM’s AISC (all-in sustaining cost) by up to $200 per ounce (oz) as well as boost annual production by up to 200,000oz.”
The capital expenditure (capex) needed to support the expansion options would range between $440 million and $1.4 billion, with Tonkin indicating the 24Mtpa option could hit the sweet spot of $1 billion.
“If you look at … fully rebuilding a greenfields 22Mtpa standalone plant, of course it’s going to be the largest capex – there’s a lot of infrastructure to replace, establish and start with for a greenfields plant – and therefore it doesn’t give us the best internal rate of return (IRR) relating to the expenditure that we put in place,” Tonkin said in an investor conference call.
“We’ve got a hybrid that sits in the middle (of the two options) and that’s the 24Mtpa option which effectively replaces nearly 70 per cent of the current circuit, but ultimately it drives a very balanced capex for the longevity of the asset, and it gives us a very compelling IRR.”
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.
KCGM’s mineral resource is currently 27.4Moz with an ore reserve of 11.9Moz.