Northern Star Resources will more than double the processing capacity of its flagship asset, Kalgoorlie Consolidated Gold Mines (KCGM), after the company’s board approved a $1.5 billion mill expansion.
A three-year construction phase will enable throughput for the KCGM mill to increase from 13 million tonnes per annum (Mtpa) to 27Mtpa, with ramp-up to commence from the 2026–27 financial year (FY27) before reaching steady-state production in FY29.
The mill expansion is estimated to deliver a post-tax internal rate of return (IRR) of 19 per cent and pay itself off after 4.6 years (at a $2600 per ounce gold price).
“Today is an exciting day for Northern Star and a historic new chapter for this world-class asset,” Northern Star managing director Stuart Tonkin said.
“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.
Tonkin said the mill expansion was financially compelling and would generate significant value for Northern Star 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,” he said.
“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.”
With a mineral resource of 28.3 million ounces (Moz) and an ore reserve of 12.2Moz, KCGM is one of the world’s largest gold mines, with its sheer size supporting the asset’s growth optionality.
The KCGM mill expansion forms part of Northern Star’s five-year growth strategy, where the company hopes to be selling between 1.8–2.2 million ounces of gold per annum by FY26. This will see mill expansions also take place at Northern Star’s Yandal and Pogo operations.
Subscribe to Australian Resources & Investment and receive the latest news on commodity prices, resource developments, executive movements and more.