Northern Star plans $1 billion KCGM transformation

Aerial view of the KCGM.

Northern Star Resources has unveiled a transformation plan for its Kalgoorlie Consolidated Gold Mines (KCGM) plant that could add up to 11 million tonnes per annum (Mtpy) of additional capacity.

The major gold miner said three expansion options were considered as part of KCGM’s plant optimization Pre-Feasibility Study (PFS):

  • Extend grinding capacity to 17 Mtpa: additional extension
  • Extension of grinding capacity to 24 Mtpy: 70% of the renovation of the processing plant
  • Expand crushing capacity to 22 Mtpa: full rebuild (completely new processing plant)

Northern Star managing director Stuart Tonkin said the plant’s current capacity of 13 Mtpy would need to be increased to optimize future returns from the asset.

“The PFS has determined that all three plant expansion options are financially attractive and offer significant operational benefits to potentially create significantly more value than maintaining the current milling capacity of 13 Mtpy,” it said. -he declares.

“PFS work has shown that increased milling capacity, supported by a simplified processing circuit diagram, could reduce KCGM’s AISC (all-in sustaining cost) by up to $200 per ounce (oz) and increase annual production up to 200,000 oz..”

The capital expenditure (capex) needed to support the expansion options would be between $440m and $1.4bn, with Tonkin indicating that the 24 Mtpa option could hit the sweet spot of $1bn.

“If you’re looking at…the complete rebuilding of a 22 Mtpa stand-alone plant, of course that’s going to be the biggest investment – there’s a lot of infrastructure to replace, establish and start up for a green plant – and so that does not give us the best internal rate of return (IRR) relative to the expenses we put in place,” Tonkin said on a conference call with investors.

“We have a hybrid that sits in the middle (of the two options) and that’s the 24 Mtpa option which effectively replaces almost 70% of the current circuit, but ultimately provides a very balanced capital expenditure for the longevity of the asset, and that gives us a very compelling IRR.

Northern Star acquired 50% 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 improving understanding of the underground resource base, as well as optimizing the mine through the delivery of a new fleet to allow for increased material movement.

KCGM’s mineral resource is currently 27.4 Moz with an ore reserve of 11.9 Moz.