Northern Star Resources Limited (ASX: NST) has announced board approval for the A$1.5 billion KCGM mill expansion project, which will further strengthen the company’s key asset and its overall portfolio.
The mill expansion project is on strategy, 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 28.3Moz and an Ore Reserve of 12.2Moz. The growth optionality that comes with owning an asset as large as KCGM is significant and arguably unmatched across Australia.
Highlights:
- A$1.5 billion KCGM mill expansion project will increase and modernise KCGM’s processing capacity from 13Mtpa to 27Mtpa
- Three-year construction phase has commenced with long-lead items ordered; ramp-up from FY27 towards steady state of 27Mtpa by FY29
- Feasibility study demonstrates project is financially compelling and delivers:
- Post-tax IRR of 19% and 4.6 year payback (A$2,600/oz gold price)
- Project will deliver sustained lower cost base and significant increase in free cash flow
- Development fully funded from cash on hand, forecast cash flow – dividend policy maintained
- Maintains strong balance sheet with gearing (ND/ND+E) and ND/EBITDA below zero through build
- Cost confidence from advancing detailed engineering design post-feasibility phase
Commenting on the board approval for the KCGM mill expansion, Northern Star managing director Stuart Tonkin said:
“Today is an exciting day for Northern Star and a historic new chapter for this world-class 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 2nd 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.”
