NRW Holdings Limited (ASX:NWH) has started the new financial year (figuratively) taking home the gold, after its subsidiary Primero Group was awarded a prime contract with Northern Star Resources (ASX:NST) for the $1.5 billion KCGM growth project.
Its participation in an early contractor involvement program to develop an improved design for the Fimiston processing plant was the catalyst for the decision, according to Primero managing director Michael Gollschewski – proving the old proverb that “patience pays”.
The $973 million contract represents the largest slice of Northern Star’s $1.5 billion budget to expand the Super Pit – with Primero designing, procuring, constructing, and commissioning the process plant facilities of Fimiston mill by the latter months of 2026.
“The work conducted to date to develop the capital cost, design, execution strategy and schedule for the project, has been one of the most comprehensive and rigorous ECI programmes we have participated in,” Mr Gollschewski explained.
Northern Star has big plans for the Super Pit, with the $1.5 billion Fimiston South growth project set to extend the life of the mine to 2034 and overtake Newmont’s Boddington mine as Australia’s largest gold mine.
Announced last week with great fanfare, the expansion will make KCGM Australia’s highest gold-producing asset by the end of the decade, with projections at 900,000 ounces annually by 2029.
In comparison, the Super Pit produced a total of 469,084 ounces of gold during the last calendar year, according to a survey by Surbiton Associates, a Melbourne-based mining consulting firm.
The processing capacity of the Super Pit is also planned to more than double after expansion, jumping from 13 million tonnes per annum to 27 million tonnes per annum once complete.
NRW’s managing director, Jules Pemberton said he was looking forward to developing a long-term relationship with “one of the industry’s leading gold producers” – a title Northern Star earned in 2021, following its takeover of junior partner Saracen Mineral Holdings.
Talks of expansion to the Super Pit have been abuzz since 2021, but it’s hard not to give any credit to the firm gold price and the reliable demand for ‘safe’ assets in uneasy markets.
The All Ordinaries Gold Sub-Index is up 15.44 per cent since January; a growth of 39.63 per cent from this time last year.
The World Gold Council was a little more conservative with their predictions on the future of the gold price in their mid-year outlook, even as bullion was up 7.3 per cent.
Although we may not see a return to pandemic-era prices for gold, The Perth Mint noted the Australian dollar gold price at $2902 an ounce.