KALGOORLIE (miningweekly.com) – Gold miner Northern Star Resources is looking at ways to minimize costs as inflation concerns continue to mount.
Northern Star MD Stuart Tonkin told journalists on the sidelines of the Diggers and Dealers conference that the company is continually reviewing areas of cost cutting opportunities. One of the clearest examples of this was the recent decision to place the Jubilee mill, at the Kalgoorlie operations, on care and maintenance.
“We will redeploy all of the staff, so that will go into jobs within Northern Star, but closing down the mill is just a more efficient way to really focus on value over volume, and you end up with A$20-million more in cash in the year for doing less activity at the site,” Tonkin said on Tuesday.
Operations at Jubilee are already winding down, Tonkin said, with ore feeds previously processed at Jubilee now being directed to the Kanowna Bell and the Kalgoorlie Consolidated Gold Mines (KCGM) operations.
However, Tonkin warned that opportunities for cost cutting would not be done to the detriment of future operations.
“You have to be careful that you don’t harvest in the short-term to the detriment of long term value, you have to be careful on that balance. But things like the Jubilee plant being parked means its in a good state to be turned back on quickly, but it is an important measure to deal with staff shortages and escalation in costs,” Tonkin said.
While the sale of Jubilee is not currently being considered, Tonkin noted that Northern Star is continually ‘actively managing’ its portfolio of assets.
The company in June completed the sale of the Paulsens and Western Tanami gold projects, to fellow-listed Black Cat Syndicate, for A$44.5-million. The projects were considered to be non-core to Northern Star’s five-year strategic plan and had been on care and maintenance.
Meanwhile, Tonkin said on Tuesday that work was continuing on investigating the feasibility of a mill expansion at the KCGM operations, following the release of a prefeasibility study (PFS) earlier this year.
The PFS forms part of Northern Star’s ambitions to more than double material movements at the mine to 65-million tonnes a year, in line with its pathway to eventually increase production to 80-million tonnes and then to 100-million tonnes a year.
Three expansion options were investigated in the PFS, increasing capacity from the currently 13-million tonnes a year, to 17-million tonnes a year through a bolt-on expansion, or 24-milion tonnes a year through the refurbishment of 70% of the process plant, or expanding it to 22-million tonnes a year through a total rebuild.
The PFS found that all three mill expansion options were financially compelling, delivering internal rates of return of between 13% to 26%, and pay-back periods of between three to five years, with capital costs estimated at between A$440-million and A$1.4-billion.
With the expansion of the mill, gold production from KCGM could grow between 100 000 oz/y and 200 000 oz/y, while all-in sustaining costs could reduce by up to A$200/oz.