Northern Star
Australia’s third-largest gold producer Northern Star Resources is continuing its upwards trajectory, capping off FY17 with record results and a clear pathway to push annual production above 600,000 ounces.
THE next few years will be game changing for Northern Star Resources.
After growing its resources and reserves base through exploration, the race was now on for Northern Star to hit its new production milestone.
The miner, which currently operates the Jundee, Kalgoorlie and Paulsens gold projects in WA, has some exciting plans on the table, with development moving forward at its Central Tanami project in the Northern Territory, expansions underway across its Goldfields operations, and a revitalisation program planned for Paulsens.
In August, the company flagged an annual spend of $100 million towards exploration and project expansions.
“The split is $35 million in exploration, and $65 million in expansionary capex to lift our production profile to 600,000ozpa from where we currently are; primarily out of Jundee and Kalgoorlie operations,” Northern Star chief executive Stuart Tonkin said.
With extended mine lives now out to 10 years, the company ticked all the boxes required by global investors, with an expanded inventory to drive production growth.
Both Jundee and Kalgoorlie would soon be capable of producing 300,000ozpa, which would make Northern Star part of an ‘exclusive global club’ comprising just 23 mines in Tier-1 jurisdictions.
In FY18, Northern Star expected to produce between 525,000oz and 575,000oz, and between 550,000oz and 600,000oz in FY19.
The miner was off to a great start, selling 138,459oz of gold in the September quarter.
Northern Star executive chairman Bill Beament said superb performances from the Jundee and Kalgoorlie operations was a direct result of investment the company had made in the exploration and production arenas.
“We have invested $180 million over the past three years to grow our mineral inventory.
“This will fall to $35 million in FY18 as we believe the visibility across our Tier-1 assets has been achieved.
“It’s been very pleasing to see the business grow organically and produce a sector leading return on invested capital in what has arguably been the most capital intensive phase of the company’s history.”
WA expansions
An $18 million mill expansion at the Jundee project in the northern Goldfields, designed to boost production, was effectively complete.
“Commissioning is underway at the moment,” Mr Tonkin said.
“This takes us up to 1.7 million tonnes per annum, and that allows us to achieve about 300,000ozpa which reaffirms Jundee as a Tier 1 asset.”
Further south, the company’s Kalgoorlie operations, encompassing the Kundana, Kanowna Belle and new Millennium mines, had improvements and upgrades pending.
“We’re still completing studies on all our options,” Mr Tonkin said.
“We’re aiming to return that to a 300,000ozpa producer, but the current bottleneck is the processing capacity.”
One solution was a recent deal inked with Poseidon Nickel to potentially process ore at its unused Black Swan operations.
On 28 August, Northern Star entered a non-binding Memorandum of Understanding (MoU) with Poseidon to explore the option.
“That’s related to our Kanowna or Kalgoorlie processing bottleneck,” Mr Tonkin said.
“The ore for that would come from our Paradigm deposit which is closer along the haul road and could feed into Black Swan easily.
“Millennium is now in production, and that project has demonstrated northern star’s capability to rapidly develop all the way from discovery to production quite efficiently.”
“Works are currently underway to evaluate that scenario against our other options.”
Mr Tonkin said since the processing facilities was currently tailored for nickel, it required a significant infrastructure upgrade to convert to a gold free-milling processing plant, and the study would take a few months to complete. “There’s a bit of work to do,” he said. The company also continued to make headway in developing new sources of production, including its brand new Millennium underground mine in Kalgoorlie.
“It’s been essentially the first new mine for Northern Star across its history,” Mr Tonkin said.
“Millennium is now in production, and that project for us has demonstrated Northern Star’s capability to rapidly develop all the way from discovery to production quite efficiently.
“That mine initially delivers 50,000ozpa but that, with adjacent production fronts, will grow to 100,000oz in the next couple of years.”
Meanwhile, at Paulsens in the Pilbara, exploration will take priority in an effort to return the asset back to its historic production rates.
Mr Tonkin said over the next 18 months, the company will spend about $10 million drilling out a parallel system to bring into its plan in 2021.
Tanami
The Central Tanami project in the Northern Territory was another growth opportunity for the company.
Only in its early stage of exploration, the possibilities for Northern Star were huge.
In 2015, Northern Star acquired a 25 per cent interest in Tanami Gold’s 2.7moz project, which will increase to 60 per cent pending the refurbishment of the existing plant infrastructure.
Mr Tonkin said the JV partners were currently evaluating a plan to redevelop the processing centre with multiple feeds up and down the belt.
“We love the Tanami geology wise, and we have got a significant land holding there so it’s really about doing that grassroots work and making the right decisions on redeveloping that asset,” he said.
“It was one of the first redevelopment assets we acquired.
“Everything else we purchased was already in production, so for us it’s about the longer term play.”
Northern Star also held an interest in Tanami Gold’s shelved Western Tanami Project in WA, which comprised a 350,000tpa carbon-in-leach treatment plant, and associated site infrastructure and accommodation.
The project was placed in care and maintenance back in 2013, following disappointing drilling results on the Kavanagh lode at the Coyote gold mine.
In October, Northern Star entered a binding deal with Tanami Gold to purchase the remaining interest in the project for $4 million.
Forward thinking
With Northern Star’s current projects soon to deliver 600,000oz each year, Mr Tonkin said the next step would be growing annual production to 750,000oz, based on returning Paulsens back to its former glory and redeveloping the Central Tanami operation.
Beyond Jundee’s 10 year mine life, Mr Tonkin said he also viewed the latest discovery, Zodiac, as a strong production source for the project.
“That discovery we drill tested in June initiated from a 3D seismic survey,” he said.
“For us it’s an exciting early stage find and that can be game changing for the life of Jundee.
“Kalgoorlie operations have also got plenty of numerous targets in our pipeline that we will progress through the drilling over the next few years.”
Mr Tonkin said the principal strategy for the team had always been to leverage off its core disciplines, including underground geology, mining, and processing, to drive productivity through its mines, especially since globally gold reserves and discovery were declining.
“The focus for us is looking at underground development of mines,” he said.
“We think we position ourselves pretty well to leverage our skills onto that space.”