Australian mining company Northern Star Resources has approved the $A1.5bn ($1bn) Kalgoorlie Consolidated Gold Mines (KCGM) mill expansion project in Western Australia.

This includes optimisation and expansion of the Fimiston processing plant at the mine, which complements the optimisation work being undertaken as part of the company’s current growth plan.

With the $1bn investment, Northern Star will grow the mine’s processing capacity from 13 million tonnes per annum (mpta) to 27mtpa.

The expansion will be financed using cash reserves and projected cash flow, noted the miner.

Located in Kalgoorlie-Boulder, 600km east of Perth, Western Australia, KCGM is one of the largest gold mines in the world, with a mineral resource of 28.3 million ounces (moz) and ore reserves of 12.2moz.

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Northern Star acquired a 50% stake in the mine in January 2020 and took sole ownership of the mine after it merged with Saracen Mineral in February 2021.

Since then, the company claims to have made major progress in understanding the underground resource base as well as optimising the mine with a new fleet for increased movement of materials.

The company looks to retain proven processes and source the process equipment from tier-one manufacturers, with the new plant expected to be highly automated.

Increasing the plant throughput while simplifying the existing flow sheet is expected to be beneficial in terms of increased production with improved gold recovery rates, a reduction in unit rate processing costs, a reduction in fixed operating costs and up to 50% of water use reduction per tonne of ore processed.

Northern Star managing director Stuart Tonkin said: “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 second quartile of the global cost curve.”