THE BOURSE WHISPERER: West Australian-focused gold producer Northern Star Resources is set to increase annual production from 75,000 ounces per annum to 200,000 ounces per annum.
The increase will take place over two stages and comes as a result of a decision by the company to upgrade the plant at its Paulsens gold mine and develop its Ashburton project.
Stage One will see Northern Star increase plant capacity at the Paulsens mine from 350,000 tonne per annum to 450,000 tonne per annum.
The initial result of this will be a rise in production from the current level of 75,000ozpa to 80,000ozpa to 100,000ozpa.
Northern Star said the additional ore to cater for the increase will come from a combination of open pit development and high-grade underground zones, currently classed as either unmined resource blocks or remnant ore.
The company expects this combination of material to provide three years’ ore feed to the expanded mill.
During this time, Northern Star will undertake further reserve drilling and modelling at its neighbouring Ashburton project, which will be split into two projects.
The Ashburton free-milling project, where oxide/transitional resources stand at 92,000oz, will form part of the Stage One expansion.
The Ashburton sulphide project, where sulphide resources stand at 576,000oz will be Stage Two.
Northern Star said the Ashburton free-milling project, where it currently has a $20 million exploration program underway, has potential to expand the free-milling resources.
It will ultimately supply ore to the Paulsens plant once the initial three-year supply of feed from the Paulsens open pit and upper level resources have been exhausted.
Based on the current free-milling resources at the Ashburton project, Northern Star is confident it could add a further three to four years to the Paulsen’s 100,000ozpa production profile.
At this time Northern Star will also begin work on Stage Two of the growth strategy by undertaking studies on the Ashburton sulphide project, where it said, preliminary indications point to a stand-alone operation producing 100,000ozpa.
Northern Star intends to fund the expansion from its cashflow, which is supported by a bank balance of around $30 million.
The increase in production comes on the back of a productive 12 months for the company since it acquired Paulsens for $40 million with it about to become one of Australia’s prominent gold miners.
“Paulsens has provided Northern Star with an outstanding foundation of strong production, low costs and high cashflow,” Northern Star managing director Bill Beament said in the company’s announcement to the Australian Securities Exchange.
“And there is still a lot of gold to be mined and we believe a lot of gold to be discovered at Paulsens.
“This two-staged strategy will enable the company to take even greater advantage of record gold prices in a very short timeframe and for a relatively small capital outlay.
“At the same time, it allows Northern Star to start work on its next substantial growth phase, which will catapult the company into the next league of gold producers.”