Gold’s Super Pit expansion ‘comes at a cost’ for Saracen and Northern Star
The new owners have raised inventory, lifted mine life and flagged plans to boost production by 40%.
The new owners of Kalgoorlie’s Super Pit have given their first glimpse of the future for the iconic gold mine, upping its inventory, lifting its mine life and flagging plans to boost production by 40 per cent.
But the extension of the life of the ageing mine will come at a steep cost, with its operators needing to move about 850 million tonnes of rock – or about the same amount of iron ore exported from the Pilbara each year – to access fresh zones of gold ore.
Saracen Mineral Holdings and Northern Star Resources jointly released the new outlook for the Super Pit on Tuesday, outlining plans to open up new zones at the gold mine, extend its life to 15 years and boost production back to levels around 675,000 ounces a year by 2028, up from 440,000 to 480,000 ounces this financial year.
The plans come as spot gold continues to trade near record levels, after this month breaching the $US2000 an ounce barrier.
Saracen and Northern Star have been working on their plans for the mine since spending about $2.3bn to each buy half of the Super Pit from US gold majors Barrick and Newmont in late 2019, and said their work to date had lifted gold reserves by 54 per cent, to 9.7 million ounces of gold. On paper that translates to a $US19.4bn ($26.8bn) resource at the current spot gold price.
The upgrade includes a reassessment of the gold price needed to successfully mine the deposit economically, and an increase in gold-bearing ore at a new mining area at the southern end of the pit Fimiston South.
But the pair will need to spend about $440m in “growth and de-risking capital” over the next two years to bring the plans to fruition, as they undertake the herculean task of moving waste ore sitting over the top of the deposit.
As work to access the ore begins this year, Saracen and Northern Star will move 58 tonnes of waste for every tonne of ore, falling to about 30 tonnes in two years, before dropping back sharply in the early 2030s to about 3 tonnes of waste to every tonne of ore.
The waste-to-ore ratio over the life of Fimiston South will be about 10 to one, the companies said – still significantly above the six-to-one levels flagged for the life of the mine by its previous owners.
Saracen shares gained 2.3 per cent, or 13c, to $5.75 on Tuesday, with Northern Star up 5 per cent, or 72c, to $14.99.
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