Northern Star Resources say there’s more to come from Kalgoorlie’s Super Pit
The new owners of the Kalgoorlie Super Pit, Northern Star Resources, say it has a multi-decade future ahead of it.
It is the most visible symbol of city’s past, and the biggest influence on the its future.
More than 5km long, 1.5km wide and more than 500m deep, the Super Pit is the first thing most people see when flying into the Kalgoorlie – as thousands of delegates to the annual Diggers and Dealers mining conference did at the weekend.
It is also the last, given the waste ore piles and stockpiled ore sit directly in front of the flight path for planes leaving Kalgoorlie airport – so much so that current owner, Northern Star Resources, faces restrictions on how high it can stack those piles.
With a workforce of more than 1500 in-house and contract staff, the Super Pit is also Kalgoorlie’s biggest single employer. Under the ownership of Barrick and Newmont, its long-term future was in doubt only a few years ago after a massive pit wall slippage dumped more than 1.5 million tonnes of rock on the floor of the mine, creating a mammoth task to clear it away before fresh ore could again be accessed.
Now, however, Northern Star is working on an even bigger task, planning to move more waste rock – up to 1.6 billion tonnes of it – to expand the pit and give the mine a life that could last decades.
The Super Pit was the brainchild of Perth corporate raider Alan Bond, who spent much of the 1980s buying up the tenements that now make up the mine. The square mile around the discovery has produced more than 65 million ounces of gold, with about 22 million ounces from the Super Pit itself.
Northern Star managing director Stuart Tonkin is now looking to make good on the promise of the company’s $16bn merger with Saracen Mineral Holdings in 2021, which brought the ownership of the two halves of the Super Pit back together for the first time in decades, after Northern Star and Saracen had bought out its most recent owners, US gold majors Barrick and Newmont.
Northern Star’s ground around the mine still has 11.9 million ounces left in economic reserves – including 2.9 million ounces already sitting in stockpiles on the surface – making it the eighth biggest deposit in the world, as measured by reserve.
Since taking control, Northern Star has replaced the mine’s ageing truck fleet almost entirely, bringing in another 39 haul trucks, plus new shovels and loaders, with a mind towards the task that lies head – moving the waste ore to expand the pit, and opening up new zones at the mine’s underground operations.
And the company is still drilling along the 9km of ground it holds in central Kalgoorlie, looking for new extensions beneath its Mt Charlotte underground mine, beneath the Super Pit itself, and at an emerging deposit north of both, Mt Percy – which sits below parts of Kalgoorlie that Northern Star is still slowly buying up. Northern Star is also running the numbers over the best way to expand the company’s 13 million tonne a year mill, with a plan to refurbish the existing plant to a 22 million tonne capacity looking like the best option to date.
Tonkin says that, despite the ounces already poured from the Super Pit, there is plenty more to come. “Its hard life is showing 20-plus years – but it’s not unrealistic to go to 30, or 40, or 50 years if it’s done well,” he says. ”We’re only 18 months into a single ownership view, and we’re drilling and discovering, and we understand the recipe. So my thoughts go multi-decade – and it’s worth putting the effort in early.”
The edge of the Super Pit sits within a kilometre of the Kalgoorlie Arts Centre, when Diggers delegates will sit to hear corporate presentations from around 70 companies – from exploration hopefuls to major players such as Northern Star, Newcrest Mining, Gold Fields and Fortescue Metals.
Its history also neatly encapsulates two of the major themes of the conference – how will rising costs and falling commodity prices affect the industry, and can the consolidation that created the mine be replicated elsewhere?
Northern Star’s plans to expand the mine’s mill could cost up to $1bn, and are being laid at a time of rapid cost inflation in the West Australian industry, as investors are increasingly cautious about major capital spending.
Other miners, including Evolution Mining, have delayed capital spending on expansion projects until the heat dies down. But while rising costs will weigh on Northern Star’s thinking, Tonkin says, the ultimate decision will still depend on what the final numbers look like when the feasibility studies are complete in around six months. “We’re paying high attention to the current climate, where cost escalation has been pushing up. If that trajectory stayed, you’d be reluctant to really push hard on it. But there are very compelling financial metrics on it, and it’s an organic project that not many peer companies would have across the sector,” he says.
“General cost pressures – fuel, energy, steel – have lifted so we’ve had to be creative in driving other productivity to get the unit costs flat. But ideally, we’ll get the economies of scale back and get the unit cost going down again.”
How those rising costs will play into the construction costs of emerging miners presenting at Diggers – such as Bellevue Gold and lithium hopeful Liontown Resources – will also be something investors will put to their management teams.
And the question for smaller companies, not as far down the development path, will be how long those pressures will last – particularly in light of the consolidation question.
Some, such as Bardoc Gold, have already sold out to bigger players, judging it a better outcome for shareholders than trying to build a mine of their own as costs rise.
And Bond’s decade-long quest in the 1980s to consolidate the Kalgoorlie tenements also provides a backdrop for questions around Australia’s other great gold district, WA’s Leonora – where St Barbara and Raleigh Finlayson’s Genesis Minerals are already tip toeing around a regional consolidation play.
