Northern Star doubles resource

Gold producer Northern Star Resources said today it expects to lift 2015 production to 600,000 ounces, at the top end of its guidance range, after it more than doubled the resource at its Pegasus deposit at the Kundana mine.

Resource at the mine has grown to 763,000oz at 11.4 grams per tonne gold. 

The company said it would pave the way the way for a significant increase in low-cost production from the Kundana mine, in which it holds a 51 per cent ownership.

Joint venture partners Rand Mining and Tribune Resources own the remaining 49 per cent.

According to Northern Star, the Kundana mine has operated with some of the lowest production costs in the industry, and has an 80 per cent historical conversion rate from resource to reserve.

Northern Star said the development of Pegasus was well advanced, with access to the orebody being gained via the existing decline at the Rubicon mine, also a part of Kundana, just 350 metres away.

The capital cost of bringing Pegasus into production is estimated at about $10 million, which is expected to commence in early 2015. 

Northern Star managing director Bill Beament said Pegasus would generate significant free cash flow, add years of life to what is a very low-cost operation at Kundana, and provide outstanding potential to grow the company’s high-grade gold inventory further. 

“It is every gold miner’s ideal scenario – a deposit rapidly approaching 1 million ounces at a grade of +10gpt located immediately next to an existing operation,” he said.

“It remains open along strike and at depth and we also have outstanding exploration results up to eight kilometres away on the same structure.”

Northern Star acquired an interest in Pegasus, Rubicon and Hornet as part of its purchase of Barrick Gold’s 51 per cent stake in the East Kundana joint venture. 

Northern Star’s share price fell by 2.32 per cent to $1.26 at 12:00pm WST.