Australia-based mining company Northern Star Resources has received board approval for the development of the A$1.5bn ($1bn) Kalgoorlie Consolidated Gold Mines (KCGM) mill expansion project in Western Australia.

Located near Kalgoorlie-Boulder city about 600km east of Perth, the KCGM operations include the Fimiston open pit, Mt Charlotte underground mine as well as the Fimiston and Gidji processing plants.

The expansion project is aimed at increasing the capacity of KCGM’s processing circuit, which is focussed on the Fimiston processing plant, to 27 million tonnes per annum (mtpa) from 13mtpa.

Northern Star Resources 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.”

According to Northern Star Resources, the KCGM mill expansion project will provide a simplified Fimiston processing plant flowsheet with increased ore processing capacity. As a result, the Gidji processing plant will be decommissioned.

The optimisation and expansion of the Fimiston plant will take place in two phases.

Major equipment has been ordered for phase one of the expansion and preliminary work has begun to allow the construction and commissioning of the new plant.

Phase two will involve the expansion and replication of the Gidji metallurgical process at the new Fimiston plant. This is expected to start in FY25.

The construction phase of the KCGM mill expansion project will last for three years until FY2026 followed by the ramp up for the next two years.

The feasibility study of the mill expansion project has estimated an after-tax internal rate of return (IRR) of 19% with a 4.6-year payback at A$2,600 ($1,766)/oz gold price.

Furthermore, the KCGM mill expansion project targets an average annual gold production capacity of 900koz.