A gold mine that has changed hands three times in 17 years — including after one of the biggest corporate collapses in Australian history — is set to get a new lease on life. 

The King of the Hills mine near Leonora, in Western Australia's northern Goldfields, was first mined as an open pit in 1985.

By the time its former owners, Sons of Gwalia, collapsed in 2004 amid debts of more than $800 million, the open pit had produced 1.65m ounces of gold.

It was resurrected in 2010 as an underground mine by St Barbara, which sold it to Saracen Mineral Holdings in 2015 for $3m.

Saracen, which has since bought Kalgoorlie's Super Pit and merged with Northern Star Resources to form Australia's second-biggest gold miner, was preoccupied with other projects and so agreed to sell King of the Hills in August 2017.

The deal was $16m in cash and shares with Red 5, a Perth-based company that also paid $18.5m for the Darlot gold mine 100 kilometres north of King of the Hills.

Deposits over 'three or four football fields'

Fast forward four years and construction of a new processing plant is underway to transform King of the Hills into one of WA's biggest and longest-lasting gold mines.

Red 5 managing director Mark Williams declared to media and analysts on a site tour that "our children will be mining this project".

The reason for his confidence is deep drilling that has defined new gold reserves over areas equivalent to "three or four football fields".

The redevelopment of King of the Hills is costing $226m, but once in production the mine is expected to achieve payback in just 25 months.

Over its projected 16-year life, the mine is forecast to produce 2.4 million ounces of gold and generate $1.54 billion in post-tax cashflow.

King of the Hills will be mined from the surface as an open pit and from underground, where 34 kilometres of  tunnels will be developed for new mining fronts and exploration.

The underground reserves are only expected to last for the first five years, but Mr Williams says the mine's life could be extended.

"The underground has only explored a fraction of the area and if the remaining potential delivers then yes, our children could be mining this project well into the future," he said.

Pandemic, labour shortages add 'complexity'

Construction of the new mill and 380-person camp began in October last year.

Red 5 has awarded $164m worth of contracts to date and had spent $80.2m on the project as of June 30.

Mr Williams said the project was tracking on budget despite the pandemic and labour shortages pushing up the costs.

"It has certainly added layers of complexity and challenges, but we've got a great team," he said.

"We've got our prices locked in and we're confident we'll be able to deliver against our target."

The King of the Hills mine is set to create 600 jobs and remains on track to pour its first gold bar in the middle of next year.

'Strength to strength'

WA Mines Minister Bill Johnston said King of the Hills had the potential to transform the remote region.

"It is fabulous that this is a long-life project," he said.

"It has the potential to transform the northern Goldfields because you would have a solid anchor mine that will attract other projects.

"It will unlock even more opportunities, and isn't it good to think the mining industry will still be providing high skilled, high wage jobs for another generation?"

Mr Johnston said the fact the project was going ahead amid the pandemic reflected WA's handling of COVID-19.

"There's no question that the way the government and industry have worked together to manage COVID has been outstanding and that's meant that the WA mining industry has gone from strength to strength, and nobody expected that," he said.

"In February last year we certainly weren't expecting that and it's a tribute to everybody in the sector that we've been able to manage it so well together.

"We've got more people with a job in WA today than at any time in the state's history … isn't that a wonderful thing?"