Add Category
Australia's third-biggest gold miner, Evolution Mining, has approved a $250 million expansion of its Mungari operations near Kalgoorlie, despite concerns about the overheated construction sector.
Key points:
- Evolution Mining's Mungari operations, 20km west of Kalgoorlie-Boulder, employ about 850 workers
- The company has approved a $250 million expansion of the Mungari mill, which was commissioned in 2014
- The approval comes as Northern Star Resources weighs up a $1 billion expansion at Kalgoorlie's Super Pit
The expansion would more than double the capacity of the processing plant from 2 million tonnes a year to 4.2 million tonnes.
The investment follows Evolution Mining's $400 million acquisition of the Kundana mines at Kalgoorlie in 2021.
Evolution Mining's executive chairman Jake Klein said the expansion would extend the mine's life out to 2038, making Mungari "one of the longest-life mines in the Goldfields".
Evolution Mining is currently ranked behind Newcrest Mining, which is the subject of a $28.8 billion takeover by US giant Newmont, and Northern Star Resources as Australia's biggest gold producer.
The company's chief operating officer Bob Fulker called the approval a "critical milestone for the operation".
"In line with our thinking during the Kundana acquisition, the feasibility study demonstrates sound economics, which combined with the stable operating performance, makes this the right time to commence execution," he said.
Work is set to begin in the December quarter and is expected to take 30 months to complete, with commissioning scheduled for mid-2026.
Evolution Mining's managing director Lawrie Conway said the capital cost estimate was "rigorously tested" and the company was "confident in our capacity to deliver this project on time and budget".
Mr Fulker said the tendering process was well advanced.
"An early identified risk has been the regional growth currently underway," he said.
"We have proactively engaged three contracting firms to be involved in an ECI [early contractor involvement] process.
"They have all committed resources and people to the completion of the project, and we're in final conversations with respect to the tendering process."
Super Pit expansion on cards
Meanwhile, the owner of Kalgoorlie's Super Pit gold mine is edging closer to a final investment decision on a proposed billion-dollar expansion of the Fimiston Mill.
Northern Star Resources announced plans in June last year to increase the gold mine's milling capacity from 13 million to 24 million tonnes a year.
Managing director Stuart Tonkin told media and analysts in April that feasibility studies were progressing, and a decision would be made later this year.
"The Fimiston study is still to be evaluated, presented and a decision to be made on that, and that will happen this calendar year," he said.
"But we want to get to that understanding of the ultimate capex [capital expenditure] for Fimiston and the financial metrics."
Aussie gold sector worth $30b
According to Melbourne-based gold mining consultants Surbiton Associates, Australian gold production in the March quarter was 72 tonnes, down six tonnes or 8 per cent, compared with the December quarter.
Heavy rain in Western Australia, Queensland, New South Wales and the Northern Territory restricted mining and processing activities at several operations.
Surbiton director Sandra Close said the record Australian dollar gold price of $2,868 an ounce was reached in mid-March, with the gold price subsequently rising further.
"At prevailing price and exchange rates, the Australian gold industry is now worth around $30 billion on an annual basis," Dr Close said.
"As prices rise, mine operators may blend lower grade stockpiled material into the ore feed.
"This enables better use of the resource overall, while still maintaining profit margins, although the lower average grade results in fewer ounces of gold produced and at higher cost per ounce, within that time frame."