Gold miner’s rubble now worth ‘a couple of billion’
Gold miner Northern Star says its stockpile of once worthless rubble is now valued at $2 billion thanks to the approval of its Superpit mill expansion in Kalgoorlie lowering the cost of processing the precious metal.
The value of the rubble has been revised because the mill expansion lowers future processing costs, turning uneconomic, sub-grade stockpiles into money spinners, said Barrenjoey analyst Dan Morgan.
Northern Star Resources chief executive Stuart Tonkin says once the expansion of the mill is complete, the value of the stockpile will be realised. Carla Gottgens
The miner made the unusual move on Thursday to “write back” the value of a stockpile it had written off as worthless in 2021 after it acquired gold miner Saracen at a time when the gold price was much lower and the economics of processing the stockpile did not stack up.
In its full-year results on Thursday, Northern Star boss Stuart Tonkin says the stockpile is sitting right next to the mill, and once the expansion of the mill is complete, the value of the stockpile will be realised because it can be processed “well under” $20 a tonne.
“So you can see the cash margin inside that stockpile. We’re talking about a couple of billion dollars,” Mr Tonkin said.
Northern Star announced in June it would double gold output at the mill, within its Kalgoorlie Consolidated Gold Mines operations, making the project the fifth-largest of its kind in the world, and Australia’s biggest when it is completed by 2029.
Mr Morgan said the market’s natural reflex for an accounting write back is to strip it out and “we think this would be a mistake”, he said.
“What it foreshadows and of potentially greater benefit may be the impact of the milling expansion on in-pit reserves.
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