The extension seemed certain to get the formal nod when St Barbara approved a $6 million early works project in January. The project comprises a ventilation upgrade and paste aggregate fill (PAF), which will extend mining at Gwalia to at least 2000m below surface by the 2024 financial year.

Construction of the ventilation upgrade will take up to three years and will cost around $80 million. The upgrade comprises additional ventilation via raise-bore intake and exhaust ventilation shafts and related power and cooling infrastructure to enable mining at such depths.

The $20 million PAF, which comprises the mixing of paste from surface with waste rock crushed underground for stope fill, should be completed within a year. The company said expediting PAF for use during ventilation shaft construction would allow underground disposal of raise-bore chipping. PAF will also increase trucking efficiency and improve stope cycle times.

St Barbara managing director and CEO Bob Vassie said the approval began an exciting new phase at Gwalia. “Gwalia started in 1896 and it just keeps going,” he said.

“The project will ensure Gwalia can continue delivering strong, high margin gold production until at least 2024, with the foundation laid for further extensions to the mine life beyond this, as well as potential for increased production.”

Current mining is currently between 1500 and 1540m below surface, with the current mine plan extending to 1940m in FY24. St Barbara is spending $US8-9 million on exploration at Gwalia this year, including deep drilling beyond 2000m below surface targeting resource and reserve growth. Resources last year grew to almost 3.9 million ounces from 3.3Moz, while reserves increased to 1.8Moz from 1.6Moz.

If the current drilling identifies sufficient resources below 2000m, additional infrastructure to mine to 2200m below surface is estimated at $A30-35 million. Gwalia is set to produce 255,000-265,000 ounces of gold this financial year at all-in sustaining costs of $815-850/oz.

St Barbara will fund the extension from internal cashflow after becoming debt-free this month. The company expected to have around $70 million in cash after the final repayment. St Barbara shares dropped by 4c in early trade to $2.51.