The latest results from the Velvet discovery, adjacent to Kanowna Belle, include 24.5m at 30.6 grams per tonne gold (estimated true width 18.1m), including 8.8m at 79.9gpt; 42.7m at 13.4gpt gold (26.9m), including 12.m at 37.1gpt; 36.3m at 13.7gpt gold (26m), including 22m at 18.5gpt; and 58.6m at 3.3gpt (37.8m), including 26m at 5gpt.

Underground access to the deposit should be established shortly.

At the Millennium deposit, the latest results included 6.7m at 15.4gpt gold (5.2m); 10.2m at 5.5gpt gold (7.1m); and 3.4m at 11.4gpt gold (2.7m).

The company announced a maiden resource of 1.8 million tonnes at 5.8gpt gold for 346,000 ounces of gold for the Millennium discovery last year, and an updated resource and maiden reserve is due by mid-year.

Pit dewatering is underway to establish underground access to allow production to begin next year.

A scoping study on a stage one mine estimated production of 40,000-50,000oz per annum over at least four years for capital costs of just $A20 million.

Northern Star has also uncovered some historical results from the Kanowna underground which show that high-grade mineralisation continues below and along strike of current workings, highlighting the potential for mine life extensions.

The historical results included 43m at 9.7gpt gold; 24m at 7.9gpt gold; 50m at 4.7gpt gold; and 11m at 4.1gpt gold, 450m below current workings.

Northern Star is planning to boost Kanowna’s production to 125,000oz per annum in FY17 from around 85,000ozpa this year.

After reporting all-in sustaining costs of $811 an ounce for the December quarter, the company reported today that costs had fallen to $800/oz.

That combined with the rise in the gold price to $1600-1700/oz allows more material from the 658,000oz Kundana resource to be included in the mine plan.

Northern Star managing director Bill Beament said Kanowna Belle would play a key role in the company’s plan to grow production from around 570,000ozpa currently to 700,000ozpa.

“By growing the inventory in this manner, we can increase our production using existing infrastructure and ensure Kanowna plays a key role in enabling us to deliver on our 700,000ozpa target,” he said.

“This will in turn drive our cashflow while enabling us to remain debt-free and maintain high rates of return due to the fact that the growth will come purely from organic sources.”

Northern Star received encouraging results from other regional deposits including 107.5m at 3.1gpt gold, including 10,1m at 28.8gpt gold and 17.7m at 4.2gpt gold at Paradigm; and 0.4m at 134gpt gold at White Feather.

“These results show there is still a lot of gold to be found at Kanowna and on its surrounding tenements,” Beament said.

Northern Star had $226 million in cash, bullion and investments at the end of December.

Shares in the company jumped 4.2% to $3.55 in line with this morning’s rise in the gold price to $US1260/oz.