The East Kundana Rubicon mine.
The East Kundana Rubicon mine.

Northern Star Resources says it has more than doubled the resource at its Pegasus deposit to 2.1 million tonnes at 11.4 grams per tonne gold for 763,000 ounces.

The gold miner said the result paved the way for a significant increase in low-cost production at its 51 per cent owned Kundana mine.

Pegasus is forecast to produce 100,000 ounces a year (50,000 ounces NST) from July 2015 at all-in sustaining costs of $706 an ounce in the March quarter.

The upgrade is expected to increase Northern Star's share of production to 125,000 ounces a year, in turn helping the company to lift its total output to 600,000 ounces a year at all-in sustaining costs of less than $1050 and ounce.

Northern Star managing director Bill Beament said Pegasus would generate significant free cashflow, add years of life to what was a very low-cost operation at Kundana and provide outstanding potential to grow the company's high-grade gold inventory further.

"This resource increase supports our view that Pegasus is one of the best high-grade gold discoveries in Australia in the past ten years," he said.

Northern Star acquired an interest in Pegasus as part of its purchase of Barrick Gold's 51 per cent stake in the East Kundana joint venture.

The balance of the project is held by Rand Mining and Tribune Resources.

Northern Star shares were off two cents, or 1.54 per cent, to $1.275 at 9.15am while Rand shares were steady at 53 cents and Tribune shares were up one cent to $3.10.

The West Australian

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