St Barbara Ltd (ASX:SBM) has confirmed the viability of its King of the Hills gold project in Western Australia, and increased its probable ore reserves.

As a result the value of the project has improved.

An increase in capital costs of $5.2 million is offset by the benefit of increased gold production, which is expected to be around 55,000 to 60,000 ounces per annum.

St Barbara says pre-production works have started, with first gold production due for June next year.

The miner has also advised that it has sold its Tarmoola processing plant for $3 million in cash.

The book value of the plant as at 30 June was $1.8 million and St Barbara is expecting to book a $1.2 million net profit on the sale in the current fiscal year.