The board of Australia-based Newcrest Mining has approved an A$685m ($463.8m) investment for Stage 1 of the Cadia expansion project in New South Wales.

The planned two-stage expansion project has a total capital cost of $865m and an expected real net present value (NPV) of $1.17bn.

Cadia’s Stage 1 expansion includes the commencement of the next cave development (PC2-3) and increasing the process plant nameplate capacity to 33Mtpa. It also includes completion of the PC2-3 mine development.

Total capital expenditure for the new cave development is estimated at around A$595m ($402.8m), with first ore production expected in 2023.

Stage 2 expansion, which is currently in the feasibility study stage, is expected to cost around A$180m ($121.8m) and would see Newcrest increase the plant capacity to 35Mtpa, along with recovery improvements anticipated for completion in late 2022, which is ahead of the completion of the PC2-3 mine development.

Newcrest Mining managing director and CEO Sandeep Biswas said: “This expansion plan is an improvement on the previous 2018 Pre-Feasibility Study, with an estimated additional 1.8moz of gold production and 67kt of copper production and an estimated $800m increase in projected free cash flow generation by Cadia over its life.

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“The capital investment has an estimated 21.5% rate of return and ensures Cadia remains a Tier One asset for many years to come.”

The company noted that the rate of ore mined from Cadia is expected to change over time based on draw rates, cave maturity and cave interaction upon development.

In March, Newcrest Mining awarded a contract to Jacobs Engineering Group to provide underground materials handling services as part of the expansion feasibility study at the Cadia gold mine.