Canada-based Centerra Gold has received approval from the Mongolian Parliament to mine the Gatsuurt deposit after a five-year delay.
The approval will grant the Mongolia Government ownership interest in the Gatsuurt project at 34%.
Centerra has been awaiting a decision from Mongolia since 2010 to decide whether to proceed with the project, following a law that prohibited mining at certain areas near forests, as well as water sources, including Gatsuurt.
The project was one of the strategic deposits exempted from the restrictions in December 2014, but still required government ownership.
Centerra Gold CEO Scott Perry said: "The Gatsuurt Project represents an exciting opportunity to use Centerra's existing Boroo mill and other infrastructure to develop the 1.6 million ounce Gatsuurt deposit with very modest initial capital investment.
"The company will now focus on finalising the investment agreements with the Government of Mongolia."
Following receipt of approval, the company now hopes to go ahead with negotiating agreements with the government.
Once the agreements conclude, Centerra said it will undertake economic and technical studies to update existing studies on the project.
Located 55km by road from the company's Boroo mine, the Gatsuurt project is expected to be developed in accordance with applicable Mongolian environmental regulations.
At the project, the company plans to mine the ore and truck it to the existing Boroo mill to be processed. The current plan is to process about 3.6 million tonnes of CIP ore (oxides) from Gatsuurt.
During this time, the company plans to add a BIOX facility to the existing Boroo facility in order to use it for processing the remaining sulphide ores totalling about 13.5 million tonnes.