Newmont Mining is set to expand its Tanami operations in Australia by constructing a second decline in the underground mine and expanding capacity of the plant.

Building a second decline is expected to support a step change in mining rates.

As part of the plant expansion, the company added a ball mill, thickener and gravity circuit to help improve recoveries and expand mill capacity from the existing 2.3 million tonnes to 2.6 million tonnes a year.

Upon completion of expansion, the mine is expected to produce between 425,000oz and 475,000oz of gold a year at all-in sustaining costs ranging between $700 and $750 per ounce during the initial five years of production.

"The expansion project continues this trajectory, offering robust returns of more than 35% at current gold prices."

According to the company, the expansion project will add to incremental gold production of about 80,000oz a year.

In addition, mine life will be extended by another three years.

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Newmont Mining president and CEO Gary Goldberg said: "Since 2012, the team has more than doubled gold production while cutting costs by about two-thirds and significantly improving resource confidence.

"The expansion project continues this trajectory, offering robust returns of more than 35% at current gold prices."

Newmont plans to fund capital investment of between $100m and $120m by way of free cash-flow and by using available cash balances.

A quarter of the total amount will be spent in 2015, half in 2016, and the remaining in 2017.

First commercial production from Tanami is anticipated in the second half of 2017.

Located 590 miles south-west of Darwin and 350 miles north-west of Alice Springs in Australia’s Northern Territory, Tanami produced about 345,000oz of gold in 2014.

A fly-in, fly-out (FIFO) operation, Tanami added $466m of value to the Australian economy in 2012.