Newcrest Mining has announced its board’s approval of the execution of the Cadia gold mine PC1-2 project in Australia with an investment of around A$1.6bn ($1.2bn).

The feasibility study for the project estimates an after-tax internal rate of return of 18%. The project calls for the development of a high lift, undercut block cave that will produce up to 25 million tonnes of crushed ore per annum.

Newcrest Mining expects the panel cave development at the Cadia gold mine to produce an average of 231,000 ounces of gold per year and 42,000 metric tonnes (Mt) of copper annually.

The first production from the Cadia gold mine PC1-2 project is expected in FY26 while the execution is scheduled for FY29.

The PC1-2 cave will have a mine life of around 16 years from its first production. It will have an average annual production of 17Mt.

According to the Australian mining company, the development of PC1-2 will sustain the production of the Cadia mine at about 35 million tonnes per year as production from the current operational PC1 and PC2 caves start declining from FY24.

PC1-2 is expected to account for nearly 20% of the published ore reserves of the Cadia gold mine.

Newcrest Mining managing director and CEO Sandeep Biswas said: “Through applying our technical expertise in deep underground mining and value breakthrough strategies, our team has further optimised the PC1-2 mine footprint since the Pre-Feasibility Study, creating a more efficient cave and substantially increasing expected ore production across the life of the project.

“We now expect to deliver additional gold and copper production over the next decade and beyond, which is an outstanding achievement by our team and a great example of our innovation and creativity in action.

“We also have significant financial headroom to fund the construction of PC1-2 through our internal cash flow and prudent use of our strong balance sheet.”

The PC1-2 cave is estimated to take nearly six-seven years to achieve its maximum production capacity after the blasting of the first draw bell, said Newcrest Mining.