Norton Gold Fields says it will spend $40 million in the development of the Enterprise open pit at its Paddington gold project after lifting the resource estimate for the deposit by 18 per cent.
Norton said the indicated and inferred resource at Enterprise had risen to 1.22 million ounces of gold with probable ore reserve of 563,000 ounces.
The upgrade was expected to provide five years of base load ore feed for the company's Paddington Mill.
The project has a net present value of $136.6 million with an internal rate of return of 66 per cent based on a gold price of $A1600 an ounce.
Norton managing director and chief executive Dianmin Chen said Enterprise would be the next base load operation for the company's 3.3mtpa Paddington Mill.
"With a higher grade than Navajo Chief, the current base load operation, Enterprise will allow us to both increase Paddington's gold production and reduce unit production costs," he said.
The company is also investigating the feasibility of underground operations at Enterprise.
Norton Gold Fields is majority (89 per cent) owned by China's Zijin Mining Group.
Norton shares were unchanged at 19 cents at 11am.