The Boddington gold mine is expected to generate profits of US$350 per ounce this year.

The Boddington gold mine is expected to generate profits of US$350 per ounce this year. Photo: James Boddington

Australia’s biggest gold mine is set to be expanded after the board of US company Newmont Mining approved extra works on the Boddington mine in Western Australia.

Newmont is set to spend $400 million conducting a “cutback” at Boddington which will expand the mine and add several years of life to the operation.

The decision is a triumph for local management who have dramatically improved productivity at the mine in recent years, particularly in areas like shovel utilisation and truck idle times.

Newmont owns the Boddington gold mine and half of the Superpit in Kalgoorlie-Boulder.

Newmont owns the Boddington gold mine and half of the Superpit in Kalgoorlie-Boulder. Photo: Bloomberg

Boddington produced 739,000 ounces of gold in the year to June 30, 2015, well ahead of Kalgoorlie’s Superpit, which was Australia’s second biggest gold mine with 606,000 ounces produced during the last financial year.

Boddington is expected to produce gold this year at an all-in sustaining cost of $US820 per ounce, giving it profit margins of about $US350 per ounce at current gold prices.

The new expansion at Boddington, which Newmont has not publicised, is a welcome investment from the gold giant, which like Canadian rival Barrick, has spent the past two years selling most of its Australasian gold mines.

But the move continues the huge flow of money into the Australian gold sector over recent months, which has delivered extraordinary share price gains for ASX listed gold miners.

Newcrest Mining is the largest gold miner on the ASX by market capitalisation and has seen its shares rise 55 per cent over the past year, while shares in ambitious mid-tier rivals Evolution and Northern Star have both risen by 250 per cent over the same period.

The biggest improvement has been reserved for St Barbara shares which have risen more than nine-fold over the past year.

The 17 per cent slide in the Australian dollar over the past year has been a big part of those gains and has more than offset the 5 per cent decline in gold prices during the same period.

The US federal reserve’s decision to delay an interest rate rise has given the sector a further boost in recent weeks.

But the gravy train may have run its course; Colonial First State Asset Management’s resources fund manager Todd Warren said Australian gold stocks were now expensive by international standards.

“When we look across the global gold landscape, a number of the Aussie producers are now at the top of the valuation chart, they are some of the most expensive gold mining companies in the world today,” he told Fairfax Media.

Newmont will announce its September quarter results on October 28.

Gold was fetching $US1177 per ounce over the weekend.