(Adds cost of expansion, production, cost impact)
Oct 28 (Reuters) - Newmont Mining Corp on Wednesday announced plans to expand its Tanami gold mining operation in Australia by building a second decline in the underground mine and adding plant capacity.
Newmont, the biggest U.S.-based gold miner, said the expansion will add gold production of about 80,000 ounces a year and reduce Tanami's all-in sustaining costs by 5 percent to 10 percent in the first five years.
The expansion will extend the mine's life by three years.
Newmont said it will require between $100 million and $200 million in capital for the project, which it will fund from internal cash. First commercial production is expected in the second half of 2017.
Once the expansion is complete, Tanami will produce between 425,000 ounces and 475,000 ounces of gold a year at all-in sustaining costs of between $700 and $750 an ounce in the first five years of production.
Last year Tanami, located 350 miles (560 kilometers) northwest of Alice Springs in the Northern Territory, produced about 345,000 ounces of gold at all-in sustaining costs of $1,038 an ounce. (Reporting by Nicole Mordant in Vancouver; Editing by Alan Crosby)