Gold miner Kingsgate Consolidated Ltd's share price has soared on news the Thai government has approved expansion plans for its Chatree mine 280km north of Bangkok.

    At 1431 AEST, Kingsgate shares were up $1.27, or 27.08 per cent, to $5.96.

    The company says it has been granted mining leases for its Chatree North project, which it expects will contain enough gold ore to extend the life of the neighbouring 2.4 million tonne per annum (Mtpa) open-cut Chatree mine.

    Kingsgate has proposed adding a second line to its processing plant, subject to government approval, which will expand production capacity to 5 Mtpa.

    The cost of the expansion is yet to be determined.

    "Access to these new mining areas next to the current operations allows for a major increase in the grade of gold mined and the life of the mine," the company said in a statement on Tuesday.

    Managing director Gavin Thomas told AAP that the Chatree mine was "down to its last month or so".

    "We were down to remnant mining and needed this (mining lease approval) to continue," Mr Thomas said.

    "This allows a major increase in our reserve base and we can start drilling for additional ore in and around the proposed pit."He said the company had a 1.2 million ounce (Moz) gold reserve at its main `A' pit and planned to increase its resources by about 1Moz per annum.

    Mining on the new leases will commence during the next few weeks, extending the current `A' pit at Chatree North and opening up new pits nearby.

    "It will be a refreshed Kingsgate as a result of the expansion: we'll have an increase in cashflows from higher grades," Mr Thomas said.

    "It will result in a reinvigorated exploration program not only at the Chatree project but at our regional projects as well, and we'll be able to get on with the job of (determining) our capital expenditure with the plant expansion.

    "We'll have to see how much we can self-finance ... and have many options."The company would examine the expanded project's underground potential in the next two to three years, Mr Thomas said.

    Political turmoil had delayed the Thai government's approval of the mining leases, which had been frustrating, he said.

    "I can't deny it has been a challenging time for us and the mining industry in Thailand.

    "We're a touch behind schedule but we're not upset about it.

    "Now that there is a democratic government in Thailand, things are moving well."Chairman Ross Smyth-Kirk said the grant of the new mining leases would "return the company to its former position as a profitable, low-cost gold producer with considerable upside potential".