The NSW Department of Planning and Environment gave the go-ahead to start construction of the GRE46 decline, which will allow further resource definition and discovery drilling.

The company expects to start development on the A$20-22 million decline in the March 2019 quarter.

Evolution plans to spend a further $6-7 million on an initial 36,000m underground drill program.

In April, Evolution announced a maiden GRE46 underground resource of 5.9 million tonnes at 3.17 grams per tonne gold for 603,000 ounces of gold.

Since then, the company has discovered the high-grade Dalwhinnie Lode.

Results from Dalwhinnie have included 3m (estimated true width 2.3m) at 69.9gpt from 883m; 6m (ETW 4.5m) at 67.3gpt gold from 687m; and 1m (ETW 0.8m) at 38gpt gold from 774m.

"This is another important step towards achieving our objective of increasing Cowal's production rate to over 300,000 ounces per annum on a sustainable basis," Evolution vice president discovery and chief geologist Glen Masterman said.

"As indicated by recent drilling results, we are excited about the potential to add significant underground resources of high-grade material over a long strike length."

The decline approval comes within weeks of the government approval of modification 14, allowing the Cowal plant to be expanded from 7.5 million tonnes per annum to 9.8Mtpa.

The modification also allows for the implementation of a secondary crushing circuit and the development of an integrated waste landform to store tailings.

While a feasibility study is still being finalised, the cost of the plant expansion is expected to cost around $40-45 million.

The expansion will also target a drop in unit costs of 10-15%.

Cowal produced 258,000oz of gold at all-in sustaining costs of $877 an ounce in the 2018 financial year, with guidance for FY19 set at 240,000-250,000oz at AISC of $975-1075/oz.

Shares in Evolution fell by 2.8% to A$3.10, coming off a four-month high yesterday.