THE Territory's only uranium operation yesterday took a step towards opening an underground mine.

Energy Resources of Australia applied to the federal Environment Department to dig a 3km exploration tunnel into a "very significant" deposit of uranium oxide ore at Ranger, near Jabiru.

The company estimates the deposit at up to 40,000 tonnes - as much as has been mined at Ranger since it opened nearly 30 years ago.

The new find, which lies to the east of the Ranger pit, is one of the biggest undeveloped uranium resources in the world.

It is believed there is still much more uranium to be found nearby.

Ranger was scheduled to close last year but negotiated an extension with the Northern Land Council until 2021.

The price of uranium is expected to remain high and the demand for nuclear energy to rise.

Further discoveries at Ranger and throughout the Alligators river region would probably extend the life of the mine for many years and lead to the opening of other operations, particularly near the old Nabarlek pit.

Energy Resources of Australia is to spend $4 million on a feasibility study for the Ranger tunnel, which would go down for about 400m.

If permission is granted, work would start in the first half of next year.

Company communications manager David Paterson said the tunnel would be only for exploration, not mining.

"More exploration is needed before we think of moving to mining," he said.

Mr Paterson said any potential underground mine was several years away.

An underground operation would almost certainly be subjected to a full environmental impact assessment by the Federal Government.

Ranger has also applied to start a heap leach operation at the mine.