The company that operates the Ranger uranium mine in the Northern Territory has taken a major step towards turning the open cut operation into an underground mine.

Energy Resources of Australia (ERA) has awarded a contract to build a tunnel two kilometres long and 400 metres deep to test the viability of another uranium ore body on the Ranger lease.

Construction of the tunnel by contractor Macmahon is due to start next month.

The mine is located within the boundaries of Kakadu National Park, about 230 kilometres south-east of Darwin.

ERA chief executive Rob Atkinson says the existing open cut mine will run out of ore by the end of this year and the new tunnel will be used to decide whether to build an underground mine.

"Without doing this, essentially we would have no more ore to mine apart from the stockpiles," he said.

"So this really is about the future of ERA as a company, as a business, as a Territory icon for the last 30 years.

"It is a very important first step to determining the potential of an underground mine."

Mr Atkinson says the tunnel will be used to drill samples to.

"The actual tunnel itself will be fairly large," he said.

"It is about six metres across and five metres high.

"That will allow trucks which can carry up to 55 tonnes of dirt to travel up and down the decline.

"So, it is certainly a good size."