Uranium producer Energy Resources of Australia (ERA) says it will invest $120 million to further explore its Ranger mine in the Northern Territory.

The NT government welcomed the investment and said the planned works would have positive economic spin-offs for surrounding areas.

The exploration of its 3 Deeps project could allow ERA to extend the life of the Ranger mine, which otherwise may deplete all its known reserves by the end of this year and go through stockpiles in three or four years.

"This is a significant step in the process of determining the viability of an underground mine on the Ranger Project Area," ERA chief executive Rob Atkinson said.

Ranger, which is the world's second largest uranium mine, produces about 11 per cent of the global supply and is 68 per cent owned by Rio Tinto.

World uranium production was dealt a blow after the Fukushima nuclear disaster in March 2011 when prices dropped, but they have since regained some of their lost ground.

Resource Capital Research analyst John Wilson said the new works would be significant for extending the life of Ranger and showed drilling had been successful.

"It is the next leg of mining for Ranger if they can prove up something down there," Mr Wilson said.

"I guess they wouldn't be putting money in if it didn't look encouraging," he said.

In addition to the 3 Deeps exploration project, ERA will spend about $40 million to define other resources at Ranger.

Macmahon Holdings has been awarded a contract worth about $50 million as part of the new works at Ranger and is expected to begin breaking ground in May.