Unity Mining will close its Henty gold mine next year, and it moves from production in to care and maintenance, affecting 150 workers.
It comes after an operational review of the site earlier this year, which focused on the gold mine's mineral inventory and life of mine production schedule.
"From the outcome of that review the company has determined that the best economic outcome for Unity shareholders is to focus on maximising cash generation through the recovery of the remaining higher confidence and higher margin reserves," it said in a company statement.
"Accordingly, at currently scheduled mining rates Henty is expected to have substantially mined these reserves and will transition onto a care and maintenance in late 2015."
However, it went on to stress that"while the company's current plan includes the eventual suspension of gold production from the Henty mine, Unity's goal is to restart or continue operations should additional, sustainable reserves be delineated".
Unity's managing director Andrew McIlwain said "since the acquisition of Henty in 2009, Unity has enjoyed strong support from our workforce, local, and regional communities as well as Minerals Resources Tasmania and during this period Henty has been a significant contributor to the Tasmanian economy".
"Unfortunately our significant commitment to exploration drilling within the Henty mine during the last twelve months has not been successful in adding significant additional gold ounces to the mine life, and as such, the mine will transition to care and maintenance in the second half of 2015."
A company spokesperson told Australian Mining the shutdown will affect the 150 full time workers and contractors at the mine.
The announcement is also a blow for the company, as Henty is currently it's only operating mine.
However it is currently working on the development Dargues Reef gold project in NSW, just south of Canberra, and is the first new gold mine to be approved in NSW since Lake Cowal more than a decade ago.
A recent definitive feasibility study at the site showed reserves of more than half a million ounces.
The underground mine, infrastructure, and portal has already bee designed.
The operation itself is aiming to mine approximately 330 000 tonnes using conventional long hole open stope mining methods via a decline.