Heathgate, which is a private company, as a matter of policy does not disclose current production runs, a company spokeswoman said.

In a statement, the company said it welcomed the government's approval and looked forward to receiving clearance to dig a second mine next year.

Heathgate has also lodged an application to develop the nearby Four Mile deposit, located about 10 kilometres (6 miles) northwest of the Beverley mine in northern South Australia state through an affiliate company, Quasar.

"I am satisfied that the tough conditions attached to this approval will ensure the highest standards of environmental management by the mine operator," Garrett, a former rock singer with the band "Midnight Oil" and once a vocal critic of uranium mining, said in a statement.

Australia, with no nuclear power industry of its own but sitting on the world's single largest source -- BHP Billiton's Olympic Dam deposit -- now mines about 10,000 tonnes of uranium oxide a year.

Uranium mining is allowed in South Australia state and the Northern Territory, but is banned in Western Australia and Queensland states.

Opposition to uranium mining has its roots in Australia's anti-nuclear movement in the 1970s.

With its vast reserves, Australia could supply around 36 percent of the world's uranium needs, though the ban on new mines in most states has reduced that to about 23 percent.

Parts of Africa and Eastern Europe are emerging as competitive suppliers of uranium oxide to the world's nuclear reactors, numbering around 440 and growing, according to the Australian Uranium Association.

Another mining company, Energy Resources of Australia Ltd 68.4 percent-owned by Rio Tinto Ltd signed an agreement in July to supply uranium to a Chinese electric utility, which followed signing of a bilateral safety pact between the Chinese and Australia governments. (Reporting by James Regan; Editing by James Thornhill)