Cobar can extend the three-year $120 million contract by up to another two years.
Downer has just completed a three-year contract at the mine that began in May 2015.
The scope of this contract includes mechanised decline and lateral development, mining and haulage.
It also includes the provision of ground support services including shotcrete and cable bolting.
Downer EDI CEO Grant Fenn said the contractor had helped drive efficiencies across Cobar's operations.