Mining operations expanded in 1865, with several companies establishing claims in the district. Among them was the Hercules Mining Company, which began driving what would become the Long Tunnel Extended Adit. By 1867, the tunnel had reached Cohen's Reef, approximately 160 metres from the entrance and around 120 metres beneath the surface. Although the reef had been successfully intersected, the quartz at this location contained relatively low concentrations of gold, averaging about five grams per tonne.

In 1871, the mine was acquired by the newly formed Long Tunnel Extended Mining (LTEM) Company N.L. Backed by strong financial support and considerable mining expertise, the company expanded the adit by a further 230 metres. Underground chambers were excavated to house boilers and machinery, while ventilation chimneys were driven to the surface. Employing the latest mining technology of the era, the LTEM Company continually adopted new innovations as they emerged. At peak production, its five large Cornish boilers consumed more than 30 tonnes of firewood each day to power the mine's operations.

The Long Tunnel Extended Mine rose to become one of Australia's most successful gold mines. During the 1890s, it was Victoria's highest-producing gold mine for five consecutive years and, for one remarkable year, the largest producer in the nation.

By the time the mine closed in 1914, more than 859,000 tonnes of quartz had been extracted, yielding around 13.7 tonnes of gold. Beneath the hills of Walhalla, an extraordinary underground network extended over 8.5 kilometres, reaching depths of 923 metres below the machinery chamber and around 150 metres below the natural surface.