Denver Nuggets forward Danilo Gallinari is finalizing an agreement on a two-year extension worth an additional $34 million on his contract, league sources told Yahoo Sports.

Forward Danilo Gallinari is sticking around with the Nuggets. (AP) More

The deal is a restructuring that includes a $2.5 million increase on the $11.5 million owed to Gallinari as he enters the final year of his contract in 2015-16, sources said.

Under the newly negotiated terms, Gallinari will make $14 million this season, the first of a deal that runs through the 2017-18 season, sources said. He will make $15.5 million in 2016-17 and has a player option worth $16.1 million for the third year of the deal and a full trade kicker, sources said.

Gallinari is eligible for the extension because he’s signing a four-year-plus deal after three years from the date of his previous extension. The Nuggets have the requisite salary-cap space to redo Gallinari’s deal too, a benefit of trading guard Ty Lawson to Houston on Sunday night.

Under the same provision in the NBA’s collective bargaining agreement, Denver extended Wilson Chandler on a four-year, $46 million deal last week.

Denver has reached extensions with three core forwards in the past year: Gallinari, Chandler and Kenneth Faried.

Across six NBA seasons – and an interruption because of a torn ACL in 2013 – Gallinari has averaged 14.2 points and 36.7 percent on 3-pointers.

Gallinari, 26, played two-plus seasons with the Knicks, where he emerged as one of the NBA’s best young offensive forwards. The Knicks drafted him with the sixth overall pick in the 2008 NBA draft. New York traded Gallinari to Denver as part of the Carmelo Anthony deal in 2011.