The striker has penned a contract to 2028.
Wolves sporting director Matt Hobbs told the club's website: “Nathan’s been here a long time, so it’s nice for him to be able to continue his journey with us. He’s coming to an important stage of his career, where he’s really got to kickstart it and define what that career will look like.
“He’s a great kid who gets the absolute best out of himself and works his socks off to be the best player he can be. Nathan’s attitude is the biggest example he sets for the players coming through.
“His experiences this season were really important for him. Any time you get put in a situation that is a test and allows you to find out a lot about yourself is a really valuable learning curve. You’ve got to be intelligent and open enough to see it as a learning opportunity.
“The plan this season will be for Nathan to go out on loan. I think it’s important now he’s had a taste of men’s football that he gets as much game time as possible under his belt in the league. It’ll be a case of getting him out playing games this year and see how he develops doing that.”