This study examines the combined performance of Portland cement (PC), the binder, and fly ash (FA), the additive, towards improving the mechanical performance of the South Australian copper-gold underground mine cemented paste backfill (CPB) system. A series of unconfined compressive strength (UCS) tests were carried out on various mix designs to evaluate the effects of binder and/or additive contents, as well as curing time, on the CPB’s strength, stiffness and toughness. Moreover, the failure patterns of the tested samples were investigated by means of the three-dimensional digital image correlation (DIC) technique. Making use of several virtual extensometers, the state of axial and lateral strain localization was also investigated in the pre- and post-peak regimes. The greater the PC content and/or the longer the curing period, the higher the developed strength, stiffness and toughness. The use of FA alongside PC led to further strength and stiffness improvements by way of inducing secondary pozzolanic reactions. Common strength criteria for CPBs were considered to assess the applicability of the tested mix designs; with regards to stope stability, 4% PC + 3% FA was found to satisfy the minimum 700 kPa threshold, and thus was deemed as the optimum choice. As opposed to external measurement devices, the DIC technique was found to provide strain measurements free from bedding errors. The developed field of axial and lateral strains indicated that strain localization initiates in the pre-peak regime at around 80% of the UCS. The greater the PC (or PC + FA) content, and more importantly the longer the curing period, the closer the axial stress level required to initiate localization to the UCS, thus emulating the failure mechanism of quasi-brittle materials such as rock and concrete. Finally, with an increase in curing time, the difference between strain values at the localized and non-localized zones became less significant in the pre-peak regime and more pronounced in the post-peak regime.