An historic Central Otago gold mine could be in for a new lease on life, if the figures start to stack up.
The former Rise & Shine mine, and neighbours Shrek and Come in Time are on the north face of the Dunstan Range, between Bendigo station and heading toward Ophir; 25 kilometres from Cromwell.
So far Warren Batt, a director of Matakanui Gold Ltd, has spent about $1 million on his last 35 hole test drilling programme, and estimates a further $20 M-$30 M may have to be spent just to get to the end of the feasibility study, before a decision could be made on mining.
He emphasised the project is at “early phase exploration” only, and within the next six months will be engaging withe wider local communities, beyond the landholders in the immediate area.
Batt is also managing director of Waikaia Gold which since late 2013 has mined more than 70,000 ounces of alluvial gold from the gravels beside the Waikaia River in northern Southland, by floating dredge. That project's current third stage will finish about March next year.
Batt updated delegates on the project at the annual AusIMM NZ Mining Conference in Tauranga yesterday.
In an interview he stressed so far drilling had estimated an unverified 300,000 oz of gold across the three prospects, which meant it was uneconomic to mine; given very low grades of around 0.6 grams/tonne gold.
OceanaGold's Macraes mine in East Otago has annual average grades of 1 g/t from its pit and 2 g/t from underground.
“To be viable the scale of operations would have to be at least 1 M oz,” Batt said.
While Come in Time is alluvial, both Rise & Shine and Shrek are hard rock.
Batts is hoping further drill testing might see Rise & Shine match the Macraes grades.
To extract the gold, he is considering the “heap leach” method, never used in New Zealand before. Ore would be crushed, but not ground down further, then put in heap within a contained platform, then irrigated with a weak cyanide solution.
Months later the gold has leached into the solution, and is extracted, with the solution reused for another batch. Batt said this method was popular overseas in processing low grade ores, because it has low energy costs.
Matakanui has an exploration permit at present and has yet to apply for a mining permit.
“The next stage will be more drilling,” he said.
The drilling would require applications for resource consent, as roads and tracks would have to formed.
Mr Batt last looked at the area in 1986 and four other miners had drilled a total 79 holes across the range during the past 30 years. Just one of the other more than 100-year-old mines, Bendigo Reef, was Otago's most prosperous; producing 150,000 oz at the time.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.