A 20-year mining permit has been issued to private Australian company Tasman Mining to redevelop the historic Blackwater underground gold mine near Reefton on the West Coast - mooted as an overall $500 million project.
The project will now move to an exploration phase, developing a 3.3 kilometre decline tunnel to get access for more underground test drilling to better define the gold resource, before a final decision is made on mining.
Capital of $US30 million ($NZ44.3 M) is being sought, which would cover the cost of the tunnel and exploration drilling, Tasman's managing director Mark Le Messurier said when contacted in Sydney yesterday.
“I've spoken to several (Australian) groups, private investors and private equity funds, but have some New Zealand investors to talk with in the New Year,” he said.
“The reality is the challenge to raise the funds for the decline. It needs more drilling to prove the quality of the ore body - so investors will have confidence to invest,” he said.
Blackwater, which in recent years has had $18 M spent on exploration, is 37 km south of Reefton, beneath the abandoned township of Waiuta, in the foothills of the Victoria Range.
Oceana Gold Corporation (TSX & ASX: OGC) still owns the mine, but should Le Messurier decide to go ahead he has an option to buy.
From 1908, until the shaft collapsed and the mine closed in 1951, it produced about 750,000 ounces of gold, going to depths about 1000 metres underground.
Estimates of the gold still on the known targets there range from 580,000 oz up to around 700,000 oz.
When asked, Le Messurier said the deadline to raise capital for the tunnel and exploration drilling was by December next year. The decline would begin on private land and go toward the orebody at a 1:7 gradient, in a straight line.
He noted one previous test hole of OceanaGold's was a “very expensive” 1.6 km long, prompting the need to go underground and drill from those depths.
Should a decision to go ahead be made, the company would then seek $US40 M to go into production, which would include a nearby processing plant to extract the gold and smelt into rough “dore” bars.
The figure of $US500 M was the “all-up” cost of establishing the miner and included costs to operate it for a decade, he said.
He confirmed Government permitting agency New Zealand Petroleum & Minerals had granted a 20-year mining permit for Blackwater.
“The mine would have a small surface footprint with an access point and infrastructure located on private land several kilometres away from the historic mine site,” he said.
Tasman Mining would next seek final approval for its annual work plan and environmental management plans from the Buller and West Coast Regional Council. He hoped surface preparation could begin by mid-2019, such as workshops, a bridge and power.
Le Messurier estimated the decline would take two years to build, employing about 30 people, and then a further two to three years to get into production, employing around 100.
Tasman has appointed Nigel Slonker as Blackwater's project manager, including site preparation and decline development.
He is an experienced underground mining engineer, previously working for mines, tunnels and quarries inspector for WorkSafe NZ and was OceanaGold's general manager at its now closed Reefton gold mine, and had been mining manager of its Frasers underground mine at Macraes, in East Otago.
*Simon Hartley is senior business reporter and assistant chief reporter for the Otago Daily Times.