Australian company Federation Mining is intent on exploiting a potential “jeweller’s shop” of undiscovered gold beneath the site of abandoned South Island workings

The mining company boring deep into the earth towards the West Coast ghost town of Waiuta is just 300m from the golden mother lode that lies beneath it.

The mining settlement was abandoned in 1951 when the ventilation shaft of the Blackwater mine collapsed and the London financiers who owned it called it quits.

Old-timers who worked the mine down to 700m told tales of untold riches still there for the taking.

As one ex-miner described it in 1984, “it was like a jeweller’s shop down there”, with gold gleaming all around in the sparkling quartz rock tunnels.

Waiuta is now a scenically derelict tohu whenua, or heritage site, maintained by the Department of Conservation.

But in its 55 years the small town produced more than 749,000 ounces of gold from a vein known as the Birthday Reef.

Federation Mining, the company reviving the mine, is confident there’s enough more where that came from to keep it in operation for at least 10 years.

Exploratory drilling has produced an estimate of 700,000 ounces of gold based on samples from six holes at the Blackwater site.

And for the past 18-months the Australian company has been tunnelling towards Waiuta from a 20ha site on farmland in the Snowy River valley, south-west of Reefton.

Vice-president Simon Delander says the gold-bearing reef plunges to unknown depths below the old workings.

“We’re basically picking up where the old-timers stopped, tunnelling under the DoC estate to go to the base of that mine, then we’ll decline to about 1km beneath that.”

Federation Mining’s Simon Delander and safety and environmental adviser Cassandra Hutt. Photograph: Lois Williams

Federation’s 48 workers at the Snowy River site have built two parallel tunnels, each measuring 5m by 5m, burrowing just over 3km on their way to Waiuta.

“One tunnel’s for primary access for getting mining equipment up and down and the second is mainly for services like air and power. But also for safety – New Zealand regulations require a second egress in case of emergency,” Delander says.

From Snowy River, the Paparoa range is visible, where the remains of the 29 men killed in the 2010 blast in the Pike River coal mine, with its one tunnel, lie.

At the portal of Snowy River’s second tunnel, giant fans suck fresh air into the mine, which lacks the gassy seams of Pike River, Delander says.

“We’re quite different from Pike River in terms of mineralogy. There are no coal seams here so we don’t have explosive gases but there are still obviously safety issues, for instance from machinery or fire. So we have twin tunnels connecting at intervals.

“If we have to get people to the surface fast, we can bring them out the other way, through the second tunnel.”

Non-stop operation

Working day and night, giant drilling machines rumble down the main tunnel to drill holes for explosives and diggers follow after each blast to scoop up rock and load it onto trucks to be dumped onto a growing waste pile.

Blasting greywacke is a slow process: each explosion extends the tunnels by only about 4m.

But the crews are pushing ahead by about 300m a month and the tunnels should be beneath Waiuta by February, Delander says.

They’ll then need to drain the old mine workings, which flooded after the collapse of the Blackwater shaft, pumping the water through the new tunnel using a series of pressure valves.

Heavy equipment at work in the Waiuta-bound tunnel. Photograph: Supplied 

The next stage is to test the richness of the Birthday Reef with a four-month diamond-drilling programme into the quartz rock and a formal feasibility study.

“Oceana Gold hit the reef with its six vertical holes but what we need to do in terms of bankable feasibility is to have additional drilling from underground to confirm the assumptions,” Delander says.

If core assays prove there is gold in the expected quantity, Federation will be going back to its investors for the money to build a $60 million processing plant on site with quartz rock going in one end and gold bars coming out the other.

“The rock is crushed and goes through several processes to extract the gold. The end one involves cyanide, but that is detoxified in the process and the waste water goes into settling and cleansing ponds.

“We want to show that mining and short-term land use can work in co-operation with the environment. We’ve already started rehabilitating the site. We have 11,000 native plants for the passive treatment plants, in the ponds and on the river bund.”

About half the waste rock will form a plateau on the farmland topped with soil to establish pasture on what was mainly gravel and gorse wasteland created by historic gold dredging.

The remaining sulphide-containing rock will be crushed and mixed with cement to be pumped as a slurry to backfill the tunnels, Delander says.

Investors in the Snowy River project include the Australian Super fund and the now defunct Provincial Growth Fund, which granted Federation Mining a loan of $15 million in 2019.

“We haven’t drawn all of that down and we’ve actually paid some back already,” Delander says.

The processing plant – if approved – will create 100 jobs and take Buller’s already healthy economic development stats to another level when mining starts in 2024.

Construction of the plant will create about 60 jobs for contractors.

Federation applied for resource consent for the 1ha plant in June and has had the nod from most “affected parties” including its few neighbours.

West Coast Regional Council consents manager Rachel Clark says only DoC and manawhenua, Ngāti Waewae, are still to respond, but she’s not expecting any issues that might derail the mine.

Federation has injected $27 million into the coast economy in the past 12 months, including $1.4 million in Reefton’s Rosco Contracting and $1.4 million in local trucking firm Ahaura Transport.

The biggest challenge for the company – and a community anticipating boom times ahead – will be finding places for 100 workers to live.

Housing’s tight on the coast with relatively few places for sale or rent, but Delander says the company is in talks with the Buller District Council about opening up land for building in Reefton, the nearest town.

“We’re pretty keen for people to bring their families to live in Reefton or Greymouth so we’re also talking to Development West Coast about how it could help.”

The development agency’s chief, Heath Milne, says it is keen to support the biggest mining venture on the coast for years and could potentially invest.

But it won’t be making that commitment until it’s proved the gold is there, and Federation makes the formal “decision to mine” at the end of next year.

Made with the support of the Public Interest Journalism Fund

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