Mine manager Mark Coleman stands by L&M Mining's Earnscleugh gold dredge in mid-2011. Photo by Lynda van Kempen.
L&M mining's Earnscleugh flats gold dredge near Alexandra
has sunk and staff are working around the clock to refloat
the 400-tonne vessel, which is integral to the $3 million
L&M Mining's owner, Geoff Loudon, wants to reassure the
35 full-time staff their jobs are safe and the priority is to
pump out, refloat, beach and repair the dredge, which weighs
up to 850 tonnes when laden with gravel.
Mr Loudon said it was still too early to estimate how long
the salvage and repairs would take, and when operations could
Mr Loudon said staff noticed about dawn on Monday that the
dredge was taking on water. It ''quickly settled'', but there
was ample time to safely get off the vessel.
''We don't know the cause, but most likely it was a leak,''
Mr Loudon said.
The 30m by 12m dredge sat on steel pontoons. The deck was
under about 2m of water in the pit, but access was relatively
easy as most of the dredge's superstructure was above water,
Mr Loudon said. He described much of the equipment on the
dredge as ''indestructible'', and noted the diesel engine was
not going at the time it sank, meaning water had not flooded
''We're going hammer and tongs to get it refloated. With no
production, there's no gold, and we want the 35 to be
employed,'' Mr Loudon said.
He denied a request to access the pit, as the operation was
''in lock-down'' while the ''situation was still being
The Earnscleugh operation, on a 150ha block, is one of the
country's largest alluvial gold-mining operations, processing
about 150cu m of gravel an hour. The dredge came from
Waikaka, in Southland, where operations had been mothballed
in 2002 in the face of declining gold prices.
L&M Mining has estimated the Earnscleugh flats gold
resource was about 110,000oz.
During the past year, it had returned on average about 750oz
per month; varying from 500oz to 900oz per month, depending
on the gravel quality, Mr Loudon said. He estimated there was
four years' more work at Earnscleugh.
The 750oz would be worth $US1.24 million ($NZ1.47 million),
at yesterday's spot gold price of $US1661.
The dredge had been used for ''many years'' by L&M, and
was understood to have sunk twice while in operation on the
West Coast, Mr Loudon said.
''Some of the old-timers are helping now, telling us what
happened on the Coast,'' Mr Loudon said.
Because the dredge had been working for so many years for
L&M, he declined to give an estimate of its replacement
value, saying only that ''it would be fully repaired''.
L&M Mining initially started at Earnscleugh early in
2010, initially using a small ''pilot plant'' to assess the
commercial viability of the gold prospect, before moving to
full dredging operations early in 2011.
''We wanted to make sure the gold was there, and was
recoverable,'' Mr Loudon said.
L&M told an Alexandra business forum in mid-2011 it was
spending $10 million around Central Otago for the next six
years of the operation.
The majority of the 150ha being mined was farmland, with 14
million cu m of gravel wash and 32 million cu m of overburden
being processed. Both were gold-bearing gravels, with the
wash containing the higher gold concentration.
The resource consents granted by the Central Otago District
Council and Otago Regional Council contained 132 conditions,
plus regular monitoring of noise, air, dust and water.
The tenement has never been mined before, but it is near the
historic Earnscleugh Tailings Reserve, where gold was mined
in the 19th and 20th centuries.
While privately held, L&M Mining Ltd was part of the
wider L&M group, which until recently included stock
exchange listed L&M Energy, of which Mr Loudon was
chairman. He provided a $6.3 million bridging loan to the
cash-strapped methane gas explorer last year, then
successfully completed an almost $13 million takeover last
week, with the company delisting from the New Zealand and
Australian bourses early next month. The purchase price
valued L&M Energy at $56.7 million.