Work at the Earnscleugh mine. Photo by ODT.
Depressed gold prices and the high dollar have been
blamed for the closure of the privately owned Earnscleugh
alluvial gold mine near Alexandra - stripping 35 jobs and
millions of dollars from the local economy.
Sole director Geoff Loudon, of Mintago Investments Ltd (part
of the wider L&M Group), told the Otago Daily
Times yesterday ''there's still more gold there, but it's
been marginalised by the combination of price and the New
• Hopes mine
staff will find other jobs
• Closure takes
workers by surprise
Depressed gold prices and rising production costs similarly
led to Oceana Gold laying off about 270 staff and contractors
at its West Coast, Reefton and East Otago gold mines in
Start-up costs of the Earnscleugh project - the largest
alluvial (river-sediment) gold operation in the country and
one of Central's biggest employers - were estimated at $3
million. The company said about $10 million was spent in the
By 2012, the project averaged about 750oz of gold a month.
Only last December, project owners confirmed they were
considering seeking an extension to continue mining beyond
the consented April 2016 deadline.
Dredging started in July 2009 on the 150ha site, and had
grown into a 24-hour operation.
Mr Loudon said the high kiwi meant the New Zealand dollar
gold price was reduced from $NZ2000 an ounce to $NZ1500 an
''This [high dollar] has continuously been challenging the
viability of the mine,'' he said.
While gold mining will cease within a month, there would be a
further six months of remedial work to restore and return the
area to grassland.
''We'll rehabilitate the mine site for future agricultural
use, leaving the land in a better state than when it was
acquired,'' Mr Loudon said of the restoration - part of 132
resource consent conditions imposed by local councils.
''Continuous rehabilitation has been ongoing since 2012,
creating quality pasture from previously unproductive land.''
The land restoration mirrored L&M Group's rehabilitation
programmes at earlier projects at Glenore, Nokomai, Arahura,
Rimu and others, he said.
L&M owns more than 400ha of land in the immediate area at
No decision had been made on selling it, or whether the
dredge would be sold or dismantled, L&M Group chief
financial officer Shirley Herridge said when contacted.
It was ''incredibly unlikely'' the project could resume, even
if the gold price strengthened because the costs to restart
were ''prohibitive'', she said.
L&M, which began as Lime & Marble in the 1930s, is
estimated in the past three decades to have invested more
than $50 million in exploration projects around Otago and
Mr Loudon said since the Earnscleugh operation started the
New Zealand dollar had risen from US65c to US85c.
Gold hit a record $US1921 ($NZ2262) an ounce in September
2011, but during the past six months has drifted to around
$US1300 an ounce or less. It traded at $US1299 an ounce
At less than $US1200 per ounce, where it slumped last
December, even high-volume mines around the world come close
to being commercially impaired.
• Estimated gold resource: 110,000oz
• Project began operating in 2009, planned to be seven years
• Mining company has about 150ha of mineable farmland
• 35 people employed at the peak, 24-hour operation
• $10m estimated annual spend in the local community
• One of the country's largest alluvial gold-mining
• Average gold recovered per month (2012 figure): 750oz
• Conditions on Otago Regional Council and Central Otago
District Council resource consents: 132