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Wanaka harbourmaster Craig Blake (pictured) said there were several sinkholes at least 1.8m deep, and there were concerns that children might fall in.
He had spoken to some nearby residents about the sinkholes and was told it had been that way for several years.
The council has requested a Land Information New Zealand geologist to analyse the beach and the sinkholes on Monday.
In the meantime people were urged to use caution while visiting the bay.