Waikaka Gold Mines Ltd was granted consent with conditions from the Gore District Council and Environment Southland on Monday to operate a mine near Waikaka, about 20km north of Gore.
The project’s backers were looking to mine 95ha of land over eight years, at depths of 20m-40m below ground, bringing in more than $50 million in gold annually.
Waikaka Gold Mines has 52 shareholders from as far away as Japan and the United States, with the largest shareholder being the March family, of Christchurch.
Director Warren Batt, of Kerikeri, said the project was over the hill from an alluvial gold operation he had been involved in at Freshford in the Waikaia Valley.
"It finished in 2019 and we secured an option over Waikaka, which we ultimately exercised and evaluated. So we started evaluating it immediately post-Covid," he said.
He said it would be a dry mining operation, which differed from most.
"In contrast to the Waikaia alluvial operation ... the pit will be dry and the gold-bearing wash will be mined and carted to a central processing plant.
"It will be excavators and trucks. So it’s essentially an earth-moving exercise."
About 1.5mcu m of overburden would be produced annually, carted to the processing plant and then returned to the pit.
Mr Batt said the Waikaka valley floor had been mined before, from the 1860s to the 1930s, and was mined by L&M Mining for a short period around 2000.
The new mine would go considerably deeper than previous mines.
He said L&M Mining ran into technical difficulties with the mine and a collapse in the gold price.
High gold prices was not a huge decider to go ahead with the project.
"The gold price is very high at the moment. And it certainly makes the project viable. But we started this project long before the gold price got to anywhere near where it is now.
"To put it into perspective, when we started mining at Waikaia, the gold price was between $1800 and $2200 an ounce in New Zealand. Two months after we committed to developing the project, which included a couple of major projects, major contracts, building gold plants, the gold price collapsed to less than $1400. So that’s the nature of the game.
"The gold price today looks fantastic, but we’re more focused on what the bottom line is — what are the costs."
Gold was above $9000 an ounce yesterday.
Clay had also been an issue at the site but constructing a slimes treatment plant was expected to help alleviate that issue.
The company would spend the next six months awaiting any appeals and then revising feasibility studies and looking at project financing before making a final decision. But Mr Batt said he saw no reason why it would not go ahead.
He said up to 30 people would be employed at the operation once it was up and running and the intention was to employ locals.
They may have to bring in a management team of about six but the rest would be locals — contractors and truck drivers.
A geologist for 60 years, Mr Batt said the March family, who were involved in construction in Christchurch, had partnered in the Waikaia gold mine, and continued the connection while other shareholders had come into the project as more capital was needed.
About $5m had been spent already.
Invest South Ltd, the investment arm of the Community Trust of Southland, is a 9.42% shareholder of Waikaka Gold Mines.
He said with the gold price going up it has an impact on the expense of gold mining processing equipment.
"Let’s put it this way: we didn’t make a fortune out of Waikaia but there was a modest return on investment. If you look globally at the return on mining investment, it’s somewhere between 4% and 7%. Obviously, some projects do better than others, but it just must be in the blood."
Waikaka residents spoken to yesterday were happy with the mine go-ahead.
A farmer who asked not to be named said he was very happy with the operation and the talk around town was extremely positive as well.
It would inject capital and people into the town, bringing money in to the surrounding businesses — and the pub.
Waikaka Hotel lessee and Mustang Diner owner Donna Ridings said there had been a bit of chatter around town, but it was mostly positive with people excited for the project — including herself.
"There’s been some pros and cons, but myself — I’m really happy with it going there. It can generate jobs and bring in, for such a tiny little town, people and business," she said. — additional reporting by Gerrit Doppenberg
