The inlet is a popular swimming and boating area, in the Kawarau arm of Lake Dunstan.
"There was a wee girl in the water, 7-8-9 years old maybe, and a person I think was her Dad was with her and Rob got them both to the shore. Apparently, before that, the wee girl had got out of her depth and the 19-year-old man - who drowned - had gone in to get her."
Some of McHardy's group were standing on higher ground during the rescue and spotted another person in the inlet, floating under water by the pontoon, which was anchored off shore.
"At that stage we didn't know someone else was in the water, as well as the wee girl. After she was safely out of the water, Rob swam over but the person by the pontoon had disappeared from view."
Horne was a diver and someone drove to his home to collect his wetsuit and dive gear, McHardy said. By that stage, crews from the Cromwell Volunteer fire brigade, police and ambulance staff were at the scene.
The young girl pulled from the water appeared unharmed and another woman took her and another child who was with them, back home, while the search continued for the missing man, he said.
"They didn't want the kids to see all that."
Kitted up in his gear, Horne spent about 10 minutes diving around the pontoon area, searching for the man. He was supported by his partner, who was also a diver and was with the group.
He retrieved the man's body, in 5m of water, about 1.45pm, McHardy said.
"It was all very sad, but Rob, he deserves a medal for what he did in making sure the wee girl was safe and then the efforts he went to, to retrieve the body of the man. "
McHardy said the group he was with contained people from Alexandra, Arrowtown and Cromwell who were going out for lunch together. He had only met Mr Horne that day.
The inlet got "quite deep quite quickly" out from the shore, he said. The weather was fine with a light north-west breeze and "only a ripple on the surface of the water".