Surgical operation for Coromandel

Heritage Gold director Peter Atkinson near the entrance to the historic Talisman gold mine, on DoC land in the Karangahake Gorge. Photo / Richard Robinson

Mt Karangahake presides like a church over the gorge which snakes through the base of the Coromandel Peninsula.

The mountain draped in dense bush appears indomitable, yet is honeycombed with man-made voids. A century ago, tunnels on 16 levels were chipped and blasted into it in pursuit of gold, combing 34km of the interior.

The Karangahake gorge was the centre of a gold mining industry; Waikino, where the ore was crushed, was a substantial settlement. These days the scenic gorge is conservation land, with popular walking trails passing relics of the gold rush days.

Most visitors are unaware that prospectors have returned to the mountain, following quartz veins containing minute traces of gold. Heritage Gold has a permit to prospect inside Mt Karangahake, within the conservation estate. A gate on the narrow gravel road bars access so mining can take place in the old Talisman mine, halfway up the mountain.

Between 1875 and 1929, the Talisman produced more than a million ounces (28.3 tonnes) of gold and three million ounces of silver. Since 2003, Heritage has restored the old workings and drilled core samples covering 1100m, concentrating on a rich vein called Maria. Heritage director Peter Atkinson is proud of the DoC sign on the gate: in signalling a partnership between conservation and mining, it is as symbolic as a wedding band.

Just across the gorge, Heritage has a permit to test drill beneath the Rahu block, where geologists believe the same gold-bearing veins discovered at Talisman continue. They are looking for bonanza concentrations - grades of ore where the gold is visible, containing at least an ounce to the tonne. "The history of this mine has been dominated by bonanza concentrations," says Atkinson.

Higher gold prices and more efficient extraction methods mean that grades uneconomic in the past are now worth going for. And modern equipment can get deeper than miners could a century ago.

The gorge is south of the "green line" which bars mining from most of the Coromandel Peninsula. That area, north of the Kopu-Hikuai road, is Schedule Four land - part of the conservation estate, off-limits to mining.

Heritage believes Karangahake can serve as a model for mining in conservation areas with minimal environmental effects. It's the type of mining Prime Minister John Key calls surgical: underground tunnelling using smaller drilling machines and carts than with open cast digs, with waste rock recycled to fill the cavities created. Rock cleared so far from Talisman has been donated for DoC tracks, says Atkinson.

"It's the sort of mining that can be undertaken fairly unobtrusively. There's a small footprint - a narrow entrance is pretty much all you need and you can put some of the infrastructure inside the portal. More and more people are turning to narrow vein mining because [surface deposits] have been pretty well mined out."

Heritage was granted a mining permit for Talisman last November and is seeking joint venture partners; discussions have been held with Chinese companies. Atkinson says China is looking 20 years ahead for its mineral needs.

In its heyday, the Coromandel was home to one of the most productive goldfields of its type in the world, with more than 50 deposits found. If it was again opened up for exploration, companies would return with their test drills, says Atkinson. "If you want to find gold, go to a gold deposit that's already there."

Atkinson is a down-to-earth Australian with an exploration vein stretching from Kalgoorlie. He came here in the early-1980s and is a past-president of the New Zealand Minerals Industry Association. He has an interesting take on the distinction between conservation and mining land: "Not all conservation land is created equal - some of it is mining land."

He says large tracts of mining land were put into conservation estate without much thought for their mineral wealth when the Department of Conservation was set up in 1977.

"It's not that miners want to go into conservation estate - it's just that DoC owns all the prospective mining land. Coromandel is the richest bit of goldmining country in New Zealand. There is certainly some very attractive ground but, like the rest of the DoC estate, you have to ask: 'Why should all of that land be of significant conservation value given that, outside towns, it's the most modified land?' If you value conservation estate, you should value mineral resources as well."

Ten kilometres away at Waihi, old-style open-pit mining and its cleaner, gentler modern face sit side-by-side: the Martha mine on Waihi's doorstep and the underground Favona mine, both owned by international giant Newmont. From the outside, Favona is just a 5m-wide portal in a hillside but the extent of rock being extracted, and the machinery, are much bigger than Heritage's narrow vein approach at Karangahake. The adjacent processing plant crushes thousands of tonnes of ore a day, carried 2km by conveyor belt from Martha and by truck from Favona. The chemical-laden slurry from which gold is extracted goes to one of two big tailings dams behind the plant (one is full and being decommissioned). Waste rock is returned underground to fill the voids created by extraction.

Both mines are nearing the end of their days - Newmont has a permit to expand Martha to the east and extend its life for three years but has yet to commit, while Favona, which opened in 2006, has a limited life expectancy.

Unless new veins are found, the future of the processing plant and about 130 jobs are in doubt - but Newmont is exploring north of Whangamata, at Onemana and Opoutere, and is keenly interested in the review of schedule four land further north.

External affairs manager Kelvyn Eglinton says the processing plant could one day accept ore from other mines on the peninsula.

"This is our strategic advantage - we could bring material here and not necessarily by truck - we could pipe it and pump it with minimal environmental impact."

Eglinton laments the extremism of the debate about mining in conservation lands. He says the industry accepts that highest-value land should not be exploited. "The issue on the Coromandel is that no one's been up there with modern drilling techniques for 30 years to really know [what's there].

"Before we do anything we would need aerial magnetic surveys to narrow down where we would drill. Then if we do find anything you have the debate about the conditions [on extraction] and whether there's a net benefit. All we're saying is, 'let's have the debate'."