Matakanui Gold continues mining exploration in Dunstan Range

A drill rig works on Matakanui Gold Ltd's test drilling programme in the Bendigo-Ophir project last year.

The company behind a multimillion-dollar mining exploration programme on Central Otago's Dunstan Range says it hopes the figures will "stack up'' for gold to be mined.

Hokitika-based Matakanui Gold Ltd director and shareholder Kim Bunting said "ballpark figures'' of $20million-$30million could be spent completing feasibility studies to decide whether mining would be done.

The company has a five-year exploration permit for "early-phase'' exploratory work for its Bendigo-Ophir project and has already spent $1million on a 35-hole test drilling programme there last year.

Another $1million would be spent on drilling another 40-50 holes this year, hopefully in March and April, Mr Bunting said.

The combined length of the test drill holes last year was 2045m, and another 2000m would be drilled this year, he said.

The 251sqkm Bendigo-Ophir area in the exploration permit is mostly private land on the north face of the Dunstan Range, in the Matakanui and Manuherikia valleys, but also includes some pastoral lease and Department of Conservation land, including the Bendigo historic reserve and Ardgour Conservation Area.

The area has a mix of alluvial gold, and hard rock areas, where gold is trapped in quartz, or similar.

Mr Bunting said work so far was focusing on the area of the Rise and Shine valley and other nearby mining "prospects'', which were mined until about 1900 and then again in the 1930s.

He said the exploratory "minimum impact activities'' (which means using only handheld equipment), followed by drilling last year, were allowed as of right under the Central Otago District Council's District Plan and required no other council consent.

Mr Bunting said the next round of "non-minimum impact'' drilling, using mechanical means, could also be done as of right, but a consent application had been lodged with council for tracks to be constructed for this year's drilling.

Landholders in the area were being kept informed of the project and more consultation would be done with the wider local community, Mr Bunting said.

He said initial ore grades reported ranged from 0.55g of gold per tonne to 0.77g of gold per tonne, and the gold was "reasonably easily extractable''.

However, "we're a long way from having the number of ounces we require'' for mining to be pursued, he said.

Mr Bunting hoped further drilling in the Rise and Shine valley might match the grades at Oceana Gold's Macraes mine.

Macraes has annual average grades of 1g from its pit and 2g from underground.

To be viable, the scale of operations in the Bendigo-Ophir area would have to be at least 1million ounces, Mr Bunting said.

When asked if potential mining in Bendigo-Ophir could match the scale of Macraes mine, he said it was "too early to say''.

"But down the track if it stacks up it [a new mine] could be a valuable asset, not just for the company but for the district.''

pam.jones@odt.co.nz