Australian gold-diggers tunnel under town, create 450 jobs

Australia, July 15: At first glance, there is scant evidence of the gold fever that has gripped the southern Australian town of Bendigo, almost half a century after its once bustling mines were abandoned.
Instead of a rush of thousands hoping to strike the motherlode, a lone mining house is making a new search for the yellow metal in Bendigo, for it believes millions of ounces were left behind when prospectors pulled up their stakes in the mid-1950s.

“Twelve million ounces I think is the tip of the iceberg,” Mr Doug Buerger, managing director of Bendigo Mining NL told reporters at the mine site.

The search is all taking place deep underground.

Mr Buerger’s firm is tunneling under the town’s shops and houses and old mines, through the gold bearing reefs that they were built on, to revive what was once one of Australia’s biggest gold mining centres.
Only the rich Kalgoorlie veins 2,000 km (1,200 miles) west in Western Australia have yielded more gold.

Bendigo is not the only place in Australia where miners are digging under a town to find gold. But the Bendigo operation, if it proceeds, is set to be the largest and is all the talk of the town’s 84,000 residents.

During the 103 years until 1954, the Bendigo goldfield yielded 22 million ounces of gold, or 684 tonnes, about two-and-a-half times Australia’s annual output today.

Bendigo Mining, capitalised at around A$100 million (US$51million), forecasts production of 485,000 ounces a year within six years.

The project, which is seeking investors at a time when bullion fetches only about US$265 an ounce — almost the lowest price in 20 years — hopes to spend less than US$100 for every ounce it mines.
To kick off operations, the company needs another A$50million and Buerger says its has caught the eye of heavyweight investors, although no names have been mentioned.

“These things take time,” he said.

The late financier James Goldsmith and Australia’s richest individual, Kerry Packer, have been backers since 1993, injecting a total of A$11 million into the project.

As in any mining project, there are risks. Exactly how much gold lies beneath the town is still a question mark.

Bendigo Mining bought up the entire field, paying another mining house WMC Ltd A$1.5 million for its stake and in the process consolidating a goldfield which supported more than 1,500 companies at its peak in the 1800s.

The entrance to the mine tunnel, which is about 2 miles long and around 550 metres (1,800 feet) deep, starts on the edge of town.
It snakes under some houses, an industrial zone and then back under a neighbourhood dotted with timber, verandah-clad houses.

Residents say they can hear the rumble of dynamite blasts beneath their feet. After initial objections, the town has swung behind the project with enthusiasm.

“This project by Bendigo Mining provides the potential to add significantly to the employment base of the city and it is hoped that the project reaches its full potential,” the town council said in a public letter.

When it is is up and running, Bendigo Mining expects the mine to add about 450 jobs in the town.

“Without the support of the people of Bendigo you may as well just kiss the whole thing goodbye,” said Mr Buerger.

-- Reuters