The rock face is a dripping mask of greywacke and argillite, illuminated by the lights of “the jumbo”, as the rock drilling machine is known in mining jargon. The diamond drills extend toward the tunnel’s end, manipulated by twin booms. Once the drilling is complete, explosives finish the job and the tunnel advances at a rate of about 8 metres a day.

The drills are silent for the moment but despite the damp, the air is dusty. And the tunnel is filled with the thrum of the ventilation system and the low rumble of a huge front-end loader. Back and forth it travelsbetween the rubble in the tunnel’s depths and the surface, a length of some 300m.

In the cross-over where a second tunnel connects to the first, its lights flood the vaulted space and briefly reveal the walls and roof running with water and recently sprayed with concrete to stop them from crumbling.

There’s mud underfoot. Set in an alcove is a rectangular container the size of a garden shed: a rescue pod with supplies, a chemical toilet and 36 hours’ worth of oxygen.

The end-point of all this activity is still three kilometres distant, and directly below the collapsed Blackwater Mine, now on Department of Conservation (DoC) land and preserved as part of the West Coast’s history, along with the ghost town of Waiuta that surrounds it, deserted since 1951.

But beneath the surface, a quartz vein the old-timers called the “Birthday Reef” holds renewed and glittering appeal, as does the prospect of others nearby, either undiscovered or more extensive than previously thought.

The twin tunnels – or “declines” – that Federation Mining is sinking begin from portals in a hillside on private land. They’ll meet the target quartz some 800m below ground. From there the company will conduct further exploratory drilling of the gold-bearing quartz, hoping to gain confidence in what it believes is a deposit that extends far deeper than historic workings reached.

It will be a crossroads for the small company. At that point, Federation’s Sydney-based managing director Mark Le Messurier will need a “bankable reserve” against which to raise the hundreds of millions of dollars Federation still needs to build an operating mine.

The drilling results will be crucial.

Federation’s work is also likely to mark a crossroads for the future of new gold developments on the West Coast more generally. Something of a revival effort is under way at the Reefton Goldfield, the country’s third most prolific, and already the tens of millions of dollars that Federation is spending is being followed by millions more in the form of exploration and drilling programmes by several other companies.

If Federation is successful, it is likely to encourage much more activity and investment in the area: perhaps outright gold fever. And Federation’s lead istesting the waters in other ways, too. The company’s tunnels disturb only a limited surface footprint, and it’s hoped this will serve as an exemplar of the kind of “light touch” mining that the political climate in New Zealand increasingly demands.

But there are some, like environmental group Forest and Bird, with considerable reservations. And the Government itself has made a sweeping, though as yet undelivered, promise that threatens to stop much of the activity in its tracks: “no new mines on conservation land”.

Federation Mining

Federation Mining (its local subsidiary is Tasman Mining) was formed from a nucleus of players from mid-tier Australian goldminer Evolution Mining, includingLe Messurierand vice-president Simon Delander.

In 2018 it agreed terms with OceanaGold, New Zealand’s largest goldminer, to develop the Snowy River gold deposit, some 20km south of Reefton. Federation holds the exclusive right to purchase the project from OceanaGold for an undisclosed price, upon taking a decision to develop the mine.

Crunch time will come in 2023, saysDelander. He hopes the new drilling will shore up confidence in the current 700,000 oz mineral resource. If a mine is deemed feasible – and critically, finds funding – the go-ahead would be given late that year (further regulatory consents will also be needed, though a mining permit is already in hand).

To date, the company has had considerable success in raising funds. The deal with OceanaGold provides up to $5 million and last year the Government firmed up a $15m loan through the Provincial Growth Fund.

The money was cinched last August by a further investment from AustralianSuper, that country’s largest superannuation fund. The investment is estimated at A$50m, for a large minority stake in the company.

That money is now flowing. Federation’s workforce in the Reefton area has swelled to roughly 30; another 13 contractors support operations like drilling and trucking. In the last seven months the company has spent $11.2m across the New Zealand economy, more than half of which was paid out on the West Coast on goods and services and wages.

“It’s a lot of detail we put out every month, but that’s the level of communication that’s expected of us from our government partners,” Delander explains on a recent tour of the site. For him, it was also a welcome return to New Zealand from Sydney, following the opening of the transtasman bubble.

It’s information the company shares widely on social media and in the local paper. And it’s tough to find much opposition in the area. Buller District Mayor Jamie Cleine is an enthusiastic supporter.

And in the Reef Cafe in town, where on a chilly May morning coals blazes in the open grate, the talk is of the 140 jobs a fully fledged mine would bring, as early as 2024.

It would be unlikely to rival OceanaGold’s mines at Macraes or Waihi, but the possibility that Reefton might again be home to the third-largest goldmine in the country has clearly caused a stir.

Renewed interest

Federation is among several small companies with seasoned operators who’ve been attracted to what some are calling “the Reefton revival”.

Dunedin-based geologist Dave Craw characterises what’s going on in the area as “a mini-boom”. It’s been quite good for some of his old students, he says, geologists who were able to work “at home in New Zealand for a change” when travel to Australia was barred last year.

Geology, Craw says, is one reason for the activity. Rock very similar to that found on the West Coast of the South Island (quartz-rich greywacke and argillite rocks known as the Greenland Group) is also found in Antarctica and eastern Australia. It was all part of the ancient continent of Gondwana, which split up some 400 million years ago.

“The thinking that the West Coast shares the same geology as the state of Victoria is not new at all,” says Craw. “What’s changed is that Victoria has had some great success in finding more gold in that rock quite recently. Which has produced knock-on interest here.”

Between 2015 and 2017, exploration work to extend the Fosterville Mine, now the largest gold producer inVictoria, resulted in a doubling of reserves and much improved grade (meaning lower costs to recover the precious metal).

And just as the Fosterville discoveries fed a reassessment of what gold might remain in similar rock around Reefton, OceanaGold relinquished its hold on the area.

Mining engineer and minerals consultant John Taylor has worked on the Reefton Goldfield, on and off, since the 1990s. “Having commenced exploration in the long dormant mining field in the early 1990s, Macraes Mining and its successor, OceanaGold, obtained permits covering the entire goldfield and were effectively the only explorers in the area for nearly 30 years.”

Taylor says the companies invested a lotin exploration, but their interest was focused on large prizes and particularly on the Globe-Progress Mine and processing facility: “they weren’t really interested in anything smaller”.

OceanaGold closed the Globe mine in 2016 and relinquished most of its licences in the face of a low gold price.

That created an opening for other companies to re-examine the area’s quartz reefs, which stretch as deep as 1600m underground, perhaps further – far deeper than the “old timers” reached.

“With Simon Henderson [Reefton Gold] working on the northern part of the goldfield and Paul Angus [Siren Gold] working on the southern parts of the goldfield and Federation Mining going in underneath the Blackwater Mine, I would say there’s significant hope that we produce another mine here,” Taylor says.

Reefton Gold

There’s nothing like soaring prices to focus the minds of explorers, and last year the gold price hit a record US$2000 an ounce. It has fallen back a little, but remains close to historic highs at roughly US$1800oz.

Reefton Gold is controlled by Canadian investors, including billionaire and noted gold bug Eric Sprott and Oliver Lennox-King, a New Zealander by birth and former chair of Canadian miner Fronteer Gold,sold to Newmont Mining for over C$2b a decade ago.

On the ground, it’s headed by old New Zealand mining hand Simon Henderson and is now in the midst of an exploratory drilling programme in the north end of the old Reefton field, on a permit that includes the Victoria Forest Park, part of the DoC estate.

The company has spent in the order of $3m to date, and expects to spend about the same again, largely on drilling and exploration in the coming 12 to 18 months.

The drilling, Henderson says, disturbs the land a little as possible. A rig is set on a timber frame in a small clearing in the bush (roughly 10m by 10m) and holes are drilled fanning out from each drill pad to minimise disturbance. Once finished, the holes are capped and the frame dismantled. Helicopters move both drillers and their equipment.

“I don’t know how much drilling we’ll do in the next phase, and I’m not trying to be obtuse,” Henderson says.

“The number we drill will depend on the success of each. We’re in that testing phase, you go, ‘well I think it’s here’ and we’ll go out 100m and see if it’s still there, and if it’s still there we’ll go out another 100m and say, ‘is it still there?’ and if the answer is ‘yeah it’s still there’ then we’ll go out another 100m and of course at any point along the way the answer might also be ‘bugger, we’ve lost it’ so then we go somewhere else.”

Henderson is well aware of the sensitivity around the land he’s working on. But he is also hopeful that Federation’s lead can point a way forward.

“Federation Mining, in their approach to the reopening of Blackwater, are able to tunnel from outside the forest park and into their deposit with minimal disturbance to conservation land and I think that sets a great example of what can be done in the new order of things. As responsible and environmentally sensitive operators, we’d like to think that we could operate in a similar way.”

'No new mines … '

Mining activity in New Zealand’s national parks has long been prohibited; that land accounts for roughly 10per cent of the country. But beyond the parks, the broader Department of Conservation estate takes in another 20per cent of New Zealand. And a promise by the then Government in 2017 to ban new mining on the entire estate came unexpectedly.

It’s a commitment the Labour Party – previously in coalition with pro-mining party New Zealand First but now enjoying a parliamentary majority – has not advanced. However, a spokesperson for Acting Conservation Minister Ayesha Verrall says it remains “on the agenda and work on it is continuing”.

The opposition National Party is critical of an outright ban and it’s understood the Government may be reconsidering the inclusion of so-called “stewardship land”, a category within the DoC estate for which conservation value typically remains unassessed.

Meanwhile miners, West Coast mayors, and indeed many in the region, hope the mooted policy quietly goes nowhere. “They’re kicking it for touch and long may it continue,” is Patrick Phelps’ view. He’s the Hokitika-based manager of Minerals West Coast, a trust and mining advocacy group. “I don’t like the uncertainty, the industry doesn’t like the uncertainty but frankly I prefer that to a death sentence.”

But environmental protection groups take a different view and they’re urging the Government to make good on its commitment.

Kevin Hague is chief executive of Forest and Bird and based in Greymouth. “The Government says it intends to stop new mining on conservation land and we say ‘well hurry up and do it’. The longer the delay, the more opportunity exists for mining companies who want to mine on that land to access that land and to get their applications in.”

Hague’s concern over gold mining is chiefly around losing biodiversity: “New Zealand has the highest proportion of species at risk of extinction. Most of our habitats are in decline and habitat loss is the principal driver of biodiversity … even vibrations from underground mining can affect endangered species above ground.”

In Federation’s case, he’s concerned that successes in mining typically attract more activity, “and what comes next might entail access on conservation land”.

Siren Gold

There’s no doubt that greater use of conservation land is exactly what the third major explorer in the area, Siren Gold, has in mind. Siren’s executive technical director and long-time explorer, Paul Angus, makes no bones about it: “I’d say about 95per cent of the company’s land is on the conservation estate. If it comes to a mine plan, it’d be underground, but I expect a tunnel from DoC land would be plan A, and plan B would be to tunnel in from private land.”

The junior ASX-traded explorer isworking around old mines at Big River and Alexander and expects to drill between 40 and 50 holes this year.

“We’ve been pretty aggressive, spending quite hard,” says Angus. “This year we’ll likely spend about $8m. I’d say 70per cent of that will be drilling related. Plus the spend on geologists, field sampling, field mapping, helicopters, assaying rock, working with DoC …” Later in the year the company hopes to extend its programme to the Golden Point prospect. “We still have to negotiate access with DoC and that’s taking quite a long time, they’ve got a backlog at the minute.” Angus is succinct about the Government’s proposed policy: “it seems to have gone quiet and we hope it stays that way.”

But while there is an undoubted focus on political risk, it may well be that the greatest hurdles for Reefton’s revival are thrown up by mother nature herself or by a volatile gold price. As Simon Henderson puts it, “the toughest job I have is to find gold.” And even then, there are no guarantees.

After all, OceanaGold is also making a considerable investment in the old goldfield. It’s planting 800,000 beech and mānuka seedlings on the site of the closed Globe Progress Mine; it’s backfilled and planted the former Souvenir open pit and has turned the oldtailings storage facility into a wetland.

That’s not because they ran out of gold. They closed the mine with more than 700,000oz in place, John Taylor says ruefully.

Maybe that looks like a mistake at today’s gold price, but that would have been tough to knowin 2016.

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