Newmont Waihi Gold expansion worth millions

Waihi, population 4500, will remain a rich gold mining town for at least another 10 years, after the American mining company Newmont announced bold expansion plans.

Newmont Waihi Gold wants to develop a new underground mine, called Correnso, in the eastern part of the town, and it will also begin an exploration programme beneath the Martha open pit, believing deposits of gold were left over from the historic mine, which closed in 1952.

The new activities would pump a further $700 million into the region and maintain continuous employment for 700 families, through to at least 2020. Newmont directly employs 350 people and the others are involved in providing goods and services to the local mining industry.

"It's a positive for the company and for the community as a whole," said Newmont general manager, Glen Grindlay. "We recognise some people will have concerns but we will be putting money into making the area better, such as parks and reserves and street lighting.

"For us, Waihi is a conscious decision. We want to stay here and the exploration potential is great. We think there's more gold here than what we've found," he said.

American-listed Newmont Mining is the world's largest gold producer, operating on five continents.

Before yesterday's announcement, Newmont's gold and silver mining operations at Waihi were expected to finish in early-2015.

Newmont opened the underground Favona mine seven years ago and it will be exhausted by the end of this year. The nearby Trio mine will begin operations early next year and carry on till the end of 2014 - the same time that mining will be completed on the eastern edge of the Martha open pit.

Trio is expected to produce 200,000 ounces of gold and 350,000 ounces of silver, worth more than $500 million, while nearly three times that amount could be mined from Correnso.

An exploration tunnel, stretching 2.5km to 230m below the surface, will be constructed within the north wall of the open pit and at the end of 2014 Newmont will make a decision on whether renewed underground mining at Martha is feasible.

The historic Martha mine produced 5.6 million ounces of gold and 37 million ounces of silver between 1882-1952.

Mr Grindlay said the present ongoing exploration - at a cost of $10 million a year - had indicated promising deposits of gold and silver, and the programme was important to the local community and New Zealand as a whole.

"Gold mining is a significant contributor to the economy through money that goes back into the community and through taxes, employment and training."

Newmont spent $190 million a year on goods, services, rates, taxes and royalties. Just over 32 per cent of that amount was spent locally, 29 per cent regionally, 21 per cent in the rest of the country and 18 per cent overseas.

Over the past 20 years, more than two million ounces of gold and 14 million ounces of silver have been produced at Waihi. When Newmont opened Favona in 2004, the gold price was US$409 an ounce and it has now reached $1800 an ounce.

"It is higher than we would have predicted. Some of the price is lost through the exchange rate and we use a rolling average of $1300 in our planning," Mr Grindlay said.

Some of the mining operations in Correnso would take place between 130-350m below residential properties in Waihi east - the entrance is the same as the one shared by Favona and Trio.

As mined areas are completed, they are backfilled with rock to provide long-term stability.

"From a technical point of view, we believe there will be no safety risk because of the modern (mining) techniques," said Mr Grindlay. "For every truck that goes out (with gold deposits), we take one back in with waste rock to fill up the gap."

He acknowledged some residents would have concerns about having a tunnel under their houses and there would be some vibration.

Mr Grindlay said Newmont would compromise on blast times and it would continue to offer its Amenity Effect Programme payments for people closest to the operations. Last year payments ranged from $250-$3000 for a six-month period.

Newmont will consult with the local community about their latest plans during the remainder of the year, and the American mining giant will put in a resource consent for the Correnso mine early next year.

Information brochures have been delivered by Newmont to every home in Waihi including 31 properties directly above the proposed mine and 15 immediately adjacent to it.

Hauraki mayor John Tregidga said his council would take any community concerns to Newmont so it can address those issues before the consent application is completed.

If approved, construction of the Correnso mine is expected to start in mid-2013.