Oceana Gold's $75 million multiple-mine development at Reefton could be threatened with the potential closure of the South Island's West Coast to Canterbury rail link.
The Reefton mines - in the early stages of development - are projected to add 140,000 ounces a year to Oceana's expanding operations, more than a
quarter of its targeted 400,000- ounce production by 2006-07.
The Land Transport Safety Authority (LTSA) last week released an independent report on the rail link, claiming the route could close within two years because of the extent of deferred maintenance.
A report commissioned by coal company Solid Energy claims about $70 million needs to be spent on the line.
Oceana's operations chief, Len Jubber, described the situation as serious for the Reefton development.
However, he was confident that the overall economic importance of the rail link would be recognised by the Government.
Oceana Gold's development of the Globe Progress and Blackball mines near Reefton was to rely on transporting partially processed concentrated ore by rail to the Macraes mine, 100km north of Dunedin, for gold extraction. Mr Jubber said it was too far to truck the 95,000 tonnes of ore.
He said negotiations were under way with Toll Rail, formerly Tranz Rail, for a contract to rail the ore over from the West Coast.
Toll Rail, meanwhile, said it was still negotiating with the proposed State-owned entity TrackCo, which would run the rail network from July 1. TrackCo would take control of about $200 million set aside by the Government for track investment.
- NZPA
