Three men working at a Taupo property were shocked to discover an old box unearthed during excavation work containing sticks of gelignite explosive.

Police were notified about 2.45pm Monday. They cordoned off Tamamutu St and evacuated houses on either side of the property as a precaution while the bomb squad was called in.

Shane Shine, who has been a tenant at the address for the last eight years, said the box - which was about 1.2m under a grassed area - had an explosives label saying 'danger explosives - gelignite'.

But he and the two labourers who were helping him on the job thought it was more likely to be a time capsule or a coffin for a pet.

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"Our initial reaction was that it couldn't be explosives so we lifted the box gingerly into the carport, prised off the top and then saw the sticks of gelignite."

He said they called police straight away and were advised to leave the property immediately.

"We dumped everything and went," Mr Shine said.

Taupo police Sergeant Stuart Duncan said although the explosives were old they were well packed and appeared to be stable.

Mr Duncan said gelignite had been commonly used in the past for breaking in land but why it had been buried on a residential Taupo property was a mystery.

Mr Shine said he believed the home was around 50 years old and had been a holiday home before he moved into it.

Labourer Adon Walker said he was digging some footings for the house when he hit the box.

In retrospect it was probably lucky that he hit the box on the side leaving only a small nick, he said.

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