Waihi residents living near the hole that swallowed a house when it opened suddenly last month have been offered a $1.6 million compensation deal to cover the original value of their homes.

The cost will be shared between the Earthquake Commission and the Waihi Gold Mining Company.

Yesterday, the residents were told the Earthquake Commission would pay up to $100,000 for a house, up to $20,000 for contents and some compensation for loss of land.

The total value of the commission's offer was $1.3 million.


Government valuation on the 13 properties involved is $1.6 million.

The Waihi Gold Mining Company has offered to make up the balance in return for ownership of the land.

Recipients will also have to forfeit the right to claim any more damages from the commission or the Crown.

Subsidence in old gold mining tunnels has been blamed for the collapse that created a crater 50m wide and 15m deep on Barry Rd early on December 13.

Steve Kilgour, partner Barby Manuel and their three children, Zoe, Chavez and Bronson, were lucky to escape as their home, two cars and a caravan disappeared into the hole.

About 26 people living nearby were evacuated and have not been able to return to their homes.

The Earthquake Commission, Waihi Gold and the Hauraki Regional Council met the owners of the 13 affected properties in Waihi yesterday to outline the compensation deal.

But not all residents were happy with the proposal.


Pat Cornthwaite, one of those evacuated from their homes on December 13, said compensation had been discussed but she had "no idea how much it is".

Nor had any firm decisions been made.

A man who did not want to be named said residents were being asked to sign a form as part of the deal which would stop them suing for more compensation.

The man said he wanted to take the money and leave Waihi, where he has lived for 41 years.

He was upset it was taking so long to sort out compensation.

"I'm spewing about being one of the victims of that hole - I could be in there," he said.


"Why all this hassle?"

Earthquake Commission and Waihi Gold representatives will meet affected homeowners over the next week to negotiate settlements.

The commission initially said the subsidence was outside its coverage.

But Finance Minister Michael Cullen said in December "some lateral thinking" had found a way around the problem.

The commission's general manager, David Middleton, said the offer was fair and reasonable, "especially in view of the fact that legally they had no comeback against anybody and no claim against any policy or any Government agency".

Mr Middleton said the commission would investigate who was liable for the collapse once the residents had been paid.


The Ministry of Emergency Management had instructed the commission to come up with a complete reimbursement package.

"They have been through enough. They just want to know they will have the money to start again," Mr Middleton said.

It was up to each individual to consider the offer, but the land was worthless.

Hauraki Mayor Basil Morrison said the affected land would be used as a buffer zone for the open-mine pit.

The land is in the area with the most ground movement caused by mining, identified in consents for the extension of the Martha Mine in 1999.

The consents allowed Waihi Gold to double the amount of groundwater extracted from the open-mine pit and beneath the town, and doubled the predicted ground movement.


Strict monitoring conditions were breached when the company did not file annual reports on ground movements to Environment Waikato. It filed a report for 2000 a week after the collapse and is yet to file its report for last year.