Australian mining firm eyes $4 billion prize after Otago gold find

An Australian mining firm has struck a gold deposit inland from Dunedin that it believes could be worth billions of dollars.

New Age Exploration said the discovery near Lake Mahinerangi was years away from progressing into a mine proposal, but if that were to happen, the company would likely look to the fast-track process to build an underground mine.

The company announced its early-stage findings to the Australian Securities Exchange this week.

Chief executive Kirby Johnson said shear-hosted gold mineralisation was identified during drilling at the company's Bella prospect, within the wider Lammerlaw Gold-Antimony Project, where it holds an exploration permit.

While the company was "only a few drill holes in", he said initial indications were that the deposit could extend more than five kilometres laterally.

"If you find a million ounces of gold at US$4000 an ounce, these days gold has become incredibly valuable," he said. "Then that can easily translate into $4 billion and so that's definitely our target."

The deposit bore similarities to the Macraes deposit in Waitaki, where OceanaGold operated the country's largest gold mine, Johnson said.

"There's a heck of a lot of work to go yet, before we know genuinely if it could be that big, but that's definitely our aspiration," he said.

Asked about the potential environmental impacts of a mining proposal, Johnson said New Zealand's world-class environmental management legislation was a major drawcard for the company.

He said the site was agricultural land.

"There are no wineries," he said. "There is no tourism that I'm aware of, and I feel that agriculture and mining can co-exist."

Johnson said the company's strong preference would be for an underground mine.

"We think that, fundamentally, that's a better way to go, rather than open-cut. An underground mine has a much smaller footprint on the surface and probably more suited to this environment."

A New Zealand workforce would also be central to any future proposal, he said.

"Mining jobs are good jobs, high-paid jobs and profits, tax, they all stay in New Zealand," he said.

Nearby, in Central Otago's Dunstan Range, Santana Minerals' application to construct an open-cut gold mine has attracted criticism from opponents, who argue it is too complex and risky for the Fast-track process.

Johnson said New Age Exploration viewed the fast-track process as a way to sort through issues quickly, rather than bypass or sidestep them.

"We really like the fast-track process and we give credit to the New Zealand government," he said. "We're very supportive.

"It's actually a key attraction for us to be working in New Zealand."

Exploration was a risky business and the true likelihood of a mine going ahead was unknown.

"We think we've got excellent geology here and it's extremely encouraging for us to go forward, but we have to do a lot more drilling to really know," he said.

"We're still several years away from even thinking about applying for a mining permit."