Reefton's gold rush over
Reefton is pinning its hopes on a possible new underground goldmine in the area after Australian goldminer OceanaGold Corporation said it would mothball the Globe Progress mine in two years.
OceanaGold said the plunging gold price led to its decision to place Globe Progress, near Reefton "in care and maintenance" from mid-2015, cutting its life by two years.
It is another blow to the West Coast's mining community, which lost 230 jobs late last year when the underground Spring Creek coalmine was mothballed by state coalminer Solid Energy.
OceanaGold said a week ago it was reviewing the mine's future. About 260 people work at Globe Progress, which opened in 2006.
The company said it would keep in place the plant and equipment and would evaluate other opportunities in the Reefton gold field, such as the potential to mine the ore body underground at Globe Progress and at the historic Blackwater mine.
It had a technical study under way on the Blackwater Project, about 15 kilometres south of Globe Progress. If the economics stacked up and received board approval, development could start in 2014-2015, OceanaGold's chief executive, Mick Wilkes, said.
Despite the mothballing news, OceanaGold shares ended the day 4 cents higher at $1.44. The price has been falling steadily since last year's peak of $4.50 in October.
Gold plumbed fresh three-year lows yesterday, falling below US$1200 (NZ$1536), then rising again, with investors battered and bruised after a 30 per cent drop in the price this year. Speculators in China were reported to be selling.
Reefton Area School principal Wayne Wright said about 30 families at the school would be affected by Globe Progress halting operations in mid-2015. The mine was an important part of the Reefton economy and community.
"The spinoff in terms of money in the community has been wonderful," Wright said.
"Reefton as a community kind of adapts very quickly to the highs and lows of the mining industry and always seems to remain buoyant."
The community was looking to the prospects of the Blackwater project.
"[OceanaGold] do have other initiatives in the area they would like to open up. The Blackwater proposal is at Waiuta, in that area there they will go underground. Those possibilities are there for people."
Mining had its peaks and lows and "people get on with it". Private coalmining was going on in Reefton as well, Wright said.
OceanaGold said in April that, from a deep drilling programme, it estimated Blackwater had an inferred resource of 600,000 ounces of gold. It had been drilling near the historic Blackwater Mine.
A fresh study would expand on previous conceptual mining scenarios and would include a study of mining method options aiming for production of 50,000 to 60,000 ounces of gold a year. The study was expected to be completed late this year.
Wilkes said in April that the drilling gave the firm confidence about the continuation of the ore body below the historic mine.
Engineering, Printing and Manufacturing Union area organiser Garth Elliott said mine staff were given a presentation about the future of the mine and the choices available to the company a few months ago. They were therefore aware an announcement like yesterday's could come.
The union has 126 members at Globe Progress. Most lived in Reefton, Greymouth and Westport.
"It's just another blow for the West Coast," Elliott said.