Gold at Sams Creek in Golden Bay is now estimated at more than one million ounces, and worth about $2 billion – and that is just a start.

An announcement to the Australian Stock Exchange from the company exploring the area, MOD Resources, has revealed the gold resource at Sams Creek has been increased by 33 per cent to 1.024 million ounces.

With the price of gold in New Zealand dollars about $2000 an ounce, that is worth around $2b.

Significantly the company noted that gold was all contained within an 800-metre strike length of the main zone prospect, which represented less than 15 per cent of the known 6km strike length of the Sams Creek dyke.

That means there is potential for the gold resource to increase markedly.

MOD chairman Miles Kennedy said the fact that it had been able to increase the resource at Sams Creek by 33 per cent to more than one million ounces with its initial nine-hole drilling programme underlined his confidence that Sams Creek had the potential to host a multimillion-ounce gold resource.

The company now has three diamond rigs operating at Sams Creek on the second stage drilling programme.

Sams Creek is 25 kilometres from Takaka in the Cobb Valley, and is on conservation land outside the Kahurangi National Park. It has been known as New Zealand's biggest undeveloped gold project.

West Australian-based MOD Resources has so far spent $2.4 million exploring the area.

The Sams Creek exploration permit covers 30.6 square kilometres and is owned by OceanaGold Corporation through its subsidiary Oceana Gold (New Zealand).

The company has a resource consent and access arrangement for Sams Creek.

It does not have a mining permit and will continue exploration to find out how much more there is.

Its exploration permit expired in March but New Zealand Petroleum and Minerals has extended it for five years.

The Sams Creek Project had previously been put at 770,000 ounces. The revision to 1024 million ounces has been made after drilling nine diamond holes within the main zone prospect for a total of 2300 metres.

The new estimate under industry standards of the gold resource was completed independently by Nelson firm Golder Associates.

When MOD finishes its exploration it will decide whether to apply for a mining licence and resource consents.

Golden Bay Forest and Bird spokeswoman Jo-Anne Vaughan said the downside for the company was that the gold resource would be "incredibly hard" to get out because it was under hard complex rock.

It would have to crush the rock and would get "about a teaspoon of gold out of a tonne", she said.

"That's an incredible tiny amount and an incredible amount of waste rock and where are they going to put that?

"They cannot leave it in Golden Bay because of our aquifer. I think they have some huge issues."

She said Forest and Bird did not want the company there but it would woo local people with jobs which were hard to come by in Golden Bay.

"Hopefully the price of gold will come down so it will not be economic for them to mine but in the meantime they are milking it for all its worth for their shares."

New Zealand Minerals Industry Association chief executive Doug Gordon said the announcement represented the transformation of a mineral potential into an actual known resource reserve.

"What's more exciting is, as they say, these results are from 15 per cent with 85 per cent of the area of interest yet to be properly explored.

"This is exactly what the industry foresaw as part of our country's mineral potential prior to the Government's mineral stock take in 2010 – and it's not on schedule 4 lands. So from that political perspective, one of many to be considered, the resource is mineable.

"This is good news for the sector."

- © Fairfax NZ News