One year after Lihir Gold’s failed foray into the historic mine ended when it offloaded the site to Castlemaine Goldfields for $4.5 million, the new owner finally began its first exploration at the weekend.

After months of drilling and planning, managing director Matthew Gill described the recommencement of mining at the Ballarat East site as “a big milestone” for the company. “We commenced extending one of the existing tunnels and that will now continue with the purpose of accessing the quartz ore reef we identified last year,” Mr Gill said.

“This is the commencement of the development and is a big commitment on our behalf.

“We hope to be producing gold around September this year.”

Mr Gill said multiple quartz reef had been identified and he was confident his company, which will undertake exploration on a much smaller scale than Lihir, will succeed where its predecessor did not.

“The gold grade we’re expecting is some 7.5 grams to the tonne, about a quarter of an ounce, which is quite rich by gold grade standards,” he said.

“Our approach is we are going in at a lot smaller production rate and we think the quartz reef can sustain that sort of extraction rate.

“At full production rates, which we expect to be at in the first quarter of next year, we hope to produce around 50,000 ounces per annum.

“We are going for quality tonnage rather than quantity and that’s the fundamental difference.”

At the current gold rate of $1400 per ounce, the company is aiming for the mine to produce about $7 million in gold annually.

Mr Gill said the company had already provided jobs for about 30 employees and it was anticipated the number would reach 100 by the end of the year.