The mine has three diamond drilling rigs under the city, with a fourth set to be added in January. 

The inferred mineral resource has increased by almost 150,000 tonnes with the grade of gold in the deposit remaining the same. 

The results will increase the life of the mine, ensuring jobs stay in the city.

The mine is owned by LionGold Corp, which also owns mines in Canada, Bolivia and Ghana. 

LionGold chief operating officer Matt Gill described the latest figures as “very good news”.

“We have three drill rigs underground at the moment and the hope is to continue that success,” he said. 

“To keep mining and not just to replace what we have mined but actually increase it. 

The mine is about 600 metres below the city and starts in Mount Clear. The current drilling is occurring below the fire station on Barkly Street.” 

Given the mine was only reopened in 2011, with the first gold bar being poured in 2012, Mr Gill said the amount of gold in the mine had effectively increased by more than 100,000 ounces in a year.

The company is also conducting a drilling program 110 kilometres north of Ballarat.

The Tarnagulla project involves two now-retired underground mines with the plan to create an open pit mine in the future, according to Mr Gill. 

“We think that it is an easier and quicker way to get some production, which we would then use the Ballarat Gold Mill for,” he said. “Tarnagulla has historical production; it is famous for nuggets. There are two underground mines there and one of them operated as recently as 1990.

“They collectively produced over 700,000 ounces and a pretty good grade. It is as good a prospective area as anywhere in central Victoria.”

The tenement is one of five prospective mine sites the company has across central Victoria.