A grant worth $750,000 has been set aside for the project, which will be overseen by Regional Development Victoria and part of a multi-million dollar re-development of the historic precinct.

The Courier understands a bar and restaurant are planned to go alongside the gin distillery in works to upgrade and bring more business to the station precinct.

However, the owners of the only established Ballarat distillery have said they were previously unaware of the project and had not been approached to contribute.

The project is named as the Little Lon Distillery at the Goods Shed. Little Lon Distillery is run out of a historic building in Melbourne's CBD.

The project description released by the Department of Jobs, Precincts and Regions says: "The centrally located Goods Sheds at the Ballarat Railway station off Lydiard Street will create an Urban Distillery and Ballarat born spirit brand to be manufactured and served locally, distributed nationally and exported internationally."

The Courier approached Chris Pratt, a co-owner of the Kilderkin Distillery, who said he did not know about the project. Mr Pratt said he was "taken aback" by the news.

Kilderkin Distillery has been operating in Ballarat since 2016 - the first distillery in the region since the 1930s. Last year, it won a Champion Victoria Gin award at the Australian Distilled Spirits Awards. The distillery is due to move its cellar door from Delacombe to Sunnyside Woollen Mill.

The funding for the Goods Shed distillery was announced as part of the Regional Tourism Investment Fund - Stimulus Round, which saw $46 million set aside for 30 separate projects. There was no public expression of interest process for the funding grant at Ballarat Station.

In last November's budget, the state government announced the tourism fund, saying it would focus on projects with nature-based, First Nations, arts, food or wine tourism themes.

The name and branding of the new Ballarat Station distillery venture has not yet been confirmed.

The Ballarat Station Precinct Redevelopment project was announced in 2015. Last year, the construction of Quest Apartments was completed following the build of a multi-storey car park.

As well as other retail outlets, a convention and exhibition centre is planned at the site, to be managed by facilities services company Spotless.

A government spokesperson said there was currently no more timelines or details to share about the distillery. They did not respond to an inquiry about the process for allocating the grant.

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