THE Augusta mine in Costerfield will expand, despite residents' concerns, after Victoria's planning tribunal upheld a decision by the City of Greater Bendigo. 

Councillors "put their faith" in mining company Mandalay Resources in November last year by voting for the expansion, despite major concerns over the industry's history. 

Many councillors said local farmers' fears that their livelihoods would be threatened as a result of the expansion "weighed heavily on their minds" and also noted the "bad line of history" with mining companies in the region.

However they voted to approve the proposal to build two new groundwater evaporation storage dams, as recommended by the city. 

This decision was upheld by the Victorian Civil and Administrative Tribunal this week, with most concerns dismissed by the body.

The evaporation facility includes a series of shallow ponds and a storage dam, sitting above the ground to stop outside surface water entering the ponds. 

Mandalay Resources says the proposal will help manage the current and future amount of groundwater discharged from underground as gold and antimony is recovered. 

It currently does not have the correct facilities to manage this sufficiently. 

Costerfield resident and business owner Pamela King led the appeal, with concerns about contamination of ground water, the threat to chemical-free farming in the area, the protection of agricultural land, dust and noise and the drying out of Wappentake Creek. 

However VCAT said "more stringent conditions" would be placed on the development. 

They have requested that Mandalay Resources monitor domestic water supplies and farm dams, carry out weekly physical inspections of the pipeline and create a management plan to minimise the generation and export of sediment, dust and other pollutants. 

At the time of the council decision, Cr Peter Cox called on councillors to reject the application, noting the potential risks and long-term environmental impacts of the proposal. 

"I woke up feeling sick to my stomach this morning, much like the families affected by this," he said. "It's weighing heavily on all of us." 

He said history had shown that mining companies could not be trusted. 

"I agree that mining has built Bendigo, and this state, but the industry has left a huge (environmental) legacy that we now have to deal with."

He said Mandalay Resources had not even provided a business model to ensure the sustainability of the expansion and feared this was just the first of many expansion applications at the site. 

Cr Rod Fyffe also voted against the proposal, saying it only took one mistake to destroy the livelihoods of community members. 

Mandalay Resources and some objectors have been contacted for comment.