These were the only tools needed for success on the rich pickings around Ballarat and Bendigo, where diggers sometimes found gold in quartz reefs sticking out of rocks above the ground, or nuggets on the surface. In other cases they found it in shallow creeks and streams, or underground in narrow mine-shafts, illuminated by candle-light.

The tools and technology used by today's explorers and miners have advanced of course and are giving the Victorian gold industry something of a revival.

It's a renaissance rather than a repeat of gold rush of the 1850s and 1860s , when tens of thousands of people came from around Australia and the world to the goldfields.

But undoubtedly gold production is increasing, more companies are exploring for it, more ground is to be opened up for exploration and the Fosterville gold mine near Bendigo is attracting attention around the world. And it is all happening as a cocktail of global uncertainty and weak Aussie dollar has pushed the price of gold through $A2000 per ounce for the first time on record.

The Fosterville mine, owned by Canadian-headquartered gold miner Kirkland Lake Gold, is both the country's lowest cost gold producer and the highest margin gold producer.

Since being acquired by Kirkland Lake in 2016, the mine's production has risen sharply thanks to "transformational" gold discoveries deep underground. The mine, about 20 kilometres from Bendigo, employs almost 600 people, and this year its owner is spending about $60 million on further exploration at the site.

"It's unprecedented in Fosterville's history. It's unprecedented in Victoria's history. So it's a really significant spend," says Kirkland Lake's vice president for Australian operations Ian Holland, of the company's big investment.

In the 168 years of mining since the gold rush commenced with a discovery at Ballarat in 1851, the total gold found would be valued at about $150 billion at today's gold price.

The most lucrative goldfields have been Bendigo, which has produced 22 million ounces of the metal, and Ballarat (10 million ounces).

According to the Victorian Department of Jobs, Precincts and Regions more than 80 million ounces of gold has been found in Victoria. But that might be only the first half of the story, because state government geology experts believe that the same amount of gold that has already been found here, still remains under the sweeping plains of the state's north.

Retired mining engineer Peter McCarthy, who has a 50 year history in the mining industry including 40 years in Victoria, agrees that plenty of gold still lies under the Victorian dirt.

He is considered one of the driving forces behind the re-start of the modern day Ballarat gold field, when mining resumed in the city a few years ago, almost a century after the closure of its last mine in 1917.

"Victoria had a terrific history, the endowment was there. The amount of gold in the rock was huge. And there's a lot of Victoria which is covered, the northern part of it is covered by Murray Basin sediments...And it comes down not that far north of Bendigo," he says.

"There's up to 100 metres of cover there, there's nothing out-cropping, so there's nothing which the old-timers could have found, or could have used to find gold up there."

While the northern plains are covered by river sediment and clay, western Victoria is covered by basalt, or old lava flows from volcanoes.

"In both cases the gold deposits continue under that material. So the area that effectively is unexplored is vast, and we just need smart techniques to find the gold deposits down through that cover. And we know it's there because with the basalt, where the gold deposits went under the basalt they were followed under the basalt, and went a long way under the basalt," he says.

McCarthy says estimates of the amount of gold still underground are based on sound statistics, not speculation, and the outlook is exciting.

But it seems tomorrow's gold miners won't make their fortune with a pick, pan and a shovel.

"It will be larger companies doing it. There won't be an opportunity for individuals to do it. The stuff that's accessible has all been found," he says.

"To discover (gold) and access a mine under all those covers, someone is going to need $100 million to get started."

Kirkland Lake Gold's Fosterville gold mine goes a long way underground. Its deepest point is now about 1.2 kilometres below the surface, meaning that a trip for a loaded haul truck from the bottom to ground level is about eight kilometres.

Kirkland Lake is the sixth owner of the Fosterville mine in recent years, and is investing heavily at the site. The mine's workforce has jumped about 50 per cent over the past two or three years to its current total of 600. Some of the workers are Victorians who have returned from mining jobs around other parts of Australia.

While it's not uncommon for gold to be visible in the rock in underground gold mines, things started to change in the rock at Fosterville between 800-1000 metres underground. The change in the orebody was first seen in 2015, but increased in 2016.

"When you see it you can't mistake it," Holland says. "We didn't see it at all for 10 years, but then the orebody started to transition at depth.

"It was transformational. So it's converted Fosterville from a relatively low margin modest-scale operation at 100,000 ounces per annum, to where we are now, in the top five gold producers by volume in Australia. And we are the lowest cost pure gold producer in Australia, (and) the highest margin (producer). So absolutely transformational," he says.

Last year was a "real breakout year" for Fosterville, which produced over 350,000 ounces of gold. "And this year our current guidance to market is a further step-change, to 570,000 to 610,000 ounces," Holland says.

While the outlook for Fosterville's gold production is a bright one, one surprise policy development in recent weeks has disappointed the mine's owners.

The Victorian gold mining industry was stunned when the state government unveiled plans for a 2.75 per cent royalty on gold production in last month's state budget, which the government said would raise $56 million over its first four years.

"We were deeply disappointed by the lack of consultation. It surprised us, it surprised our investors," Holland says. "From our end we've committed unprecedented levels of investment, in terms of exploration and capital projects. And for the rules of the game to be changed part way through the game we think is poor policy and ultimately we think it's a negative for future investment in Victoria."

Based on the company's latest production guidance, combined with the current spot gold price in Australian dollars, Holland says Kirkland would be on track for about $30 million of royalty fees per year.

Holland stresses that Kirkland is not fundamentally opposed to a gold royalty, and added that it was not an immediate threat to the mine's viability.

"But what I would say is that if this was imposed four or five years ago, we probably wouldn't have been able to commit the exploration dollars that we did, to finding what we have, and having the growth that we have. And we don't know what the situation will look like in four or five years' time."

Victorian Treasurer Tim Pallas defends the state's gold royalty, which will kick in from January 2020.

"We're seeing an extraordinary gold resurgence - acting now is essential for Victorians to secure a fair return from the resources dug from our soil," Pallas says.

"This will be invested across the state on the infrastructure and services that Victorians voted for and need."

Geoff McDermott heads Navarre Minerals which is looking for gold in a number of places across Victoria.

McDermott is enthused about a "great discovery" made 40 kilometres north of Bendigo, which is yielding Bendigo-style gold in a joint venture drilling program.

"We're basically looking within 100 kilometres of existing mining operations and we look at similar type structures that host the gold," he says.

The gold explorer is "chasing" gold in areas to the north of Victoria's best known goldfields including Bendigo, under the so-called Murray Basin cover, where river sediments have left anything from just a few metres to a couple of hundred metres of cover on top of the gold-bearing rocks.

"It's hidden the gold-bearing basement rocks from the old-timers finding gold," he says.

"Because the old-timers couldn't see the gold to chase, all the historic mining stops at the interface with the Murray Basin cover."

This important interface is just north of Bendigo. "I think the opportunities are quite substantial in Victoria still, to find significantly more gold deposits than are currently being found," McDermott says.

Paul McDonald is the director of the Geological Survey of Victoria, and says that the Victorian gold industry is undergoing something of a resurgence, partly inspired by the success of the Fosterville mine.

It is the Geological Survey of Victoria which estimates that that about 80 million or so ounces of gold still lies underground in the state's north.

McDonald is confident but says it will be challenging to extract and could take another 168 years.

"It's harder because it doesn't stick out of the ground, so it's actually harder to explore for. But this is not just a Victorian problem this is an Australian problem, where all the easy stuff has been found," he said.

"The time it's going to take will probably be similar. But the size of the deposits might be larger. Just because of the economics of it, if it's a bit deeper the deposits have to be a bit bigger to make it economically viable.

"The gold fields of Ballarat, Bendigo and Stawell are multi-million ounces, so we expect multi-million ounce deposits still to be found under cover."

The Age

Have you signed up to the Bendigo Advertiser's daily newsletter and breaking news emails? You can register below and make sure you are up to date with everything that's happening in central Victoria.