A MINING company hopes to extend the life of its operation and keep all its central Victorian staff in work.
Mandalay Resources wants permission to dig deeper than anything it has done in Costerfield, according to a submission recently lodged with the City of Greater Bendigo's planning department.
Current underground projects near the site are slated to end early next year.
Mandalay wants to turn its attention to an ore body it uncovered during exploration drilling in 2017.
That formation, known as the Youle ore deposit, shows all the geological hallmarks of rock bearing gold and antimony, the company believes.
"With the existing underground mining areas coming to an end in early 2020, this discovery will enable operations to continue and retention of existing employment to full levels," Mandalay's planning application states.
The company wants to start mining the deposit this business quarter, the submission states.
How Mandalay discovered a deposit others had missed
If you want to know where to start searching for gold you could do a lot worse than digging where yesteryear's miners downed tools.
Dormant mines in Costerfield have proven an invaluable clue in the search for an ore deposit a modern-day company hopes will guarantee 200 workers and 60 contractors another four years of work.
Mandalay Resources hopes an untouched deposit under historic diggings could do just that, operations manager Adam Place said.
"It's a continuation of a structure that the old-timers mined from the late 1800s," he said.
"The Costerfield mine was really quite big at that stage. I think it was nearly 1000 feet (304 metres) deep, which would be reasonably-sized by today's standards."
Mandalay discovered the so-called Youle ore deposit in 2017 during exploration drilling.
The company has set a lot of store in historic workings after discovering other gold and antimony-rich deposits under other dormant Costerfield mine shafts, Mr Place said.
"It gives us a lot of confidence that the old-timers knew what they were doing," he said.
"There's plenty of ore there and with newer technology and current commodity prices we might be able to mine them too."
The deposit takes its name from William Youle, a businessman who, along with Edwin Field and brothers Alan and Peniston Coster, helped establish mining in the area from the 1860s onward.
Now, with less than a year until Mandalay's nearby projects run out of known ore bodies, the company has applied to the Bendigo council for planning permission to start digging in a new area a few kilometres up the road.
What secrets might the Youle still hide?
Mandalay already had planning approval to sink three ventilation shafts 220 metres to an underground chamber, where miners planned to start digging into the ore body, Mr Place said.
As soon as miners get permission they will dig down half-a-kilometre below the surface.
That would be the deepest they had delved down to in Costerfield, Mr Place said.
"Hopefully we can go on deeper than that. Fingers crossed," he said.
Mandalay's exploration drills had previously gone down 700 metres and the company is yet to discover just how large the Youle ore deposit actually was, Mr Place said.
"It's been a relatively short time-frame between us identifying something that's economically viable to get to and to be able to keep mining," he said.
Rigs are already sinking exploration drills just north of the proposed Youle mine site.
The latest was installed a week-and-a-half ago and has gone down 140 metres so far, Mr Place said.
It has begun lifting out samples that are being sent to geologists to analyse for insights into the Youle deposit.
Another rig less than a block away has been there for a year.
"How long they stay depends on whether they find anything of interest," Mr Place said.
He said Mandalay could begin advertising proposals for new exploration projects in as little as the next few weeks.
"There's a long process that you go through with those, but they give us the opportunity to continue to drill around this area," Mr Place said.
"We will do as much drilling as we can do and prioritise areas that give us a future, as well as the here and now."
In the meantime, the mine is working on a plan to deal with unusable by-products brought up from the deep.
About 140,000 tons of rock will go through its processing plant each year, Mr Place said. More than 130,000 tons end up as sandy slurry by-product which needs to be stockpiled in tailings dams.
The mine has only a year left before it runs out of space in its two dams.
Mandalay has asked Bendigo's council for permission to raise the walls of one of its tailings dams by 7.5 metres, enough to keep the company mining until midway through 2027, according to a recently submitted planning application.
Search for gold gathers steam across Victoria
It's a good time to mine in Victoria, Mr Place said.
Prices for gold are good at the moment and the Aussie dollar is dropping.
"That's been really good for us," Mr Place said.
What's more, mining companies have been watching how much gold is coming out of a nearby mine at Fosterville.
Mine owners Kirkland Lake Gold earlier this year estimated it would produce between 570,000 and 610,000 ounces this year.
In June, the mine produced its two millionth ounce of gold, equivalent to about $4 billion in the day's gold price.
Fosterville's success had made prospecting an exciting space in Victoria, Mr Place said.
"So we are really fortunate to have this project going at the moment," he said.
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.