Mandalay Resources' Costerfield miners tighten belts ahead of mining royalty introduction

The government announced the royalty in the May budget without consulting with industry and has so far declined adding an exploration offset and other measures to help miners manage its impact.

Costerfield owner Mandalay Resources has budgeted $1.5 million to cover the royalty, which will be introduced from New Year's Day.

"What we are doing is trying to save costs in other areas to offset it (the royalty)," Costerfield general manager Ryan Austerberry said.

Mandalay has revisited the scale of exploration under Costerfield, where it hopes to tap into a newly discovered underground ore body called the Youle deposit, Mr Austerberry said.

The Youle is key to the company's plans in the area over the next five years.

Mandalay will also tighten belts on community spending, Mr Austerberry said.

"At the moment we often spend over when community groups come to us requesting assistance," he said.

"We will probably be more stringent on how we work with that."

Mandalay Resources does not oppose a gold royalty but believes the industry should be more widely consulted to avoid any unintended impacts, Mr Austerberry said.

Peak industry group the Minerals Council of Australia agrees.

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It has branded the governments' one month consultation process "inadequate".

"The royalty should be delayed by 12 months until a full and transparent policy consultation process takes place with the community, industry and local councils to design an enduring royalty regime tailored to Victoria," it said in a submission to a review of the predicted impact.

Modelling the Minerals Council commissioned on the royalty found a "significant" risk" that government assumptions about its impact will not hold.

Victorian division executive director James Sorahan said the royalty should raise revenues when gold prices are high without risking growing mines and regional jobs when prices are low.

"(The modelling) shows that the government failed to do the work on this unfair gold tax, and its regulatory impact statement is fundamentally flawed and underestimates the damage it will do to regional communities such as Bendigo," he said.

A spokesperson said the government is continuing work with the industry and community on the royalty.

"The regulatory consultation period has just finished and responses are now being reviewed - and responses to all points raised will be published along with the outcome of the consultation process in December," they said.

"We believe Victorian taxpayers should get a similar return from the mining of resources in the state to those in other parts of Australia and across the globe.

"We have a royalty for coal and other minerals but not gold, this change would bring parity and consistency."

The government anticipates the royalty will affect four mines, including Costerfield and Kirkland Lake Gold's Fosterville operations.

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