Sole director Geoff Loudon, of Mintago Investments Ltd (part of the wider L&M Group), told the Otago Daily Times yesterday ''there's still more gold there, but it's been marginalised by the combination of price and the New Zealand dollar''.
• Hopes mine staff will find other jobs
• Closure takes workers by surprise
Depressed gold prices and rising production costs similarly led to Oceana Gold laying off about 270 staff and contractors at its West Coast, Reefton and East Otago gold mines in recent months.
Start-up costs of the Earnscleugh project - the largest alluvial (river-sediment) gold operation in the country and one of Central's biggest employers - were estimated at $3 million. The company said about $10 million was spent in the area annually.
By 2012, the project averaged about 750oz of gold a month.
Only last December, project owners confirmed they were considering seeking an extension to continue mining beyond the consented April 2016 deadline.
Dredging started in July 2009 on the 150ha site, and had grown into a 24-hour operation.
Mr Loudon said the high kiwi meant the New Zealand dollar gold price was reduced from $NZ2000 an ounce to $NZ1500 an ounce.
''This [high dollar] has continuously been challenging the viability of the mine,'' he said.
While gold mining will cease within a month, there would be a further six months of remedial work to restore and return the area to grassland.
''We'll rehabilitate the mine site for future agricultural use, leaving the land in a better state than when it was acquired,'' Mr Loudon said of the restoration - part of 132 resource consent conditions imposed by local councils.
''Continuous rehabilitation has been ongoing since 2012, creating quality pasture from previously unproductive land.''
The land restoration mirrored L&M Group's rehabilitation programmes at earlier projects at Glenore, Nokomai, Arahura, Rimu and others, he said.
L&M owns more than 400ha of land in the immediate area at Earnscleugh.
No decision had been made on selling it, or whether the dredge would be sold or dismantled, L&M Group chief financial officer Shirley Herridge said when contacted.
It was ''incredibly unlikely'' the project could resume, even if the gold price strengthened because the costs to restart were ''prohibitive'', she said.
L&M, which began as Lime & Marble in the 1930s, is estimated in the past three decades to have invested more than $50 million in exploration projects around Otago and Southland.
Mr Loudon said since the Earnscleugh operation started the New Zealand dollar had risen from US65c to US85c.
Gold hit a record $US1921 ($NZ2262) an ounce in September 2011, but during the past six months has drifted to around $US1300 an ounce or less. It traded at $US1299 an ounce yesterday.
At less than $US1200 per ounce, where it slumped last December, even high-volume mines around the world come close to being commercially impaired.
Earnscleugh mine
• Estimated gold resource: 110,000oz
• Project began operating in 2009, planned to be seven years
• Mining company has about 150ha of mineable farmland
• 35 people employed at the peak, 24-hour operation
• $10m estimated annual spend in the local community
• One of the country's largest alluvial gold-mining operations
• Average gold recovered per month (2012 figure): 750oz
• Conditions on Otago Regional Council and Central Otago District Council resource consents: 132
