The site, on the Little Rough Ridge in the Gimmerburn area of the Maniototo, has shown signs of gold deposits in bands of quartz and schist rocks, Glass Earth chief executive Simon Henderson says.
The Little Rough Ridge tenement is adjacent to the historic Garibaldi diggings.
"This new discovery is a turning point in Glass Earth's hard-rock gold exploration in Central Otago," he said.
The discovery was a result of an exploration programme focused on finding gold deposits similar to Oceana Gold's 7.2-million-ounce Macraes gold deposit in the metaphorphic terrain of Central Otago, he said.
Rock chip and soil sampling around Little Rough Ridge was followed by about 600m of digger trenching to depths of 2m-3m.
The company plans to continue trenching, then move towards a drilling programme at the site.
Glass Earth has two alluvial-gold production units operating in the Maniototo, with a third scheduled to start up shortly. It is targeting a quadrupling of weekly gold production to between 100 and 110 ounces across the three sites.
Glass Earth has spent more than $35 million in mainly South Island exploration during the past five years.
In March it posted a $2.13 million loss for 2011 trading, but retained about $4.45 million cash in hand for ramping up its Central Otago gold-extraction.
Mr Henderson said income from alluvial mining this year, which in 2011 was about $389,000 from a former joint venture near Alexandra, would enable the company to continue trenching and initiate a drilling programme, using its own drill rig, at Little Rough Ridge.
"The plan is to continue trenching, then begin drilling once the width and length of the system is known," Mr Henderson said.
In February, Glass Earth bought out its southern joint-venture partner for $4 million in cash and shares, covering one tenement in the Ida Valley and two in the Manuherikia Valley near Alexandra, taking over all alluvial-gold production.
Unlike Glass Earth's other three alluvial-production areas, Little Rough Ridge is potentially a hard-rock (trapped gold) discovery.
Mr Henderson said until the estimated gold resource was proven, no decision would be made on whether it would remain a 100% Glass Earth-owned venture or if a joint-venture partner would be sought to share in the higher production costs of hard-rock mining.
Last week, Glass Earth announced a $4 million joint venture with Newmont Mining, at a gold and silver WKP prospect in Hauraki. A drilling programme will be undertaken during the year.
