Energy and Mining Minister Tom Koutsantonis said this morning he had refused ASX-listed mining company Terramin’s bid to revive the historic Bird in Hand gold mine located near Woodside around prime vineyards in the Adelaide Hills.

The site, approximately 5km southeast of Lobethal, was the location of 17 gold mines that operated in the 1880s.

Terramin bought the 40-hectare dairy property in 2015 and applied for a mining lease and a miscellaneous purpose licence in 2019.

The proposed location of the Bird in Hand gold mine.

It planned to operate the gold mine for around five years, saying it would create 140 direct jobs and contribute $221 million to South Australia’s gross state product.

But the project was opposed by landholders and vineyards, including Bird in Hand Winery and Petaluma Winery, due to concerns about potential impacts on groundwater.

The Department for Energy and Mining (DEM) had completed its “comprehensive statutory assessment” of the project – along with a public consultation – and deemed Terramin’s project to satisfy all relevant regulatory requirements.

But Koutsantonis’ office said the minister “took into account other relevant considerations” when making his decision, including “broader state interests such as potential socio-economic and amenity impacts and the effect on existing industries – including tourism – and the local community”.

“While the proposed mine would have had a short-term life, the potential impact on surrounding businesses – including world-class wineries such as Petaluma and Bird In Hand – and associated regional tourism could have longer-term implications,” his office said.

“The Adelaide Hills region enjoys a well-earned clean, green reputation, and this must be safeguarded.”

In a statement to the ASX this morning, Terramin’s board and management said it was “surprised and disappointed by this decision”.

“This decision will mean that the communities of Woodside and 140 highly paid mining jobs and many more indirect jobs,” the company said.

“The people of South Australia will miss out on the mine’s significant economic contribution to the state economy.”

The company, which entered a trading halt today prior to the announcement, said it “answered all questions… and provided all information and documentation sought by DEM”.

“Terramin understood that it had provided comprehensive responses to the satisfaction of DEM and addressed all regulatory requirements,” it said.

“To have been through this exhaustive process and then be denied the Mining Lease with no clear explanation of the grounds for this decision is most unexpected.”

The company said the gold deposit is “extremely high grade” and the resources would have been extracted via an “unobtrusive, single keyhole entry method, with all surface activities well within the boundaries of Terramin’s land, with any mine infrastructure largely hidden from view by extensive tree stands and vegetation”.

It also said its proposal was “supported by comprehensive studies based on science, which demonstrated that there would be no adverse environmental outcomes arising from Terramin’s mining proposal”.

“These studies were peer reviewed by independent and Government experts over many years,” it said.

“Terramin has not been made aware of any issues with the methodology or conclusions of these studies.”

The Department for Mining and Energy in 2020 received more than 250 public submissions about the bid to reactivate the mine, with international firm Accolade Wines, owner of nearby Petaluma Winery, saying “there is an unacceptable risk that the proposed mining operations will impact groundwater availability’’.

The department told Terramin it had concerns about groundwater management, as well as noise, traffic and mine rehabilitation issues.

The neighbouring Bird in Hand Winery was also vocal in its bid to stop the project, while Terramin launched an unsuccessful court bid to stop the winery’s multi-million dollar expansion.

In a statement, Koutsantonis said his call to decline Terramin’s project was “not a decision I’ve taken lightly or easily”.

He also said he appreciated Terramin’s “cooperation in providing further detail about their proposed operation as requested”.

“I’m also acutely aware of community concerns about the proposal, including from nearby wineries, residents and the local community,” Koutsantonis said.

“The area of the proposed mine is home to a world-class viticulture industry, producing some of Australia’s best-loved wines.

“Tourism to the region is a critical contributor to the local economy and, on balance, there remains a possibility this proposed short-term mine may adversely affect the established and significant long-term agricultural and tourism industries of the Woodside area immediately adjacent the project areas.

“As such, I am not willing to risk these established local industries against the opportunity this short-term mine may provide, and have decided it is in the state’s interest to decline the Mining Lease and Miscellaneous Purposes Licence applications by Terramin for its Bird in Hand Gold Project.”

Bird in Hand founder Andrew Nugent told InDaily the minister’s decision was a “tremendous relief for our local community”.

“We appreciate the clarity of direction from the government to endorse the pristine environment, the world class wine, food, and the precious cultural significance of the beautiful Adelaide Hills,” he said.

“I am grateful to have the opportunity, along with our amazing team of artisan wine professionals to showcase our State to an elite, discerning and global culinary audience.”

A spokesperson for Accolade Wines, which owns neighbouring winery Petaluma, also welcomed the decision.

“We commend the Government for undertaking an extensive and comprehensive assessment and public consultation process prior to this decision,” they said.

“We look forward to the long-term health of the local environment, community and tourism industry in this internationally renowned wine growing region of South Australia.”

Independent Kavel MP Dan Cregan, the local state MP, said: “In years to come, people will realise this was the right call.”

“The proposal to mine gold at Woodside caused deep alarm in my community,” he said.

“I believe the proposal threatened industries of state significance in the Hills, including world-recognised wine, berries, apples, pears and cherries.”

“My constituents were also deeply concerned about truck movements, underground blasting, dust and the impact on the local environment and amenity.”

“We have fought long and hard to be heard on this issue. Today is a very important day for the Hills and the communities that were impacted by this proposal.”

Federal MP for Mayo Rebekha Sharkie said the decision would ensure the land “would be available for many generations to come”.

Terramin said it would await the release of the Department’s project assessment report prepared for the Minister before considering its next options.

The company’s share price dropped 18 per cent this morning and is now trading at $0.02c a share.