Crocodile Gold’s Big Hill open-cut gold mine project has been rejected by the Victorian government of Australia owing to grave environmental and health issues it could pose to the nearby community.

The gold mine project was proposed to be developed near the town of Stawell. Crocodile Gold had plans to produce 2.3 million tonnes of ore, and the project was expected to operate for about five years.

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"The Environment Effects Statement process has determined that the proposed mine could have significant environmental impacts, particularly in regard to air quality and public health."

The existing underground operation, which is now set to close, is billed for replacement.

The boundary of the mine is just 60m away from the residential area, posing a threat to public safety.

Victorian planning minister Matthew Guy said: "The Environment Effects Statement process has determined that the proposed mine could have significant environmental impacts, particularly in regard to air quality and public health.

"The predicted economic benefits of the project do not outweigh the adverse impacts on air quality, and the project does not provide the necessary community benefit to the state in regard to both short and long-term economic, environmental and social consequences."

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According to Guy, the proposal for the Big Hill was made in 2000.

Crocodile Gold president and CEO Rodney Lamond said: "We appreciate the important input from the Minister’s Independent Panel to statutory decision-makers on the Enhanced Big Hill Project and we will be looking at ways to implement the recommendations.

"We continue to believe that the project remains beneficial to the company and the community of Stawell. My team and I will review the recommendations and begin developing a plan to ensure that this project continues to move ahead."

Nearly 20% of Stawell’s economy comes from mining.

Northern Grampians Shire Mayor, Kevin Erwin said the decision to reject the project will have a major effect on the future of the town.

Guy added: "Although this new proposal would have less impact on biodiversity, the potential impacts on air quality, amenity and social well-being, and risks to health of the community, especially nearby residents, is too great to ignore."