The company announced that soil sampling had been undertaken north of Stawell towards Germania and would soon commence on the eastern edge of the Stawell township.

Senior Exploration Geologist, Sarah Heard, said this was the first time the soil sampling technique had been used and the company was already starting to see some positive results.

Ms Heard said the program aims to identify any anomalous gold in the soil which might have originated from mineralisation at depth. Possible sources include the quartz vein lodes historically mined at Stawell and possible 'buried' domal Basalt bodies such as the Magdala Deposit.

"This soil sampling technique is believed to be an effective 'first pass' exploration revealing previously undiscovered areas to focus future exploration activities," Ms Heard said.

The soil sampling process involves digging a small hole with a mattock and shovel and taking a 200-300 gram sample. Holes are filled in before proceeding to the next sample point.

Ms Heard said to date, around 1200 samples had been taken. By the time the program is completed during the first quarter of next year, company geologists will have covered a distance of 247 kilometres and taken 5500 samples.

The program will take place mostly on private landholdings with the occasional sample on road verges. The sampling is expected to impact on several private landholders.

Geology Manager, Mark Haydon, said the mine's owners, Crocodile Gold, can see real potential in the area from Stawell to Glenorchy and through to Wildwood and Germania and that was why the soil sampling program was given the green light.

"We know a lot of people will ask the question as to why exploration is continuing if the mining operations are winding down," Mr Haydon said.

"The fact is, exploration has never ceased. We have always been committed to finding potential new mineralisation.

It's just that people haven't been hearing about the exploration.

"Crocodile Gold owns the tenement and has made a commitment to continue with further exploration in that area. We really are competing with a numnber of other exploration programs within the Crocodile group, so we are very hopeful of producing good results.

"It's a large area that is being covered, so eithin that corridor, we are hoping to get some excellent drill targets from this soil testing. Whether or not the outcome will see an extension of the mine's life is an unknown. What the company is really looking for is a whole new discovery."

Mr Haydon said the first step will be to complete the sampling along the entire corridor, with samples taken every 50 metres. Any positive signs of anomalous gold will then see recommendations put forward for drill targets to be further explored.

"Hopefully we will discover several drill targets and can convince Crocodile to get out there and drill some holes to confirm what we believe exists within the tenement," Mr Haydon said.

"Crocodile is very keen for us to find new gold and depending on how much is there, how deep the mineralisation is and how exonomically viable it is to extract, it would create a number of options for us.

Mr Haydon said at present the results had been extremely positive.