Otago is gold country. Some would say that the city of Dunedin, the province and many of its towns and institutions were built on the proceeds of the gold rushes of the 1860s.

In the early days, gold was discovered through the efforts of enterprising prospectors scratching around Otago's rivers and hills with a pick, shovel and gold pan. That easy gold is long gone, but the search for new deposits of gold, silver and platinum continues in Otago, Southland and further afield in the South Island.

However, today prospectors have to be smarter to find precious metals, investing millions of dollars in the science, research and new exploration technologies now available.

"Finding gold is a bit like a blind man searching on a dark night for a black cat that might not be there."

As Professor Dave Craw, of the University of Otago's Department of Geology, puts it: "Finding gold is a bit like a blind man searching on a dark night for a black cat that might not be there.

"We don't look for gold - that's not really our role," Craw explains. "We leave that for the private exploration companies and we work with them. Our job is to do the basic science behind all of that, to identify areas that are more promising for gold exploration than others.

"They're looking for a needle in the haystack - we're looking for the right haystack," he says.

Craw and his research team have received a $2.4 million grant from the Foundation for Research, Science and Technology (FRST) to continue their work in this field for the next six years. The Department of Geology first received FRST grants in 1991, and the continuity of funding since has been crucial to plan research in an orderly way and to try things they would not attempt otherwise.

"Gold talks. Otago is gold country so it's very easy to see relevant end results for the research that we do," Craw says.

FRST funding and the mining industry's contribution to research over a long period "has paid for itself many times over with a very good return to the Otago economy," he says.

Meanwhile, the search continues for new fields. While Oceana Gold, the owner of the Macraes Gold Mine in East Otago, is the only company actively mining for gold in the province, there are several companies prospecting.

University of Otago geologists are using a range of different scientific approaches and the latest advances in technology to help them identify and prioritise areas for further exploration. They are currently working closely with a Canadian company.

The Toronto-based Glass Earth Gold Ltd recently completed the largest aerial geophysical survey in New Zealand, mapping 13,000 square kilometres of Otago with a new tool that plots the electrical and magnetic properties of the rocks below the earth's surface.

This new mapping tool is the biggest technological advance in mineral exploration in years, Craw says, and ultimately the University will have access to that information when it becomes publicly available.

"I'm sure we'll find things of interest. Whether companies come in and invest in exploration is really up to them," he says.

"Our aim is to produce information that makes Otago and Southland attractive to commercial prospecting. That's what we really want to do. That's why I say we're not looking for gold. We're looking for the right environment to find gold, so that people will invest."

The Macraes mine in East Otago has proved a useful tool for Otago research students, who were on-site when the first exploratory test holes were drilled in 1985.

To better understand the Otago goldfields, geologists have cast the net worldwide looking for goldfields with similarities and differences. The closest comparison to Otago is the Yukon field in northern Canada, where the Department of Geology has a research fellow, Dr Doug MacKenzie, working in the field. Otago and the Yukon are the only two fields Craw knows of with lots of gold in schist belts and no granites.

The challenge for Otago geologists in the next six years is to find new goldfields elsewhere in Otago and Southland before the Macraes field is exhausted, which present forecasts suggest may be in about five or six years.

"We want people to invest in gold exploration because it's good for the region and someone, some day, will find a mine like Macraes, which has been very successful economically.

"But there might only be one Macraes. That's the problem. It might be a one-off."

Gold exploration involves a lot of investment and a lot of failures. Historically, only one prospect in a thousand ever becomes a mine. "It's a risky business, but the rewards are huge," Craw says.