There's gold in them thar hills - and with the price of the precious metal skyrocketing - it could mean that Crediton will soon be the next Klondyke!

Gold has been found in the South West for centuries, but never in large enough quantities to support profitable extraction.

In 1997 mining company, Crediton Minerals, found grains of gold at locations west of the town.

After yields proved promising, it spent £200,000 test drilling in the Crediton Trough, a 45km-long and 12km-wide valley. At the time, the firm's chairman, Jeremy Metcalfe, said: "We may be in sight of a gold deposit of substance.

"We have found very elevated levels of gold, quite unique, and this has to be taken seriously."

It will be at least two years before the company knows whether the gold can be mined economically.

"There is a huge amount of work to be done, but we are greatly encouraged by what we have found."

While some local people saw a bonanza in prospect, others were concerned about the potential environmental impact of any mining operation.

Linda Lever of the Mid Devon Green Party, said: "People are likely to be seduced by the thought of wealth suddenly. But I don't think that's what it's all about. I think it will be a question of a large company coming in and causing all sorts of havoc."

Mr Metcalfe said it was too early to know what sort of mining method might eventually be used, but a full environmental impact study would be done.

"We shall be conducting our work in an environmentally-friendly way as possible, and eventually hope that mining will bring jobs and prosperity to the area," he said.

Dr Richard Scrivener, who lives locally was then the firm's exploration contractor, working on behalf of the British Geological Survey.

NATIVE GOLD

At the time, he said: "Essentially we are looking at native gold occurring in grains. I am very excited by this particular find. It is a very considerable enrichment. The indications are we have free metallic gold present in the rock."

He said tiny gold grains, some larger than a millimetre across, had been found in streams in the Crediton area.

Parent company, then Minmet, was listed on Dublin's exploration exchange with 4,000 shareholders.

The company, which announced the results, then had interests in gold operations in Portugal, Ireland, Bolivia, Russia and the United States.

The geology of the Crediton Trough is said to be similar to areas in Queensland, Germany and central Europe where gold is mined.

To date, the biggest gold find in the South West was a nugget weighing 56 grammes, found in the Carnon Valley, near Truro.

£873 AN OUNCE

Last month gold was hitting record highs at around £873 an ounce, sought not only for investment purposes and a strong jewellery market, but also for use in the manufacture of certain electronic and medical devices.