An environmental watchdog group says it's disgraceful the government is spending millions of dollars to help re-establish a gold mine on the West Coast.

Damien O'Connor announcing the injection of funds with Tasman Mining's managing director Mark Le Messurier in Reefton on Friday. Photo: Supplied

The Provincial Growth Fund has approved a $15 million loan so Tasman Mining Limited can begin operations to see if gold mining will be viable at Blackwater near Reefton again.

The local MP, Damien O'Connor, who is also Rural Communities Minister, has said this could attract hundreds of millions of dollars in investment to the region.

He announced the loan in Reefton on Friday.

The mine is expected to create about 40 jobs from mid-2020, and 100 jobs once full production starts from about 2024.

But Catherine Delahunty from the group, Coromandel Watchdog Hauraki, said the Blackwater Gold Mine should stay shut.

She said it's sad to see the government putting money into it.

"We think it's really, really a bad call and quite disgraceful that the Provincial Growth Fund, which is important money for the regions, is being spent on a dinosaur."

The $15m loan would allow Tasman Mining to build 3.3km-long twin decline tunnels at the former Blackwater gold mine site and complete a three-year drilling programme to see if gold mining would be viable there again, Mr O'Connor said.

Listen to the interview on Saturday Morning with the author of Through the Eyes of a Miner, Simon Nathan, whose book included material on the Blackwater Mine in its heyday.

The Blackwater mine is owned by Oceana Gold. Sydney-based Tasman Mining has an exclusive right to buy the mine once it decides to develop it.

The mine is 37km from Reefton, beneath the abandoned township of Waiuta. The deposit was continuously mined successfully from 1908 to 1951, producing about 700,000 ounces.