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As part of the McMahons Creek and Reefton goldfield, the Yarra River was known to have carried good gold, and from the 1850's the riverbed underwent alluvial mining and was sluiced for gold.
Sluicing was the practice of using running water to break down gold-bearing earth. At Big Peninsula miners were reported to obtain around five to six grains of gold per dish considerably short of the 480 grains that comprised an ounce.
In 1864, the Yarra River deviated at Big Peninsula. A tunnel was hand dug through the narrowest point of the rocky hillside to divert water flow and expose nearly tow miles of natural riverbed for gold extraction purposes. This allowed miners to scour a river bed without having to worry about strong or deep water flow.
The tunnel is around 2 metres in height and width, 25 metres long and was so effective that the former course of the river has become overgrown with vegetation and is now incorporated into the surrounding scrub.
Today it is a lovely place to explore, enjoy a picnic or a swim on a hot day. The watercourse at the tunnel entrance has created a terrific little pool that is almost spa-like. There are formed stepping stones across the river that allow viewing from both sides very easy, although the river is accessed by a steep track.
You can also start the McMahon Creek Goldfield walk from here. A 13 km loop track that is a moderate to hard walk that takes approximately fours hours return. The walk passes some remnants of 19th-century gold mining activities, including water races, open-cut mines, mine shafts and small dams. For your safety stick to the designated track.