A rally in gold prices has sparked a new gold rush in South Africa as mining firms seek to exploit reserves buried deeper than humans have ever dug before.

Rocketing prices have transformed the ageing gold industry in the world's largest producer, with companies spending hundreds of millions of dollars on expansion projects.

South Africa already has the deepest gold mines in the world, some extending 3,500 metres (2.2 miles) below the surface to sweltering tunnels threatened by tremors.

That distance is seven times greater than the height of world's tallest building, Taipei 101 in Taiwan, but gold producers want to burrow still deeper.

"We estimate that between 3,500 metres below surface and 5,000 metres, there's probably as much gold as we've mined so far," said Dick Kruger, of industry group the Chamber of Mines.

Remaining gold deposits in South Africa are estimated to make up around 40 percent of the world total and are three times larger than those of the United States and Australia combined.

Big producers AngloGold Ashanti and Gold Fields are making plans to dig deeper at existing mines in projects that would cost 6.1 billion rand (470 million pounds) and could exploit 14 million more ounces of gold.

"The projects that we're dusting off now with these higher gold prices are projects that are going to go from 3.5 kilometres to just above 4 kilometres," said David Diering, an executive with the world's third largest gold producer AngloGold.

INDUSTRY TURNAROUND

It's a turnaround for an industry many were writing off little more than a year ago.

South Africa has produced around 1.5 billion ounces of gold -- just over a third of all mined gold in the world -- but much of it came from seams near the surface, now largely exhausted.

South Africa's annual bullion output has tumbled by 50 percent over the past decade as high-grade mines ran out of ore and firms grappled with more difficult underground operations.

In recent years, a resilient rand also slashed export earnings and forced the closure of some loss-making mines.

A bull market in gold changed all that.

Fears of inflation and concerns over global stability have propelled gold higher, with prices hitting a 26-year peak of $730 an ounce in mid-May.

Even after a recent retreat to around $630 an ounce, a softer rand has sweetened the price for producers.

"There are no technological challenges to go to 4 or 4.5 kilometres. The impediments to going down to these depths were economic," said Diering, AngloGold's executive officer for business planning in Africa.

NEW MINES TOO RISKY

So far, companies are focusing on expanding existing mines, rather than building more risky ultra-deep mines.

"The tendency is not to sink a new shaft and equip it with all new technology but rather to extend current workings," said Ray Durrheim, a senior researcher at the Council for Scientific and Industrial Research.

"It's a far lower-risk option because you're not having to put $1 billion into a new shaft and wait five years before you get your first ounce of gold out," said Durrheim.

As mine shafts sink deeper, temperatures soar and at 4,000 metres reach 62 degrees centigrade (144 degrees Fahrenheit). Firms must spend huge amounts on refrigeration and ventilation to cool mines down to around 28 degrees.

Despite these challenges, investors are enthusiastic: they recently poured money into a new company looking at deep mines, drawing a warning about the uncertain prospects.

Wits Gold, which listed on the Johannesburg bourse in April, has prospecting rights over ground that holds 159 million ounces of gold, much of it below 2,500 metres.

The shares have soared fourfold since a private placement, prompting management to temper shareholders' expectations.

"We're happy to see a debate about the potential for mining in areas and at levels that were previously considered uneconomic," Chief Executive Marc Watchorn said. "However, our strategy is to concentrate initially on resources at shallower depths."

Even if new mines remain years away, the renewed activity has caused people to look again at the Deepmine research project -- abandoned in 2002 due to low prices.

During the project, scientists examined prospects for digging mines as deep as 5,000 metres using traditional mining methods and studied ideas for radical new mine technology.

Durrheim, who was programme manager for Deepmine, said they examined using robots and automated processing machines to drill and crush rocks. Baskets of ore might be magnetically levitated to the surface, eliminating the need for old-fashioned lifts.

Prices would probably have to rise much further for firms to look at building deep mines from scratch or to allow researchers to dust off the preliminary research into futuristic mines.

"The prices would have to stay at a higher level for quite a period of time before companies would feel comfortable to invest in those kind of projects," said Alex Conradie, mineral economics analyst in the Department of Minerals and Energy.

"But it's definitely a possibility for the future because the deposits are there and there's technology in place."