Here the waters that drop into the tunnel are discharged 800m away into Spring Creek, at an elevation of 25 metres lower than the tunnel entry.
Construction through hard granite took place over three and a half years from mid-1876 to the start of 1880 and was considered one of the finest engineering feats ever accomplished in Australia at the time. The cost of the project was £13,000 to build (equivalent to 3250 ounces of gold being $8.12M $AUD today), however it was an essential step to unlocking the gold rich deep alluvial leads known to exist along the Spring Creek riverbank.
These leads had been chanced upon briefly in 1853, only for access privileges to be immediately denied after heavy rains flooded the deep tunnels. Further attempts to access this rich gold zone failed due to their position below the water table, and the whole idea was deemed unworkable.
Over subsequent years some progress was made in draining and working over much of the shallower ground on the creek by cutting a deep drain through the granite down to the Upper Spring Creek Falls at Newtown Bridge. However, the elusive lure of the deep gold leads persisted.
This led to the formation of a new mining company with an old name in 1875, created to invest in the deep underground tunnel required to drain water away from the deepest levels of the proposed open cut mine.
As one newspaper report described things at that time: "perhaps no richer alluvial ground was ever worked in the colonies than that which will be included in the properties of the Rocky Mountain Gold Sluicing Company ... [When the tunnel is completed] it will undoubtedly be the safest, richest and most lasting investment in the colony."
These optimistic predictions for the company's future turned out to be modestly accurate. For the next forty years following the tunnel's opening, the alluvial sediments immediately east of Beechworth were rinsed away downstream minus their gold.
The large hole that was left behind in the process stands today as the bed of Lake Sambell. The water that flows down the tunnel now comes from lake overflow pipes built into the dam wall structure.
During periods of heavy rain, the outflow from the tunnel into Spring Creek below the falls can be quite significant.