Earlier this week, Unity Mining suggested building a plant for cyanide processing at the Majors Creek gold mine, just south of Braidwood, despite initially intending to transport materials for processing in Parkes some 380km to the north.

"There is a ground swell of opposition growing and people around here are just horrified that this would be mooted out of the blue like that," said Braidwood resident and Palerang councillor Paul Cockram.

"I mean, they came here and stood in front of this community and said they were going to build a mine but 'don't worry we're not going to do any of the really nasty processing part - we're going to send that somewhere else to get it done," he said.

Mr Cockram said the Braidwood community was still waiting for more detail on the processing plant but said there would be "considerable community opposition to Unity Mining just out of the blue changing the rules completely".

"The whole game has changed as it's going to be a totally different mine - it will be a noisier mine, bigger and more dangerous."

But Unity Mining's managing director Andrew McIlwain has said concerns about the use of cyanide at the mine were unnecessary as the potentially toxic substance could be used safely if handled correctly.

"The Dick Dastardly bit about cyanide comes from spy movies and hangover from the Second World War," he said. "It's potentially toxic but handled and managed in the right scenario, it is very safe."

Unity Mining's announcement has already alarmed downstream food producers and Eurobodalla Shire, which wants to keep its water catchment for 140,000 people in summer in pristine condition.

"It's terrifying for people in Eurobodalla Shire and Araluen Valley - which sits at the head of Eurobodalla's water supply - so this has far reaching consequences not just for Palerang but for other shires on the coast," said Mr Cockram.

"When you've got a mine that's sitting atop a valley that grows fruit and has an economy based on growing things, if you have a dam breach it only has to happen once and then down the valley it goes."

Araluen Valley Protection and Producers Coalition president Penny Hayman said within two weeks of mine construction, Unity had polluted Spring and Majors creeks.

The Land and Environment Court ordered Unity to pay $196,000 in penalties and costs, including to the Upper Deua Catchment Landcare Group.

Unity Mining's managing director, Andrew McIlwain admitted the pollution during earthworks on the mine was not Unity's finest hour.

"We have taken our 40 lashes and paid our fines. It is not something we are very proud of, but circumstances were quite different," he said.

Mr Cockram said communities in Parkes had objected to processing ore transferred from other parts of NSW – including Majors Creek – and may have forced Unity Mining's hand.

"In Parkes they had some action to stop them processing it and suddenly it gets bounced back to us now," he said.

"I think that we need to be as resolute and say 'I'm sorry but if you're going to have cyanide processing then you'll have to process it somewhere you are guaranteed not to have a spill."

Palerang mayor Pete Harrison said the cyanide proposal worried the community because Unity had previously ruled this out.

"My professional background is as a chemist. I understand why people react to it. I am not as concerned as some people might be about the whole thing," Mr Harrison said.

"Where the facility exists there's a risk and where the facility doesn't exist there isn't; it is as simple as that."

Mr McIlwain said previous plans involved 2200 trucks carrying ore from Braidwood to Parkes each year, while now six trucks would carry cyanide in briquettes contained in cylinders.

"Before the solution leaves the processing facility, it is chemically destroyed and brought down to quite safe levels and discharged to a tailings facility," he said.

"It breaks down under ultra-violet light. It breaks down over time and it doesn't bio-accumulate. It is not like a heavy metal in the food stream."