Gold was discovered in the Captain's Flat area in 1864.

It wasn't until 1882 that a large productive reef was discovered on a ridge above Captain's Flat township by Hugh McNeill, William Harkness and Edward Holehan. The Molonglo River Goldfields were proclaimed on 27 September 1882, which started the Molonglo River goldrush. The McNeill claim was at the northern end of the ridge and Ralph Montgomery took a seven acre lease adjacent. George Emmerson struck gold further south which became known as the "Coffee Claim", due to the nature of the ore.

In 1883, a Mr Blatchford erected a 20 head stamping mill where Emmerson trucked his ore for crushing. Bernard Holtermann MP, bought a half share of McNeill's mine and built a 10 head stamping mill.

The Blatchford mine yielded some 360 ounces of gold from 2,386 tons of quartz. Gold was difficult to extract from Captain's Flat ore due to the high levels of silver and lead. Montgomery's mine yielded 240 ounces of gold from 800 tons of ore.

In 1885 Holtermann died which stalled the northern mines, water was in short supply and gold yields dipped. However the mines perservered and attention turned to the lead and silver which had proved so detrimental to the gold extraction.

In 1885, Blatchford built a Kahlo and Dobb "Pacific Water-jacket Smelter. This revolutionised the mines and only large scale operators could survive. Blatchford formed a company and named his mine El Capitan with Montgomery doing the same some six months later. His claim became the Koh-i-noor Mine. At this time, lead was the most important mineral.

The mines of Captain's Flat sent some 182 tons of ore to Swansea in Wales, this being comprised of 176 tons of lead, 52,775 ounces of silver and 427 ounces of gold. The Vanderbilt mine was opened by William Garland on the eastern side of the town and this became the North Vanderbilt Amalgamated Silver Mining Company Limited. This venture was not successful and was abandoned after two years. El Capitan mine was taken over by the Broken Hill Propriety and renamed the Commodore.

Two new furnaces at Commodore, one at Koh-i-noor, a stamping battery, Huntingdon Mill and a reverberatory calciner still failed to successfully extract the metals from the Captains Flat ore. The Koh-i-noor began heap roasting the ore in 1890, workers heaping the ore onto timber beds which were then set alight. Huge amounts of sulphur were released which killed most of the bushland in the area, which in turn was felled and used in the furnaces.

Finally in 1894, the Commodore-Vanderbilt and Koh-i-noor mines were amalgamated and became the Lake George Mining and Smelting Company. After British investment in 18996, the name was shortened to Lake George Mines Limited with Mr. Trewenack as general manager.

By introducing Pyritic Smelting, the company believed they could increase yields and set about building stacks, furnaces and installing pumping equipment, electric lighting and telephone communications.

A tram line was built to dispose of waste materials. The smelter, built on the southern edge of the town between the Molonglo River and Jerangle Road, spewed smoke and soot every hour of the day and night and the red hot slag looked like lava as it oozed down the slopes.

The mines yielded 860,795 ounces of silver, 3,781 tons of copper and 16,140 ounces of gold from 205,707 tons of ore, between 1887 and 1899. The vast copper yields made world headlines and attracted great interest, seemingly assuring Captain's Flat as a major industrial centre.