While elevated arsenic levels were detected, elevated levels were also present upstream of the mine.
"It is likely the elevated levels are due to the highly mineralised soil and rocks in the surrounding area and from historical activities in the catchment," Mr Buckley said.
Kagara executive general manager Joe Treacy said problems occurred after heavy rain hit the workings, causing a dam to start seeping water.
"We got a really big dump - (50mm) in half an hour and there's not a lot you can do about that," Mr Treacy said.
"We've put in dams and pumps and done as much remedial work as we can.
"A lot of the water we are capturing is from old workings which were going down the creek before we arrived.
"There's no excuses but we'd like to think there's a lot less (contamination) since we got involved.
"There's a significant legacy issue here going back 70 years. We're confident it's all contained."
KZL Price at posting:
12.0¢ Sentiment: Buy Disclosure: Held
