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Dereel is a small town to the south of Ballarat on the Ballarat to Cressy Road. In its early days miners had worked the Spring Creek Goldfields in the area since 1853. In 1864 a common school was provided in the town and closed in the 1930s.In 1959 State School Dereel reopened following support from parents in the area. On 16 March, 1874 the residents at Dereel petitioned the Victorian Department of Lands and Survey for the reservation of a site for a cemetery to be established. The petition was signed by sixty residents of the parishes of Dereel and Corindhap. The site that was requested was of seven acres on the Rokewood to Ballarat Road, to the south of the town. On 16 July, 1874 the Governor in Council approved that seven acres be temporarily reserved and the site was gazetted on 24 July, 1874 [VGG 1874/1387]. The records noted that by 1934 there had been no burials in the cemetery and on 10 July, 1935 the Government Gazette noted the revocation of the cemetery.

1851 was to be an eventful year, with Esmond's exciting find of gold at Clunes in June, being released to newspapers in Geelong, almost at the same time as Hiscock's find at Buninyong on August 8 hit the headlines.

As Holmes of Colac would know of this early village, fifty miles to the north, exciting events quickly took place.

During the latter part of August, gold was found at Golden Point, Ballarat. Holmes and his mates would get the news of this event at Mother Jamieson's Hotel.

Later, the first week of September, they were found at Golden Point diggings and on good gold.

At this time the only road serving Colac was one from Geelong, so Holmes blazed a new track north from Colac across the plains, the high country of the Misery Ranges quickly showed on the horizon above Dereel, (these hills are a part of the ancient shore line). Six miles from here they would come across one of Learmonth's old Sawyers Camps. During the gold era this camp probably became the Log Hut Village.