The current study demonstrated that Themeda australis (R. Br.) Stapf (kangaroo grass), a major understory component of the original grassy Box woodlands in the Central Tablelands of New South Wales, was suitable for use in large-scale mine rehabilitation. The results of the trial were applied in the mine rehabilitation program. Due to extensive clearing of the woodlands and the introduction of exotic flora and fauna for agriculture, only small remnants of the original flora remain. The final land use of the gold mine is a conservation area free from agricultural pressure. Local native species adapted to the soil conditions and variable climate are highly desirable for the control of soil erosion following mining. Germination and establishment of T. australis on oxidized overburden were examined over 53 weeks. Seed-bearing mulch was used as both the seeding material and an organic additive to the overburden. The effects of five factors were investigated: time since soil preparation, position within small contour banks, location of contour on experimental slopes, additional water, and rate of seed/mulch application. Direct seeding using the lowest rate of mulch application resulted in the establishment of more T. australis seedlings on new contours than on 15-month-old contours. The provision of additional water increased germination and establishment in both old and new contours, but was not essential. Seedling densities were greatest in the middle positions of contour banks up to week seven, but were destroyed during a heavy storm. At the close of the experiment, seedling densities were greater in the top and bottom positions of contours. Although significant slope × rate and age × slope interactions occurred, SNK tests did not reveal any consistent interpretable results.