Fanny Creek drains from Island Block opencast coal mine, near Reefton on the West Coast of the South Island of New Zealand, and is impacted by acid mine drainage (AMD). The objectives of this study were to characterise drainage chemistry in Fanny Creek catchment, and to determine optimal passive treatment strategies for Fanny Creek AMD for future pilot or full-scale application. This was undertaken by monthly monitoring in Fanny Creek catchment between February 2008 and January 2009 to collect drainage chemistry and flow data. Laboratory trials of suitable passive AMD treatment systems were conducted and their treatment performance assessed to select and design optimal passive treatment strategies for Fanny Creek AMD. Oxidation of pyrite in Brunner Coal Measure sediments at Island Block mine generates AMD. Fanny Creek originates from a number of AMD seeps on the eastern waste rock slope of Island Block mine. Seeps have low pH (<3.23) and a single detailed metal analysis indicates drainage is enriched with aluminium and iron, and contains elevated concentrations of manganese, copper, nickel, zinc and cadmium relative to applicable water quality criteria such as ANZECC guidelines. Acidity and metal loadings of drainage in the catchment indicates AMD from the northern waste rock slope contributes most of the acidity (~70%) and metal (60%) in Fanny Creek, and acts to re-dissolve additional metals upon mixing with drainage from other slopes. The most suitable location for a passive AMD treatment system in Fanny Creek catchment is on the Waitahu Valley floor, near monitoring site R12, because this allows for sediment removal prior to a treatment system. Fanny Creek AMD at site R12 was characterized in detail because this data assists with selection and design of passive AMD treatment systems. Fanny Creek at site R12 contains on average 6.0 mg/L aluminium, 1.3 mg/L iron, 3.1 mg/L manganese, 0.49 mg/L zinc, 0.14 mg/L nickel, 0.0071 mg/L copper and 0.00048 mg/L cadmium. Average pH at site R12 was 3.95, calculated acidity averaged 42.7 mg CaCO₃/L, and flow rate ranged from 1.5 L/s to about 30 L/s. Acidity and metal generation from Island Block mine increases linearly with flow in the catchment, and therefore Fanny Creek drainage chemistry is not significantly affected by rainfall dilution. Natural attenuation of AMD occurs by addition of un-impacted alkaline drainage from Greenland Group basement rocks, wetland ecosystem processes, and geochemical reactions along Fanny Creek that decrease acidity and metal concentrations before AMD discharges into the Waitahu River. During low flow conditions (summer months), surface flow of AMD into the Waitahu River does not occur because of subsurface flow loss. Three suitable passive AMD treatment options for Fanny Creek AMD were selected and trialed at ‘bench top’ scale in a laboratory. These included a sulfate reducing bioreactor (SRBR), a limestone leaching bed (LLB), and an open limestone channel (OLC). The potential to mix Waitahu River water with Fanny Creek to neutralize AMD was also investigated. Fanny Creek AMD was employed for laboratory trials, and influent flow rates into SRBR, LLB and OLC systems were regulated to assess performance at different hydraulic retention times (HRT). Optimal HRTs for future treatment system designs were determined from effective AMD treatment thresholds, and include 51 hours, 5 hours and 15 hours for SRBR, LLB and OLC systems, respectively. To determine optimal treatment options for Fanny Creek AMD the effectiveness of each trial option was compared to applicable water quality criteria, and scale up implications of treatment options was assessed. The SRBR system had most effective AMD treatment, with water quality criteria achieved for metals, greatest alkalinity generation, and highest pH increase. However, a full scale SRBR system has significant size requirements, and long term treatment performance may be limited. The LLB system decreased metals to below, or just slightly above criteria for all metals, and has significantly smaller size requirements compared to a SRBR system. The OLC system was least effective, with effluent above water quality criteria for all metals except iron, and with lowest alkalinity generation. The Waitahu River is capable of neutralizing AMD because it is slightly alkaline. The flow volume of river water required for neutralization is between 65 L/s and 140L/s, which can be gravity fed to mix with Fanny Creek. These results indicate that either a LLB treatment system or the Waitahu River Mixing option are the optimal passive treatment strategies for Fanny Creek AMD. On site pilot scale testing of SRBR and LLB systems, and the Waitahu River Mixing option is recommended because of AMD treatment uncertainty, and to more accurately select and design full scale passive treatment strategies.