Emergency services responded to the disaster at Cobar, in northwest NSW, at 3.45am on Tuesday, and were told one man had been confirmed dead after the explosion.
Two women were brought to the surface, but one of them died soon after.
The dead victims have not yet been formally identified, but they are believed to be a woman in her 20s and a man in his 60s who had both been living in Cobar.
The second woman, also a Cobar local in her 20s, was flown to hospital suffering hearing damage and shock.
Mining and Energy Union NSW south western district president Bob Timbs said a "catastrophic failure of a safety system" would have caused the deaths.
"In this day and age, that type of accident just should not have happened," he said.
"We will do everything within our power once we've dealt with and supported the families and mine workers in the community to find out what happened."
The mine had operated since 1982 but was closed for maintenance in 2020.
ASX-listed Polymetals acquired the site in 2023 and restarted mining operations in 2025.
Cobar mayor Jarrod Marsden said he was struggling to come to terms with the deaths, but the town would need to find strength in community to get through the tough time.
"Two families' loved ones didn't come home from a night shift. Their lives have been changed forever, just decimated by this," he told AAP.
"We're devastated, just in shock and it's impossible to try and find the words to describe it."
The NSW Resources Regulator confirmed it would steer an incident investigation, while police will prepare a report for the coroner.
NSW Mineworkers' Alliance spokesman Tony Callinan called for an open and transparent investigation into how the incident happened, adding the union would "always fight for safety over production."
The mining company requested that trading in its shares be paused for two days after a "serious safety incident".
The firm's executive chairman Dave Sproule said he was "shocked and saddened by the tragic incident".
NSW Minerals Council chief Stephen Galilee said the tragedy highlighted that safety must always be paramount for operators.
"This ... is a sombre reminder of why the NSW mining industry must never deviate from our commitment to the safety of our workforce as our number one priority," he said.
Premier Chris Minns said it was a heartbreaking day for the Cobar community and the tragedy would be felt across the mining industry.
"The number-one priority in any mine must be safety … everyone who goes to work has the right to come home," he said.
"While safety protocols and procedures have greatly improved in mining, these deaths are a sobering reminder of why we need to always remain vigilant to protect workers."
Copper and gold mining are the two leading employment industries in the region.
The site, 40km north of Cobar, is a major underground silver, zinc and lead mine. It is the second-largest project in the polymetallic region known as the Cobar Basin.
The latest incident in the town follows the deaths of three workers in 1980 in a shaft fire, while a cave-in killed four miners in 1971.
8°C