The company remained optimistic bringing in as manager John McKenna, who had previously managed the Lady Hepburn mine at Ballarat, McKenna set about the installation of crushing and chlorinating plants, three Cornish boilers were being built by Burns and Twigg in Rockhampton and the remainder of the machinery to process 1500 to 1800 tons weekly was ordered from New South Wales and America. A brickmaker was busy turning out bricks from a bed of fine clay five or six feet in depth, to be used in construction of the crushing and chlorinating works on the northern slope of Pigstye Hill above the Ross Creek wharf as all machinery and goods were to come in by sea.. By July 1888 about 200 people were living in the mining camp at Taranganba on the western side of the highest hill and an enterprising shopkeeper had already established a general store. It was widely believed that the company intended to have about 100 acres of land surveyed for development on what was described as a most "desirable site for a township . . ." On the south side of Freshwater Creek, which flowed between the two hills known as Eastern and Western.

But disquieting rumours would not go away, suspicious investors began publicly to question the worth of Taranganba Gold Mine and the ore testing methods used there, W. K. Peberdy of Jellinbah Station, Blackwater, who owned 2000 shares, visited the mine and took samples. Those tested on the spot, with the assistance of Robert Ross, gave good results, however Peberdy took ore samples away and tested them in Rockhampton, the results were negative. he sent samples to Brisbane for testing and these results also showed "no gold". Peberdy's results, published in the Rockhampton Morning Bulletin, were followed by a number of others from dissatisfied investors, Taranganba shares fell dramatically and became unsaleable. Finally the directors requested Government Geologist Robert L. Jack to make an official investigation of the mine, although Jack had earlier been refused permission to inspect it. Jack found only minute quantities of gold and his detailed report to the Queensland Minister for Mines said that the undoubted presence of gold in the quartzites might possibly justify the assertion that the hillocks of Taranganba were in a certain sense "mountains of gold," but the content of gold in proportion to the stone was very far indeed from being payable, the directors also sent mining engineer W.B. Henderson to inspect the mine and he reported it to be "absolutely worthless", these reports sounded the death knell of the Taranganba Gold Mining Company Ltd.

Shares in Taranganba Gold Mining Company became worthless. Those who had invested heavily lost large sums of money, but many small investors lost their entire life savings. The Queensland Crown Law Office considered pressing charges of conspiracy and fraud against Robert Ross and the Company: legal opinion considered that prosecution was justified, and a conviction likely. Although the Minister for Mines, Robert Philp, declared that the affair of Taranganba Gold Mining Company was one of the biggest mining swindles ever perpetrated in the colony, the Crown Law Office received advice from Mr. Justice Real that “Rockhampton is a place where juries at times pay very little regard to the evidence”. No charges were ever laid.

There have since been many theories concerning the origin of the gold found in the ore crushed by Robert Ross and his sons. One was that it was brought from Greek's Reef at Bondoola. Although discounted by some observers as unlikely, the most popular local theory was that it was Mount Morgan gold. The belief was that Mount Morgan stone had been ferried in on Ross's cutter by an employee, French Peter, after it had been left in wait for collection at a spot along the Fitzroy River by a Mount Morgan collaborator of French Peter. From the beginning of the affair, visitors to Taranganba had remarked on a resemblance in the stone they saw there to Mount Morgan stone. Pieces picked up among the grass, they said, had the blasted, iridescent, and sometimes honeycombed appearance with which they were familiar at Mount Morgan.

The Ross family who came from the New England district in1858 became one of the best known and most colourful families in the area, surrounded at times by publicity and controversy. Andrew Ross and his sons Robert and James acquired most of the coastal land from the mouth of the Fitzroy river north to Raspberry Creek. Andrew Ross settled on Balnagowan, Robert on Cawarral and then Taranganba and James Ross first at  Raspberry Creek, then Barmoya and finally at Mulambin.