The person-riding gemstone hoist winch rope is used to lift people - one at a time - in and out of the mine shaft.
The 8mm diameter non-rotating wire rope was sitting in a 12mm diameter head pulley groove.
With the inner strands protruding from the outer rope layer in two places the rope's strength was compromised, which could have caused it to break and injure somebody, according to the regulator.
The regulator's investigation found the damaged rope's lay length increased along the rope and affected the nonrotating properties of the rope, so when the rope was unloaded torque built up and caused two rope distortions.
The rope is thought to have become damaged because it did not fit the head sheave groove dimensions.
The regulator warned mine operators that if they found evidence of protruding wires or strands they should replace the rope.
The head pulley groove diameter and rope diameter should also be measured to ensure they fit.
Operators should also check with the hoist designer to make sure the rope is compatible with the head sheave design.
According to the Australian standard the head sheave groove diameter should be 7.5% to 12% greater than the rope's diameter.