Damien Howson (Orica-Scott) won the summit finish stage on Thursday in Falls Creek after duelling with Sky's new Frenchman Kenny Elissonde. Howson put 47 seconds on Elissonde and 1-11 on Froome, who placed sixth.
"We've got some hard days coming up though so we'll shake it up and see what happens. It's not over yet," Sports Director Brett Lancaster said.
"It will be very tricky to get over a minute on Howson, but it's bike racing and 'Froomey' is one of the best bike riders in the world. We'll never give up. It's not over until the fat lady sings."
The five-day race near Melbourne is far from over with only two days down. However, Thursday's stage to near 1500 metres appeared the most decisive on paper.
Howson leads by 38 seconds on Jai Hindley (Korda), 53 seconds on Elissonde, 1-10 on Michael Storer (Korda) and 1-12 on Froome.
If he is to claim the title again in 2017, he could strike in tomorrow's second stage to Beechworth or Sunday's final stage to Kinglake. Both stages undulate and offer opportunities.
Ellisonde said that "later in the week" Froome could have his chance for a win and yellow jersey.
"We don't ride for third place," the small French climber said. "We'll try something. There is still time for the final selection."
Orica-Scott will be anxious to score a home win in Australia’s second big stage race of the year. Its star Esteban Chaves just missed out in the Tour Down Under, placing second at 48 seconds behind Richie Porte (BMC Racing).
The 2.1-ranked Herald Sun Tour is the last major event before cycling's focus shifts away from Australia for the year.
"This is my first win in these [Orica] colours and it's been a long spell without a win," said Howson, who normally works for the team leaders.
"I have been living my successes through others which I am always happy to do, but it's nice to get a little bit of glory today."
"[Today] was one of those dream scenarios where you have enough time to think about a finish salute."
They still have around 450 kilometres to cover over the next three stage before Howson can consider the overall victory his.
"Team Sky are one of the world's strongest teams so I guarantee they are going to throw everything they have (at us)," Howson added.
"There's still a lot of tough stages to come, but I also have a very strong team behind me."
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