The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Favorable gold prices, reality TV and modern equipment spur resurgence in industry, according to AMA-commissioned report
From the bold fortune hunters at the close of the 19th Century to the hopeful miners starring on 21st Century "reality" television programs, placer gold mining in Alaska conjures images of "Gold Rush." In truth, however, neither of these are accurate representations of the hard work and careful planning that lends to success at a contemporary placer gold mining operation in the Last Frontier.
To paint a clearer picture of today's placer miner in the Far North State and to quantify the contributions of this unique niche of the mining sector, the Alaska Miners Association hired the McDowell Group Inc. to complete a report on "The Economics of Placer Mining in Alaska."
"Placer mining is a unique segment of Alaska's mining industry. This form of mining has a rich history in Alaska, and the image of a goldpanner is iconic in Alaska's culture," the McDowell Group explained in its report. "Yet, little has been understood about the economic impact of this form of mining."
The McDowell study found that while individually placer mines tend to be small in stature, collectively this mining sub-sector accounted for roughly 82,600 ounces of the gold produced in Alaska in 2013 and contributed about US$97 million to the state's economy in the form of wages and spending on goods and services.
This source of jobs and spending provides a crucial injection of cash into a number of rural communities that serve as hubs to placer gold mining districts.
"Placer mining occurs in all corners of Alaska and ranges from small family affairs to larger corporate undertakings," according to the McDowell Group. "With recent reality televisions shows about mining in Alaska, along with favorable gold prices, placer mining has seen a resurgence."
Heavy metal
Unlike hardrock mining, in which an expensive and complicated system of mechanical and chemical equipment and techniques are needed to extract gold from solid rock, placer mining benefits from millions of years of natural processing.
With the natural erosion process freeing gold from the rock that binds it and then concentrating it in stream gravels below, a placer miner need only find alluvial deposits with sufficient concentrations of gold and using tools as simple as a shovel and pan begin producing his or her own personal stash of the precious aurum.
While the scale and sophistication of placer mining equipment has grown over time, the basic principle remains the same - gold is heavier than most everything else out there. With this basic concept, all placer miners, large and small, contemporary and legendary use gravity to capture the heavy precious metal while washing away the lighter materials.
While the recovery process is straightforward and inexpensive, finding placer gold concentrations of sufficient quantity to make a living with a shovel and pan in the modern era is much harder to come by.
Most of these "easy" alluvial deposits in Alaska were found and mined during the great gold rushes at the turn of the 20th Century and ensuing years - including a mini gold rush that flared up in the Last Frontier when the price of gold rocketed from around US$125 per ounce in 1976 to a peak of US$850 an oz in 1980.
"When the policy of a fixed gold price ended in the early 1970s, and gold ownership restrictions on private citizens were lifted by the federal government, several hundred placer operations in Alaska came back into production (or new production)," explained the McDowell Group. "By 1982, production from about 500 placer mines had risen to 174,900 oz worth $70 million."
While most of the richest concentrations of alluvial gold have been mined, modern equipment and rising gold prices make previously uneconomic deposits worth a second look.
For the solo miner and small groups seeking to mine placer gold on a shoestring budget, the suction dredge has become the equipment of choice. Armed with some combination of small machinery, hand tools and a suction dredge, many of these small scale miners aim to make a livelihood from the gold recovered.
For others, the pursuit of gold on their claims is more of a weekend hobby. These recreational miners are an oft overlooked yet important subsector of the placer mining industry that ranges from Alaska families going out to seek gold on the weekends to tourists paying to pan or work on a "dude mine."
"Based upon interviews with recreational mine operators in 2012, at least 800 people traveled to Alaska to primarily participate in recreational mining, amounting to at least 1,000 miner-weeks of annual recreational mining at the remote pay-to-mine camps. Several thousand miner-weeks are also estimated to occur at highway-accessible sites near Anchorage and Fairbanks," according to the McDowell Report.
Today's larger scale placer mines in Alaska - ranging from family size setups of two or three people to commercial scale operations employing dozens - do not typically seek high-grade deposits overlooked by their forbearers. Instead, these operations rely on the ability to process more pay gravel and higher gold prices to mine areas previously considered uneconomic. Some of these modern miners have even found that more powerful digging machines and refined gravity recovery techniques make it profitable to rework the tailings and underlying bedrock pay left behind by historical miners.
Tracking the gold price
In the modern era, placer gold production in Alaska tends to trail the price of the precious metal. In 2005, when the gold price was hovering around US$450/oz, roughly 71 placer operations recovered an estimated 24,600 ozs of the yellow metal in Alaska. From 2005 gold prices steadily climbed to a crescendo of US$1,900/oz in August 2011. Likewise, placer gold production in the 49th State climbed to 100,041 ozs form 321 operations in 2012.
This trend continued into 2013, with some 295 operations reporting placer gold recoveries of 82,600 ozs.
"Placer mining remains strong in Alaska with gold prices ranging from $1,200 to nearly $1,900/oz over the last four years," noted the McDowell Group.
Continuing its longstanding title being the gold producing capital of Alaska, the Interior region accounted for about half of the state's placer gold production.
According to "Alaska's Mineral Industry 2013," an annual report published by state agencies, 138 placer mining operations in Interior Alaska recovered 41,366 ozs of gold. This region - which includes the famed gold rush mining districts of Fairbanks, Circle and Fortymile - has produced roughly 11.73 million ozs of placer gold over the past 130 years. This is nearly half of the 24.8 million ozs recovered across the entire state.
Western Alaska - which includes the famed golden beaches of the Nome Mining District - produced 31,354 ozs of placer gold from around 90 operations during 2013.
A relatively large number of the placer gold operations in Western Alaska, 40, are classified as recreational. This is due largely to the near-shore placer marine deposits for which the region is renowned and the added notoriety these golden beaches have received in recent years.
"A resurgence of suction dredge mining offshore of Nome, somewhat driven by reality television programs, has also attracted a host of new operators in that area," the McDowell Group noted in its report.
The state of Alaska has set aside a portion of Nome's golden beaches especially for recreational miners, allowing individuals to use small dredges and hand mining techniques along the shorelines made famous at the dawn of the 20th Century.
An offshore lease sale held by the Alaska Department of Natural Resources in 2011 is resulting in a growing amount of marine placer gold being recovered from this area.
The state divided its offering into two groups - 53 smaller near-shore parcels, ranging from 40 acres to 160 acres, and 31 larger tracts measuring up to 2,794 acres located in the deeper waters from roughly one mile off the beach to the three-mile limit of Alaska-owned land.
The production from these tracts is beginning to be realized from some of the smaller leases. Larger operations tend to take more time to complete exploration and baseline studies before diving into operations.
The Nome Offshore Project, the largest tract of marine placer gold properties acquired during the state's offshore lease, is being advanced towards a production decision by an international consortium known as Placer Marine Mining.
While the Nome beaches and near-shore marine gold deposits have been continuously worked and reworked for more than a century, the depth of the icy water covering the deposits leased by Placer Marine Mining has prevented individuals and small-scale operations from dredging there.
In 2013, a PEA was completed on the large-scale marine placer project that was originally a joint venture between De Beers and AngloGold Ashanti. Some C$5.1 million was invested on exploration of the marine property last year. Exploration, environmental baseline studies and other work in support of the operation outlined in the PEA continued in 2014.
It is projected that operations could begin at the Nome Offshore Project as early as 2017.
All told, it is commonly believed that more than 10 million ozs, or roughly US$12 billion, of economically viable placer gold lies beneath icy waters of the Norton Sound.
Northern Alaska accounted for 4,900 ozs of the placer gold produced in 2013 and is set to produce a lot more gold in the coming years.
Goldrich NyacAU Placer, LLC - a joint venture placer mining company owned equally by Goldrich Mining Company and NyacAU, LLC - is targeting the recovery of up to 20,000 ozs of placer gold annually from rich alluvial gold deposits that blanket the valleys of the vast Chandalar land package located some 200 miles (320 kilometers) north of Fairbanks.
Startup at this large placer mine is slated for the summer of 2015 with full targeted capacity expected to be achieved in 2016. Drilling has delineated a 10.5-million-cubic-yard placer deposit at Chandalar averaging 0.025 oz/t (250,000 ozs) gold.
The remaining 5,000 ozs of placer gold recovered in Alaska during 2013 was mined in the Southcentral (2,400 ozs); Southwestern (1,600 ozs); and Southeastern (1,000 ozs) regions.
Significant contributor
During 2013, roughly 1,200 individuals worked in the placer mining sector. Some 73 percent, or 880, of these placer miners were Alaskans.
Of these, about 230 call Fairbanks home, another 230 hail from the larger Anchorage area (including the Mat-Su Borough) and roughly 420 are residents of other communities across the state.
Nearly half (47 percent) of the active placer operators with employees had at least one family member working on their claim. On average, these family-oriented operations have 1.7 family members employed.
It is estimated that the Alaska placer mining sector paid US$40 million in wages and other forms of compensations such as production shares and owners profits.
When adding the indirect and induced impacts spurred by Alaska's placer miners, roughly 1,700 jobs, US$65 million in wages paid to Alaskans and US$150 million of in-state goods and services are attributed to the sector, according to the McDowell report.
While it is unlikely that placer mining in Alaska will ever match the legendary status it held at the turn of the 20th Century, continued strength in gold prices will continue to foster an important heritage that continues to support families across the Last Frontier.
"Alaska has a rich history of placer mining dating back to the late 1800s. While placer mine production in Alaska today may be small relative to the industry's early days, it remains a significant contributor to the state's economy," the McDowell Group.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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