Apple Country Bears Golden Fruit : Ore Mined in Washington to Be Processed in Germany

They’ve struck gold in the heart of Washington’s apple-growing country. But they’re shipping it halfway around the world to process it.

When two Canadian firms announced plans in 1982 to mine the precious metal in the hills above this city of 18,000, gold fever spread quickly and hundreds of claims were filed all over Wenatchee.

“Everybody in town expected gold would be found under their homes. One group wanted to drill for gold under the high school, another in a city park,” said Garry D. Bates, manager of Cannon Gold Mine. “But there is no indication of a rich deposit within the city. It’s all up here in the hills.”

Even though the gold rush soon ended, Calgary-based Asamera Minerals, operator of the mine with 51% ownership, and Vancouver-based Breakwater Resources, with a 49% stake, are optimistic about prospects for their venture, although it has yet to make them a penny. Over the past three years, they have spent more than $62 million developing, equipping and preparing the mine for production.

(Asamera produces petroleum products in Indonesia and has a refinery in Denver. Breakwater Resources is made up of investors from the United States, Canada and Europe.)

“This one mine is expected to make Washington the fifth-largest gold-producing state in America,” Bates shouted over the roar of the giant drilling rig 600 feet beneath the surface. What’s more, it’s the only gold mine of any size in the state.

2 Miles of Tunnels

Gold mining used to be fairly common in the Wenatchee area, but it died out by the 1950s as gold prices fell and the cost of mining soared.

Now, the Asamera-Breakwater group has blasted nearly two miles of tunnels through gold-laden ore in sturdy sandstone hills. A state-of-the-art mill complex has been completed above the diggings as well as administrative headquarters. And a $17-million dam to hold tailings is nearing completion.

“We have made a tremendous investment here. Obviously we would not have spent this kind of money unless we were certain the gold existed,” said Robert G. Hunter, 58, chairman of Breakwater Resources.

Milling operations began July 15, and the first load of concentrates is being readied for shipment to a smelter in Hamburg, West Germany.

Ironically, Bates says, it is cheaper to process the concentrated ore in Germany, even with all the extra shipping costs. A number of smelters bid on the project, he says, but none--not even one only 200 miles away in Trail, British Columbia, Canada--was able to process the ore as cheaply as the one in Germany. It would have been uneconomic to build a smelter in Wenatchee, he says.

So, concentrated ore from the Wenatchee mine is being loaded on railroad freight cars and taken several hundred miles to Vancouver, Wash., where it will be loaded on ships bound for Germany. Technically, the mine owners sell the concentrate to a New York commodity broker, who in turn sells it to the German smelter.

Gold is being discovered at the rate of about a quarter ounce per ton of raw ore or five ounces per ton of concentrate recovered from 20 tons of ore, Bates says.

Current production is 85 tons of raw ore an hour. That is expected to result in 500 ounces of gold every day, Bates says, putting the Washington mine’s output behind only that of Nevada, South Dakota, Utah and Colorado.

He estimates that eventually 3.5 million tons of gold-bearing ore will be recovered from the sandstone deposit, producing an estimated 875,000 ounces of gold worth $280 million or more at current world prices of more than $320 per ounce.

Total recovery costs are estimated at $150 an ounce, Bates says, and if current world prices hold up the mine should operate for about six years.

If the price goes up, the mine could operate longer and gold could be extracted from less-promising ore.

Asamera and Breakwater have 6,000 acres of land in the area under lease from 60 leaseholders--nearly all local ranchers--scheduled to receive royalty payments amounting to 10% of the value of the processed gold. Nearly all the mine acreage was grazing land, and only a small portion lies on some of Wenatchee’s famous apple orchards.

“The key to the success of this mine is the size of the gold deposit and the low cost of the whole operation,” Hunter says. “Unlike most gold mines miles from anywhere, the Cannon Mine is close to town with the cheapest hydroelectric power in the United States available.”

No mining camps. No bunk houses. No cook houses. Workers live close by in their own homes.

No ore cars on rails roll through this mine. Instead, rubber-wheeled tractors take miners below the surface. Electric hydraulic drilling machines, each with two robot arms, core out 14-foot holes, two inches in diameter. Explosives then shake loose the ore to be scooped up and dumped onto a crusher 450 feet below ground.

From the primary crusher, a 900-foot-long conveyor belt carries the material to a hoist where it is lifted to the surface and crushed and tumbled repeatedly until it is pulverized to the consistency of salt. In a float milling machine that produces chemically saturated tiny bubbles, the bubbles grab everything that has a hint of gold.

The end product, a huge pile that looks like a mountain of mud, is the concentrate that is shipped to Germany for processing.

“We have no security problem with the concentrates,” Bates says. “You would never know this pile of muck was full of gold. You couldn’t steal enough of it to do any good.”