Companies Find Good Prospects : Technology, Prices Spark New California Gold Rush
Giant earth-moving equipment swarms over the unremarkable hills just west of this historic gold-mining town, nibbling away at the rocky, red earth--16 tons a bite, 6,000 tons a day.
Nearby, massive milling machines in towering prefab buildings wait to grind boulders into dust, spitting out 14 tons of waste “tailings” for every ounce of gold recovered.
It is hardly the picture conjured by the magic whisper of “Gold Rush!” There is not a grizzled old sourdough prospector or a pickax or mule in sight.
But the new diggings at the old Harvard Mine here typify California’s latest gold rush--a carefully calculated campaign by college-educated corporate miners from around the world to squeeze a few more tons of gold out of the Golden State.
Results so far have been remarkable, and not merely in the western Sierra’s fabled Mother Lode, the 120-mile-long gold vein that hosted the state’s first Gold Rush more than a century ago.
Miners also are coaxing gold out of pastureland north of the Napa Valley and the desert near Brawley, doubling the state’s production each year for the last five years and pushing California back among the nation’s top gold-producing states.
“What we are seeing now is a pretty rapidly increasing level of activity,” said Roger Ashley, a Western gold-mining expert at the U.S. Geological Survey. “This boom in gold production will last 10 to 20 years, something like that. It will depend on how much (gold) comes out how quickly.”
California’s resurgence--part of a general boom both elsewhere in the United States and in countries from Canada to Australia--is especially unusual because of the state’s tough environmental and safety laws. Although there have been setbacks, including a chemical fire at the Jamestown mine that caused a public outcry and forced a redesign of the mill, miners say the laws are fair and do not prevent them from turning a profit.
The profit can be significant. For example, gold bullion was selling for $404.10 an ounce on the New York Comex spot market as of Friday, while the cost of production in California ranges between $184 and $300 an ounce, depending on the quality of the ore and the type of equipment used.
California mined 440,000 troy ounces in 1986, mostly from 11 large open-pit mines, each of which can produce between 20,000 and 200,000 ounces a year. The Jamestown mine, which is expected to begin full production this month, will add another 130,000 ounces a year, and Ashley expects that the state eventually could have as many as 25 or 30 large mines. In addition, there are a number of smaller, underground mines, as well as a gold-dredging operation on the Yuba River.
Together, these operations could propel the state’s total annual gold production back over 1 million ounces for the first time in nearly 50 years.
Mining experts attribute this growth to a number of factors, from rising gold prices to unrest in South Africa, the world’s leading gold producer. Also cited are new technologies that make formerly unworkable gold fields profitable and a downturn in copper and coal mining that has resulted in a supply of inexpensive used mining equipment.
Golden Renaissance
All these factors have had a part in California’s golden renaissance, mining experts said.
“It’s mainly the rise in price,” Ashley said, “but we also now have some new technology that allows low-grade ore to be mined. Extraction methods range from pretty traditional to new ones that are much more efficient.”
Indeed, new methods are so efficient that miners can retrieve gold from land that was either thought to have been picked clean by older mining methods, or was never mined in the first place.
“Most important are the bulk-mining methods that let you move large volumes of ore at relatively low costs,” said Richard Graham of Gold Fields Inc., owner of the Mesquite Mine in Imperial County.
“People think that once you mine an area, it’s done with, but it’s not so,” said Orville (Andy) Anderson, president of Sonora Mining Corp., which works the Harvard Mine. “They (Gold Rush miners) took out the richest ore and left the rest. Well, to us, ‘the rest’ is fine.”
Easy to Get At
The rich ore taken by those earlier miners was the bounty usually associated with gold mining--the placer nuggets sitting on or right under the ground, the fine dust sprinkled in river beds and the solid veins embedded in rock.
Today, miners look for microscopic gold particles dispersed throughout a much greater volume of otherwise worthless earth--sometimes as little as six-hundredths of an ounce of gold in a ton of dirt. Even this gold-bearing ore is dispersed, and some mines must move six tons of “waste rock” to find the one ton of ore that contains less than a tenth of an ounce of gold.
When the ore is found, it is dug out in large open-pit mines, then ground to the consistency of baby powder and treated in a series of chemical, temperature and electrical processes to recover the gold and silver.
Although all of the state’s mines share one common, century-old gold-milling process--soaking ore in a weak cyanide solution to separate the mineral for easy recovery--mine operators are experimenting with new methods to increase yields.
Operators of the McLaughlin Mine, at the junction of Napa, Yolo and Lake counties 70 miles northeast of San Francisco, bake gold ore in huge autoclaves, using high pressure, intense heat and a pure-oxygen atmosphere to strip sulfide from the gold. A spokesman for San Francisco-based Homestake Mines said that the process increases the amount of gold the cyanide leaches from their ore to more than 90%.
Experiment Under Way
At the Harvard Mine in Jamestown, 70 miles southeast of Sacramento, pine oil and other chemical reagents are mixed with powdered ore to cause gold-bearing particles to float to the top of big vats. The ore concentrate is then shipped to Nevada for cyanide processing. Soon, however, Vancouver-based Sonora Mining Co., which owns the Harvard Mine, will experiment with an on-site leaching process that uses the chemical thiourea instead of the cyanide process. That would improve recovery efficiency and save transportation costs.
On the other hand, mines operating in the desert and on the eastern slope of the Sierra do not need to mill--that is, crush or prepare--ore at all before they leach out gold, Ashley said. Natural weathering already has oxidized, or freed, the gold particles from impurities.
Differences among mines, each with distinct recovery efficiencies and ore grades, can be striking. McLaughlin, for example, produces 180,000 ounces each year by processing 3,000 tons of ore a day. Harvard, by contrast, processes twice the amount of ore but will produce only 130,000 ounces of gold. Harvard, however, pegs its production costs below $200 an ounce, while McLaughlin costs are closer to $300 an ounce.
California’s current surge in gold mining actually is the third such boom in the state’s history.
The first was the Gold Rush of 1848, the original discovery along the Mother Lode. Precise records were not kept, but historians at Wells Fargo Bank and the California Historical Society estimate that during the height of the rush, from 1850 to 1855, more than 18.9 million ounces of gold were recovered--and sold for between $16 and $20.67 an ounce. The rush petered out in the mid-1860s with the exhaustion of the richest surface deposits and underground veins.
Depression Effect
A second, smaller gold rush occurred when the United States first abandoned the gold standard in 1933 and the price of gold jumped above $30 an ounce. Men idled by the Great Depression flooded into gold fields, pushing up production from 412,000 troy ounces in 1929 to more than 1.4 million ounces a decade later. This ended in October, 1942, when the government, gearing up for World War II, halted all “non-essential” mining.
After the war, the price of gold was too low to justify large-scale mining. In 1980, however, economic turmoil pushed the price of gold as high as $850 an ounce, making even marginal old mines profitable. At the same time, production of such base metals as copper and lead was collapsing, making available large amounts of idle mining equipment and mining companies eager to put it to use.
California production has grown more than a hundredfold since then, from a mere 4,000 ounces in 1980, when gold was considered chiefly a byproduct of sand and gravel operations, state mine regulators said.
The boom has pushed California past South Dakota as the nation’s second-largest producing state. Another boom state, Nevada, led the nation in 1986 with nearly 1.9 million ounces--more than half the U.S. total of 3.6 million ounces.
However, the rush to reopen California gold mines has come in a regulatory melange unmatched elsewhere. State and local officials, along with residents and mining companies themselves, have spent thousands of hours and millions of dollars to address a variety of potential environmental impacts.
Range of Problems
Such matters can range from truck traffic and wildlife-habitat destruction to dust, noise and the reclamation of closed mine pits.
The McLaughlin mine, for example, is in a remote area more than 15 miles from the nearest town--tiny Lower Lake, Calif.--and yet it required nearly 300 permits.
Occasionally, the burden has been too much, and several counties along the Mother Lode have bowed to local residents and banned gold mining altogether. But most counties with proven deposits have been able to accommodate a mine or two without surrendering their environment or rural character. And companies have found that they can shoulder the regulatory load--sometimes economically, as at McLaughlin, where restrictions have encouraged recycling that has cut costs.
Problems are more likely at mines close to populated areas. Here in Jamestown, the Harvard Mine is within a small radius of several dozen houses. Although the mine is ringed by electronic monitors and its operators are sensitive to neighbors’ concerns, county officials often are confronted by homeowners complaining of mine-related woes--shattered windows, broken light fixtures, cracked walls, noise and vibrations.
29 Hospitalized
Concerns grew after a welder touched off a chemical fire during construction Jan. 16. Deputy County Fire Warden Bob Kempvanee said the fire was extinguished in 10 or 12 minutes, but it still generated enough hydrogen sulfide gas to send 29 workers to the hospital and to leave people living nearby complaining of nose, throat and mouth irritations.
The Tuolumne County Board of Supervisors has ordered an investigation into the mine’s operation, and the county Fire Department has imposed conditions the mine must meet before it can begin full production. Mine operators hope to meet the conditions by the end of this month.
“Some had already been implemented and others were in the process of being done,” said spokeswoman Lynda Garello. “We’re just waiting for the fire warden to sign off on it and (then) we get down to business.”
TOTAL U.S. PRODUCTION
1986 3,610,220 troy oz. 1985 2,475,436 troy oz. 1984 2,084,615 troy oz.
TOP GOLD MINING STATES
Nevada 1,897,258 troy oz. California 440,479 troy oz. South Dakota 378,371 troy oz.
*Troy weight is the measure used for gold, silver and other gems. A troy ounce equals 480 grains; a grain is .06 gram. An averdupois ounce--the more common American measure--equals 437.5 grains.
Source: U.S. Bureau of Mines; 1986 figures are preliminary.
