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Alaska’s modern day gold rush very different from Klondike gold of days long gone

With the price of gold at record highs, news reports suggest that Alaska may be set for a modern-day gold rush — though probably not a gold rush anything like that of a century or so ago when only the bravest and toughest went after that Klondike gold. This gold rush will only happen if some pretty big-time investors get together and put literally billions of dollars into exploration and gold prospecting.

Gone are the days when a hearty individual or a few friends pooling their resources could take on Alaska’s rugged landscape and come away with large profits from gold. That’s not to say individual prospectors and recreational gold seekers can’t turn a tidy profit. But a true “gold rush” demands heavy duty industry and serious bankrolling to make Alaskan gold profitable these days.

A recent report from the Associated Press pointed out some of the ways a modern-day gold rush would differ from the late-1800s, early-1900s diggings that drew old-time adventure seekers to the Yukon.

Today’s mining methods demand infrastructure in very remote regions. That is, where early day gold prospectors could get in and get out with a profit, today’s mining companies cannot begin to develop serious gold discovery and extraction without roads, bridges, and power lines being built in difficult terrain and isolated locations. Steve Borell, executive director of the Alaska Miners Association, put it well when he told Associated Press reporters: “You’ve got to have quite a war chest of money to go out today and find something. It’s not easy. The easy stuff has been found.

Heap leaching methods are being used more and more. This method differs from traditional milling. It involves mixing acids, chiefly cyanide, with ore and allowing the cyanide or other chemical to leach out the gold into the bottom of an ore heap and/or pit, then separating out the dissolved gold. Using this method is slow, but it does recover gold from lower grade or than most milling operations. Among the negatives of heap leaching gold, there are serious environmental and safety concerns about the cyanide used in the process. The second largest gold mine in Alaska, the Fort Knox Mine, is ramping up to increase the extent of their heap leaching.

As one measure of the gold potential in Alaska, consider the current Fort Knox Mine output: The 2010 gold output of the mine was 349,729 ounces. (The mine’s website was unclear whether that was in troy ounces or avoirdupois ounces. Troy ounces run 12 per pound; avoirdupois 16 per pound.) To get a “ball park” figure of the dollar value of such an outpit, we could take the number of $1,700 per ounce, round the ounces down to 300,000 — and that would mean the Fort Knox Mine’s 2010 output was somewhere in the neighborhood of $500 Million. It’s important to note that this is a rough estimate of gross revenue, not considering at all the fluctuations in ounce value of the gold, nor the cost to mine it.

Of course, recreational gold prospectors and entrepreneurs still come to Alaska with picks, shovels, and gold panning tools in hand. And some of them fall in love to stay the rest of their lives. Of those who catch that Alaskan gold fever, whether they stay or not, a few even make a strike and make a little money at their efforts. According to that AP report, the state of Alaska says placer mining applications — which, the AP said, usually indicates smaller, individual or family-run mining operations, rose from around 350 in 2005 to about 580 in 2011. In addition, a recent lease sale by the state for gold in Alaska’s shallow ocean waters off Nome brought $9.3 million in bids.

Despite the hard work and hours of bending and lifting demanded by most individual gold prospecting, fortune seekers arrive regularly in the Alaskan wilds to try their luck. Bill Dunlevy, a prospector of 40-plus years experience, was profiled in that AP report. Dunlevy found his biggest nugget in the early 1990s, a beauty of just over 5 ounces in weight that he prizes and wears as a pendant hanging around his neck. The report said Dunlevy has been offered as much as $20,000 for his nugget in the past. But he refuses to part with it: “I told the kids, I don’t know who will wind up with this when I go but I want to keep it in the family. It’s like finding a five-carat diamond.”

Bottom line: Alaska may be in line for a new “gold rush,” but it will be vastly different than the one old “Sourdoughs” knew in the Wild West days of the state’s rugged past!

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