Rising gold prices revive interest in Mother Lode

Don Thompson

Monday, July 28, 2003 | 9:52 a.m.

GRASS VALLEY, Calif. -- More than 150 years after gold was discovered at Sutter's Mill, two companies say the poor economy, rising prices and technology advances make it profitable to mine Mother Lode gold it once wouldn't pay to pull from the ground.

One wants to reopen what once was the state's second most productive underground gold producer: the historic Idaho-Maryland mine in the Sierra Nevada town of Grass Valley.

The other, Maryville, Calif.-based Cal Sierra Development, is shipping a 500-foot gold dredge in pieces from Bolivia to replace a $15 million dredge that sank in the Yuba gold fields west of Grass Valley this spring. The dredge can gobble 11,000 cubic yards of gold-laced Yuba River sediment a day.

The '49ers and their descendants left plenty of gold behind when every major Sierra Nevada mine shut down. More recently, open-pit mining mostly in the Mojave desert kept California the nation's No. 2 gold producer, though well behind neighboring Nevada.

"There's no doubt California has a lot of gold resources -- gold in the ground that could be gotten economically," said geologist Susan Kohler, the Office of Mine Reclamation's gold expert. Yet, "California is almost out of business when it comes to gold mining."

This spring, the Gold Rush state adopted the nation's toughest open-pit mining regulations, which Kohler expects to virtually end large scale gold mining by 2005. Analysts said the environmental regulations are driving mining companies to other states and countries, though two firms are trying to find ways around the new rules.

Last month, Western Goldfields Inc. of Plano, Texas, signed a letter of intent to mine a deposit on Imperial County's Torres Martinez Desert Cahuilla Indian Reservation it says contains at least 856,000 ounces of gold. The company says the sovereign tribe should make it easier to develop an open-pit mine despite the new regulations, and a new law requiring back-filling of mines on Native American sacred lands.

Meanwhile, Golden Queen Mining Co. of Vancouver, B.C., Canada, hopes to continue its Soledad Mountain mining near Mojave in Kern County if it can prove the project was approved before the new regulations took effect.

Industry analysts said global instability, a declining dollar, the growing U.S. deficit, and a downturn in gold exploration are once again boosting interest in the boom-and-bust precious metals market. Gold jumped last week to about $362 an ounce.

Vancouver-based Emgold Mining Corp. is betting those factors, plus changes in technology, will make it worthwhile to reopen the Idaho-Maryland mine by drilling a mile-long, 16 feet-by-18 feet sloping tunnel -- big enough to handle 40-ton trucks -- underneath what now are homes, offices and industrial parks.

When the mine closed in 1956, a miner could remove about 1.5 tons of ore a day, said company President and CEO Bill Witte. Massive modern equipment means the same miner can move 30 to 45 tons a day.

The old mine became unprofitable when the government capped gold at $35 an ounce; Witte said even the tailings the earlier miners left behind contain enough gold to now be profitable.

The company just completed test drilling at the old mine site adjacent to the Empire Mine, once the top producing hard rock mine and now a state historic site. So far there has been little opposition to the company's plans to drain the water-filled mine into adjacent Wolf Creek and begin operations.

"This is gold country, so it's got a long tradition here," said Larry Burkhardt, president and CEO of the Nevada County Economic Resource Council. "There's still a lot of gold left underneath the town. ... We've been out of the business for 40 years now, but I think people are intrigued by the idea."

Former state geologist Ross Guenther spent the last 28 years intermittently trying to interest speculators in the gold the Idaho-Maryland miners left behind when they closed the shafts after 93 years.

He hit his own treasure trove in 1985: 11 tons of old maps, milling records and assays kept by the former owners, some of which paper the walls of the modern office building he says now sits over more than 1 million ounces of leftover gold. The information has been transformed into a three-dimensional color-coded computer map of the mine.

Guenther, now the project manager, also patented a way to turn the pulverized quartz mine tailings into ceramic tile and bricks, which could help the company profit while eliminating mining waste.

The company plans a pilot ceramics plant next year, while seeking development permits over the next 18 months at a cost of $3-$5 million. Developing the mine would cost investors another $40 million, with the possible reward of reaping more than 100,000 ounces of gold a year.

"There's hundreds of these (potentially gold-bearing) quartz veins everywhere. The old miners lucked into them. With all the geology today, that's still really what it's all about," said Emgold geologist Greg Kuzma.

Miners pulled nearly 2.4 million ounces of gold from the mine between 1862 and 1956. But there's not much to mark the old mine shafts now but a concrete ore silo and a scattering of weathered wood and tin buildings.

Guenther believes "there are a dozen good candidates in California for redevelopment" besides the Idaho-Maryland. But state expert Kohler said there was similar interest when gold spiked above $800 an ounce in 1980.

"Everybody from all over the world came in and looked at those old Mother Lode mines," she said. "Anything that was productive was removed at that time."

That doesn't deter the mine's former superintendent and safety officer, 83-year-old Jack Clark, who spent 13 years in the mines' 71 miles of tunnels and shafts and now is advising Emgold.

"There's gold down there," Clark said. "I don't foresee any big problems with reopening.

"I'd like to go underground again. It would be like old times to me, I guess you'd say."