Bored at home while isolating due to possible COVID, I was channel-surfing (yes, I’m old school) and came across a show depicting apparent gold miners in Alaska. I forgot the name of the show, but it appeared that the teams’ goals were to net a certain amount of ounces of gold relative to how much they invested. As usual with these shows, the contrived challenges and disputes were for entertainment, but it did make me wonder about everything that’s involved for gold mining today.
Can someone summarize, or is there a nice summary available somewhere? Are the teams leasing the land from the government or a private land owner to do this work? Any sense of the expected ROI on such ventures? I assume that if there were substantial gold amounts in the areas, there’s no way the land owners or government entity would just allow them to go in and mine what they want, so it must be “slim pickings” for these guys.
Earle Foster was the owner of a large chunk of land on Porcupine Creek. He passed away on April 23, 2013. Earle leased this land to mine for the Hoffman Group to use. However, to make sure that they stayed on track, he made Fred Hurt work with the Hoffmans. In the end of their first season, Foster was disappointed by the amount of gold they got. During “The Off-Season”, Todd Hoffman was unable to pay a month on the Porcupine Creek Claim, and Fred bought the lease out from under them.
This is a short article on offshore dredging near Nome. It highlights a lot of the issues with mining leases as a whole.
Leases and claims being concentrated into bigger operations
Increases government oversight (bonding and insurance)
Increase environmental awareness.
Basically small time gold operations are a localized environmental disaster waiting to happen. Nobody wants to be holding the bag when something happens and landowners are starting to realize this. As they update the bureaucracy to adequately reflect the true cost, it pushes the small operations out. At the same time there are a lot of old laws on the books that support small mining operations. You can go stake a claim on a lot of federal land. The claim doesn’t get you very much and can cost between $30 and $300 a year for what amounts to nothing.
Good info, and the show was indeed Bering Sea Gold. I can’t believe that it’s on Season 9!
Another question that comes to mind is if there is any illegal unauthorized activity. While it looks like heavy machinery and boats are required, Alaska is a big place. Also if there is the threat of theft of the gold. Are there gold shops nearby that pay you cash for the gold? Do they provide tax documents? I only watched part of one episode, so maybe these questions will be answered if I watch more.
Most of the land on Gold Rush is leased from the claim owner. Their agreement with the miners can be a fixed sum or a percentage of the gold or a combination. Some of the larger operators like Parker and Tony Beets buy claims directly.
Probably the most misleading aspect of the show that bugs me every week is the voice-over announcing, "Their 300 ounces of gold is worth $600,000. No it’s not. Only once has the series ventured into the miners selling their gold. Several weeks ago they followed Tony Beets’ wife to the gold buyer. An unassuming trailer with an office considering how much gold he might have on hand. Even then they did not explain the entire cost of the process.
First of all, as the assay agent mentions, the Klondike gold runs from 80% to 92% purity. Several times during the shows we have seen cleanouts from 3 different sluices placed side by side. They can be quite different in color, a measure of their purity. The Klondike gold tends to be pretty pure but 92% purity drops the announced $2000 a troy ounce to $1840 per ounce. And they don’t get that price. The assay agent will take his cut. Since he deals in very large quantities from the major players he might only charge 5%. Now we’re down to $1748 per ounce.
One thing that surprised me is that when Tony Beets drops off 300 ounces the assayer melts the entire batch into a single ingot and assays it. And charges another fee for doing it.
I have a friend who owns claims in California and Colorado and have dabbled a bit here in Ohio myself. There are websites that list every claim on Federal land. Here is one:
If a claim is listed as vacant then you can claim it. You must prospect for gold on it, mark the area you are claiming and submit your gold samples with your application. The fees for hobby miners are very small. They can be waived as long as you do $100 worth of work on each claim every year. Many of the California claims were abandoned 30 or 40 years ago so who knows, they might be replenished.
California is a tough state to mine in since they passed the clean water act about 5 years ago. You cannot use a powered dredge or digging equipment. Just shovel and panning. Here is Ohio we can use a 4" dredge (diameter of the suction nozzle) but no mechanized digging.
The Klondike is still wide open. Bring all the bulldozers, excavators and rock trucks you can afford.
Back to the finances of Gold Rush. I feel the major players are way too quick to expand. They spend hundreds of thousands or even millions for additional equipment which is some cases must barely break even.