With gold hovering around $1,600 an ounce, a new gold rush is ramping up in the Mother Lode as the Sutter Gold Mining Inc. prepares to restart mining operations next month.
The first commercial gold mining operation in the area in more than 50 years, the company has a permit good for 50 years to operate in a part of Amador County that is honeycombed with preexisting mines.
Initially the mining company plans to focus on what’s called the Lincoln-Comet ore zone but the company has plenty of new as well as old areas to mine, including seven historic mines that in the past produced 3.5 million ounces of gold. Currently the mining company owns 100 acres and has mineral rights on 600 acres with 90 percent of the property still unexplored.
For the last several years the company has been pursuing the permits necessary to mine in the area. In total it needed 40 different permits, and project approvals administered by 20 federal, state and local agencies, to proceed with its plans. It was during this period that it also drilled core samples and assayed different ore veins to determine how much indicated and inferred gold was available to mine.
According to David Cochrane, Vice President for Environment, Health & Safety for Sutter Gold Mining, over 200 surface and underground holes have been drilled so far and over 13,000 samples have been assayed.
As a result of these assessments, yields from the Lincoln-Comet and Keystone zones alone are projected at 223,044 ounces of indicated gold with inferred resources of 458,914 ounces for a total of 681,958 ounces. The company says it expects to remove 23,000 ounces a year at a cash cost of about U.S. $700 per ounce, not including royalties, once mining operations begin.
“We’re in the sweet spot for gold production,” said Cochrane.
Pre-work in the mine is slated to start next month with gold production actually starting in the fall once their new mill is completed.
“We plan to ramp up to full production in early 2013,” said Cochrane, “and to extract 110,000 ounces of gold in the first five years.”
Historical gold mining
The area in which the company plans to mine is within the 120-mile long Mother Lode Gold Belt. The belt extends from Georgetown in El Dorado County, to Mormon Bar in Mariposa County. Mines in the area produced over 13 million ounces of gold historically with almost 7.9 million ounces originating from the 10-mile long segment between Jackson and Plymouth where the Lincoln Project is located. Properties directly under the company’s control include mines that produced 3.5 million ounces of gold in the past.
The deepest mines in the area were in Jackson and went down to 6,300 feet. The Plymouth and Eureka mines went to 4,500 feet. However the Lincoln Project mines only go down 600 feet at present.
Mining in the Gold Belt was extensive in the 1850s but tapered off once the cost of extracting the gold exceeded its price in the market. However rising gold prices have once again piqued interest in mining. Sutter got its first permit for exploration in 1989. In 1992 the company went through an environmental review and was permitted to start mining. But the project went into maintenance mode once the price of gold dropped again.
From 1997 to 2011 the mine was primarily used for tours, especially by fourth-grade students. According to Cochrane, approximately 50,000 people a year toured the mine. In the meantime, the project was changed to reduce its environmental footprint and assay tests were conducted. Once the price of gold went up, the mining project became viable once again.
Economic benefits to the area
According to the company, the mining operation is expected to generate significant economic benefits to Amador County. When fully operational they will employ 110 people with an annual payroll of $8 million. In addition they will pay $1 million in annual royalty payments to property/mineral rights owners, will generate an estimated $325,000 annually in direct sales taxes, and will make an annual contribution of $115,000 to California’s clean-up fund for abandoned mines.
El Dorado County is benefitting as well. Doug Veercamp General Engineering, in Placerville, is doing a lot of the earthwork at the mine. The contract to do the foundation construction work for the mill and shop/staff services buildings is being done by DG Granade, Inc. of Shingle Springs. And security is being provided by an El Dorado County company as well.
The official marking of the Lincoln Project was May 11, when company executives and other dignitaries gathered on site to lay the foundation for a cornerstone for the mine. Many came from Canada where the company is headquartered.
On hand for the ceremony was the President of Sutter Gold Mining, Dr. Leanne Baker, along with Mark Brown, Chairman of the Board, and other members of the board of directors. One of the events at the ceremony included a demonstration of how creating blasting holes was done 150 years ago using single, double and triple jack drilling. James D. Smith, who is the Mine Superintendent for the Lincoln Project and a fourth generation gold hill miner, narrow vein, said his father was twice world champion in single jack drilling.
“Triple jack drilling hasn’t been done in this area for 120 years,” claimed Smith.
Contact Dawn Hodson at 530-344-5071 or [email protected] Follow @DHodsonMtDemo on Twitter.