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High Gold Prices Giving Old Mine New Life

Pouring molten gold
CNBC
Pouring molten gold

The easy gold was mined more than 100 years ago in Cripple Creek, Co. The town is now more of a gambling attraction.

The gold left in the hills just above the town, about an hour outside Colorado Springs, is in low-grade, small concentrations, which take a lot more work to mine and process.

But with gold well north of $1,000 an ounce, the economics of mining, even low-grade gold, have never been better.

"We're actually plowing more money into this operation nowadays than we are drawing off of it, and that's so we can extend the life of this mine," says Ray Dubois, VP and general manager of the Cripple Creek & Victor Mine.

Anglogold Ashanti gained full ownership of this mine in 2008, and the gold producer has been investing in expanding production, literally giving the mine and the 300 jobs that it supports a new lease on life.

"We're at the end of a major extension project here that took the mine life, added four years from 2012 to 2016" says Dubois. "We're going to put a hundred more into the place to take it into the mid 2020s."

The mine operates 24 hours a day. Crews literally blast the gold out of the rock, then trucks that stand two stories carry the stones to a crusher.

The smaller crushed stones are then soaked in a giant vat of low-grade cyanide, which leaches the gold from the rock.

The gold is refined and poured into rough cones of gold, that average 60 to 70 pounds.

It takes about 750 truckloads—a full day's work—to make one of those cones. It works out to about 250 tons of rock to produce two ounces of gold.

In 2010 the Cripple Creek & Victor Mine produced 230,000 ounces of gold.

By comparison, the world's largest mine produced 10 times that. Yanachocha in Peru, a joint venture of Newmont and Buenaventura, likely produced around two million ounces in 2010, according to Jeffrey Christian of CPM Group.

Anglogold is betting that high gold prices will make its investment in Cripple Creek & Victor pay off in the years to come.

The workers and the communites that depend on the mining jobs here are hoping it does, too.