GO
Loading...

California's New Gold Rush, Minus the Rush

Monday, 29 Aug 2011 | 3:32 PM ET

These should be boom times for the mining business in California and Nevada. Gold prices are hitting hitting record highs. But 2011 isn't 1849. This isn't the Wild West. It's the environmentally conscious left coast. There is no "rush" in the new gold rush.

"In California it's pretty modest to what's going on in other places, particularly outside the U.S.," says Jim Hesketh, CEO of Atna Resources , which owns the Briggs Mine in California's Death Valley.

A jeweller weighs gold jewellery at a shop in Ahmedabad on October 7, 2010. Gold surged to a record 1,356.50 USD an ounce in Hong Kong trade. Dealers are buying up the precious metal as the USD remains under pressure amid concerns over the global economy and as dealers look to invest in the safe haven in times of uncertainty. AFP PHOTO/ Sam PANTHAKY (Photo credit should read SAM PANTHAKY/AFP/Getty Images)
Sam Panthaky | AFP | Getty Images
A jeweller weighs gold jewellery at a shop in Ahmedabad on October 7, 2010. Gold surged to a record 1,356.50 USD an ounce in Hong Kong trade. Dealers are buying up the precious metal as the USD remains under pressure amid concerns over the global economy and as dealers look to invest in the safe haven in times of uncertainty. AFP PHOTO/ Sam PANTHAKY (Photo credit should read SAM PANTHAKY/AFP/Getty Images)

The mine sits amid a landscape of scrub, gulches and rattlesnakes. A more desolate place you'll be hard-pressed to find, but there's been gold in the hills which miners have been trying to pull out for over a century.

The Briggs mine opened in 1996 and produced well over half a million ounces of gold until it shut down in 2004.

"The price of gold had fallen to about $265," says Hesketh.

That made operations unprofitable. When gold went back above $550 in 2009, the company spent $20 million to get the mine back in business.

"By the time we re-opened, the price was already pushing over $750," he says.

The company has since generated about $7 million in operational profits. Briggs officials believe the mine has a five-year life span, and there may be about 250,000 ounces of gold or more. They are investing in drilling deeper, says Hesketh, to tap even more.

Modern Gold Rush
Thanks to record gold prices, companies are reopening California's old mines, reports CNBC's Jane Wells.

"In the larger pool we have a resource of over 900,000 ounces," he says.

So why isn't everyone looking for the next mother lode? Gold is running into red tape. Hesketh says it can take 15 years from discovery to permitting to drilling. Atna has an advantage over newcomers because it got in earlier.

Vote
Vote to see results
Total Votes:

Not a Scientific Survey. Results may not total 100% due to rounding.

The Briggs mine is regulated by at least 15 different agencies, with permitting needed from the Environmental Protection Agency; Bureau of Land Management; Bureau of Reclamation; Cal-OSHA; Mine Safety Health Administration; Federal Communications Commission; Department of Transportation; Bureau of Alcohol, Tobacco and Firearms; Homeland Security; the Unified Air Board, and the Great Basin Water District.

Hesketh says tougher oversight comes with the territory, especially after mining disasters in West Virginia and Utah.

"That's the trend among the federal regulators," he says. "They've gone from trying to help you improve your business to one that's just there to punish it."

Gold and Other Money Metals - A CNBC Special Report
Gold and Other Money Metals - A CNBC Special Report

Still, they keep digging. Atna estimates it will produce up to 37,000 ounces of gold this year at a cost of about $850 an ounce.

Meantime, people who live up and down California gold country send Jim Hesketh soil samples, hoping they've got gold on their land and that Briggs will pay big money to dig it up.

"We get submittals from property owners fairly often," Hesketh says with a laugh, "Every week."

  Price   Change %Change
ATN
---