Gold mill in the works for eastern peninsula

Gold from old mining claims on the eastern Kenai Peninsula may have a new path to the market if a proposed gold extraction mill begins grinding in the hills near Seward this summer.

The envisioned Sable Crown Gold Mill is a project of the privately-owned Diamond Gold Corporation, whose president Ed Ellis will present his mill plans in an open house on Saturday at Moose Pass’s Trail Lake Lodge, from 11 a.m. to 6 p.m.

According to an announcement on Diamond Gold’s website, the mill will crush 100 tons of gold-quartz ore per day. Ellis plans for it to begin processing 40 tons per day by early summer before expanding to full capacity.

Ore will be supplied by small mines around Seward and the Port Wells area of Prince William Sound. Ellis, who has owned mining claims near Cooper Landing since the 1970s, said local mines are a historically proven source. However, extracting gold from the ore produced by these mines has been a challenge.

“Standing alone, the mines are too small to support the infrastructure of a mill,” Ellis said. “However, they could sell their ore to a custom mill. Then it becomes very economic for these small mines.”

Ellis said it was common in the past for mines to have their own mills working intermittently, crushing ore into fine particles that could be sifted for valuable minerals. However, the economic rationale for creating a larger, centralized gold mill disappeared in the late 20th century, along with many of the miners.

During World War II, many Alaska mines were closed by government order to redirect equipment and manpower toward the military. Through the 1940s and 1950s, the price of gold remained around $35 an ounce, according to the National Mining Association’s website.

“After the war, the price of gold never rose,” Ellis said. “And of course, wages were in demand for construction in Alaska for the buildup of the military. Small mines just couldn’t compete for the wages, with the gold not going up.”

When Ellis begin mining in the early 1970s, gold prices were entering a swift rise that has continued to the present. Ellis believes the value of gold — about $1,200 per ounce — is high enough to make the Sable Crown mill a sound prospect. He said the mill will acquire ore in a variety of ways.

“Some of the miners will want to do their own mining because they’re independent, and that’s great,” Ellis said. “With some of them we’ll go in and lease it, and we’ll work it ourselves. Then I have prospects I found 40 years ago that I know are good, and we’ll be mining those ourselves. Some we’ll lease, some we’ll just purchase the ore delivered to the mill, and some we’ll mine ourselves.”

David Moore, a third-generation eastern peninsula miner, refers to the pre-World War II miners as “the grandfathers.” He estimates that there were 280 small mines active in the area around Seward before the war. He presently owns two of them: the Primrose mine, visible from the Lost Lake hiking trail, and the Devil’s Club mine. Moore said he restarted mining at Devil’s Club about a year ago after recovering from an illness. The Primrose he intends to lease to Diamond Gold.

“I, as one of the owners, am interested beyond a doubt,” Moore said of Ellis’ mill.

Ellis plans to build the mill on private land in either Seward or nearby Crown Point, and estimated that it will be operational for 10-15 years. He said the mill will have a low environmental impact because of the nature of the gold-quartz ore it will be processing.

Ellis said particles of gold are physically trapped inside the quartz of gold-quartz ore rather than being bound to the material in a metallic alloy, as gold is in some other ores. Extracting the gold therefore requires physical grinding and sifting rather than a chemical process. Ellis said the mill will not require cyanide or mercury, hazardous chemicals used in some extraction process. He estimated 50 percent of the gold could be recovered by the mill and said the remnants of the process, a dense sand-like powder called concentrate, will be sold overseas for further gold recovery. He added that all water used by the mill will be recycled.

According to Diamond Gold’s website, the mill will provide between 20 and 25 jobs with a $2.5 million payroll. Ellis said the company is taking applications and that he will talk about employment at the open house.

“It’s still a small operation compared to the giant mines in the Interior of Alaska, but it’s going to be a very good little project,” Ellis said.

 

Reach Ben Boettger at ben.boettger@peninsulaclarion.com.

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