By Sarah Hurst
For Mining News 

Yukon placer mining: Fewer, but better

Over past century operators have consolidated, brought in more advanced equipment to increase efficiency of production


Last updated 3/26/2006 at Noon

The people, the technology and the regulations have changed dramatically in the past 100 years or so since the Klondike Gold Rush, but placer mining in Canada's Yukon is still thriving. Mike McDougall, president of the Klondike Placer Miners Association, and Bill Lebarge from Yukon Geological Survey provided some insights into the state of the industry during a joint presentation to the Arctic International Mining Symposium in Fairbanks March 14.

A total of 70,322 crude ounces of gold (2.2 million grams) was produced by Yukon placer miners in 2005, slightly less than the 76,152 crude ounces (2.4 million grams) produced in 2004. The value of the gold produced in 2005 was US$29.9 million, an increase from the previous year's $25 million because of the higher price of gold.

Yukon placer production is measured in crude ounces because the gold is not necessarily pure gold as it would be if produced at a hard rock mine. In Alaska no such distinction is made between troy ounces and crude ounces. The value of a crude ounce is not considered less than the value of a troy ounce because placer gold nuggets can sell for prices that are higher than the official gold price, even though they are not pure gold.

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Approximately 87 percent of Yukon's placer gold was produced in the Dawson mining district, which includes the unglaciated drainages of several rivers. The remaining gold came from the glaciated Mayo and Whitehorse mining districts. Around 450 people were directly employed at 128 placer mines in 2005, which are mostly family-owned and operated, although there has also been Russian investment in Yukon properties recently.

In Alaska 65 people were employed at placer mines in 2005, David Szumigala of the state Department of Natural Resources' Division of Geological and Geophysical Surveys told Mining News. An estimated 27,500-28,000 ounces of gold were produced in 2005, almost the same as the amount in 2004. Production is likely to be under-reported, though, because the Alaska figures are based on the voluntary answers to a questionnaire, while in Yukon miners owe a royalty to the government and production figures must be reported.

Approach changing

"So how do we look for these placer deposits? Well, traditionally we just dug a hole in the ground with a bulldozer and had a look around," McDougall said. "We're moving away from that. Mining land use regulations demanded that we reclaim the ground, so we're moving into less impactive methods, using excavators for test pitting, using Auger drills." The small Auger drills are useful in frozen ground but nearly useless in thawed ground, McDougall added, so the much more expensive reverse circulation drills have to be used in the latter case.

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"We've also done some scientific testing with radio tracers to make sure that our drills are recovering what we think they are," McDougall said. "There's some challenges with it, but properly managed the drill is still a very useful tool." Placer miners could also consider using geophysical surveys to search for minerals, Lebarge told the symposium.

Many of the areas being mined today have been mined already in the past, and these are known as technogenic deposits. There are also bench deposits - tertiary gravels along existing creeks and rivers - and modern river valleys. "Our problems in the unglaciated areas, of course, are access," McDougall said. "Permafrost is still a big thing, a lot of the ground is frozen, a lot of it's covered with frozen mud, but the advantages are high grades, and often low overburden."

The technogenic deposits are gold-bearing tailings or areas that have been covered by tailings from previous operations, where there is placer gold that was missed by the early dredges. There are special considerations at these deposits as they are filled with water and they have to be stripped very carefully, McDougall said.

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Sixtymile Valley: Changes since 1892

Taking the Sixtymile Valley area as an example, McDougall described the changes that have occurred since the first group of 350 people started mining there with pans and shovels in 1892. By 1910 the North American Trading and Transportation Co. had a hydraulic concession and developed a ditch and installed a dredge, signaling the start of capital exploration. Extensive exploration work took place in the 1930s, and one company brought a used Washington Iron Works dredge up from Idaho to Dawson City, but World War II intervened before it could be used. After the war another company freighted the dredge to Sixtymile, but failed to make money and the company went into receivership.

In the 1950s a company from Alaska came over, Yukon Exploration, and put together a "Cat" show in the Sixtymile, as well as running a dredge successfully for 10 years. In 1975 the price of gold began to rise and more small operations entered the placer industry. "Bulldozer and sluice box technology, they used a lot of water stripping and ground sluicing ... small average production; it was primarily family based," McDougall said. There was very limited exploration work at the time.

The decade from 1985 to 1995 saw further changes, with increased use of screen decks and advances in gold-saving technology, partly thanks to work funded by the Yukon government that improved riffle and sluice box performance.

"We saw the New Zealand-style trommels coming in from New Zealand," McDougall said.

"We also saw an influx of New Zealand miners as they found the environmental regulations within New Zealand difficult to meet." Auger drills were also used more for exploration and deposit evaluation.

Operators formed joint ventures to share equipment and move large amounts of overburden.

"We also saw, of course, the hydraulic excavator coming in and much more efficient material handling, cheaper cost of operation," McDougall added.

From 1995 until recently there was a drop in the price of gold and there was a corresponding decrease in the number of operators, as well as consolidation of companies. The Sixtymile area went from 16 operators down to five. There were also large increases in production volumes due to technology: 350 loose cubic yards of material could be moved in an hour, up from 50-75 cubic yards. Marginal areas now became productive, and technogenic deposits were also mined more frequently.

Recent regulatory changes

Regulation of Yukon's placer mining industry has been extremely convoluted at times, especially in the 1970s and 1980s when there was a great deal of confusion and duplication of permitting and inspections by different government departments.

"The regulators were also frustrated, they had no way to control the mine waste or the environmental effects of placer mining, and relations between the regulators and the miners were very strained," McDougall said.

The Yukon Fisheries Protection Authorization of 1988 issued discharge standards for placer miners, classified creeks and rivers and provided a measure of certainty for the industry. Subsequently, a memorandum of understanding between federal departments allowed a single agency to inspect placer mines on their behalf. In 2002 the Department of Fisheries and Oceans temporarily withdrew its support for placer mining regulations, but the minister later reversed his decision on condition that a new regime was developed.

An integrated regulatory regime for Yukon placer mining was announced in April 2005, developed by the mining industry, First Nations and the government of Yukon, and the regime is to be implemented in 2007. "The basis of the regime was to be the idea of adaptive management with a strong monitoring component," McDougall said. The new regulations recognize that the greatest amount of sediment is coming from natural sources or poorly-managed mine sites, not from settling ponds. "That was a bombshell for us, so we're going to improve our on-site management practices," McDougall added.

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