This paper is to estimate the Economic Value of the Placer Mining Industry.  There is not a lot of documentation, especially the small scale miner. This group generally works in semi isolation.  There are several classifications within this group depending on the degree of mechanization.  It is very common for a miner to progress through the various phases increasing his economic contribution.

Hand Mining

As the name implies uses manual tools, sorting aggregate and separating the mineral in a sluice box or high-banker.  A small pump is usually the only mechanical component. This method is labor intensive but an economical way to process material.

Mechanized Mining

This is where the Backhoes, Excavators and wash plants come in. This is the entry level for larger mining ventures.  The type of equipment required is tied to the specifics of the site, De-Rockers to size the aggregate, Trommels to break up clay and compacted material, Sluice boxes to separate the heavy gold from the light material, Jigs and Sorting Tables to retrieve the fine gold. This classification can expand to the limits of ones imagination and the size of the deposit.

Size of the Industry

There are today 3500 Placer Claims covering 237,000 hectares and 275 Placer Leases covering 290,900 hectares.  Revenue paid to government for acquiring and holding placer titles last year was over $2.2 Million (See Table 3 Lines 1-4 for calculation of estimate).

Last year 179 permits were issued under the Mines Act for mechanized placer work.  I have assumed the majority 134 permits (75%) were issued for leases as they are most likely to have mechanized operations.  That leaves 45 claims doing mechanized work and the balance, 3,455 claims doing their basic assessment work requirement of $500 per legacy claim and $10 per hectare for grid claims. 

The Ministry of Mines has records detailing larger operations on leases; I am going to concentrate this report on the value of the remainder.  However, I’ve estimated the economic value of both leases and claims to provide a complete picture of placer activity in the Province.

I’ve divided placer operations into four categories in order to develop a more realistic view as to the scope of this industry:

1. Small operation on a claim or lease where 1 person works hand panning and sluicing for about 4 days.
2. Medium operation on a claim or lease where 2 people hand pan but mostly sluice for about 14 days.  Travel and accommodation costs may be involved as well as a modest investment in a pump and sluicing device.
3. Long Term operation on a claim or lease where 4 people work 14 days mostly shoveling into a sluice and hand digging, moving rocks and stumps to expose new deposits.  The investment in equipment is more substantial and there is likely travel and accommodation cost involved.  For example the Oregon DEQ identified a couple spent about $2000 for a 2 week mining venture plus the cost of equipment and maintenance.
4. Mechanical Operation where 6 workers use mechanical equipment to excavate placer material for 30 days in a year and use a mechanized sluicing device.  Travel and accommodation costs are involved.   The FEIR Report makes reference to such an operation on page 68, where expenses were noted as $9, 250.

Economic Benefits from Placer Mining:

I’ve used three methods to estimate the economic activity of placer in the Province for comparison.  Facts and assumptions used to calculate these estimates are noted in Table 1 and 2, attached.  Each Estimate includes the Title revenue component of $2.2 Million:

1.      Work Requirement:  The Mineral Tenure Act calls for $10 per hectare of exploration and development work to be performed on a placer claim each year.  Also, I’ve made the reasonable assumption that $10 per hectare would also measure work performed on leases each year.

2.      Operational Categories:  I’ve divided the industry into four operational categories noted above and assumed the cost of accommodation, travel, equipment and operating cost for each category for both claim and lease.

3.      Process Cost:  I’ve calculated the cost to excavate overburden, extract pay-dirt and process it according to the operational categories used in Estimate number 2 above.

The following table provides a summary of the three methods used to estimate the economic value of placer mining in the Province:

The Future and Potential

The Placer Industry has been kept to its knees by ongoing restrictive regulation. With the production limit of 2000 cu meters on a claim, there is a reluctance to ramp up to the potential of the property because that limit can be reached in a few weeks. The upfront costs and delay of converting to a lease is a further aggravation. In some areas the belief that a lease is a lesser title has also caused resistance. This has caused a “Holding Property” scenario were claim holders are waiting for the glimmer of hope that they can start producing in the manner they should. The failure of applying the 2 zone system has also excluded vast areas of the province to exploration. The growing need for the platinum groups will only be met by increased Placer exploration. In the Interior with the massive cull of bug kill trees there will be a severe economic downturn when this project is complete. There needs to be an alternative in place when that time comes and Placer is a prime candidate.

The action of the Government in changing the method of staking has resulted in a marked growth in activity.

Changes that would make dramatic changes in the economic Viability of Placer are:

• Removal of production limits and the requirement to convert to Leases. The change to cells has removed the need for a survey of the claims location.
• Removal of the Placer Reserves. There are vast areas that are known deposits that are out of reach for mining. These areas need to be explored and assessed for economic value.
• Allow suction dredging to be used in the stream subject to operating agreements negotiated with government agencies.

Improvements for the entry level miner

As with every Trade there is a learning curve, Placer Mining is no different. Most start with a gold pan and a shovel, then a basic sluice box, followed with a pump. Now they have to learn about controlling dirty water, building containment and settling areas. The suction dredge removes a lot of the shoveling and increases productivity and more gold. The entry level miner generally spends more than he produces, much like sports fishing. This is the cost of experience. At this time hand mining is pan and shovel, all other methods are not acknowledged. This is causing a break in the creation of the next generation of miners. By allowing power sluices, hydraulic concentrators, and various self contained versions of this equipment to be used by the Hand Miner, he will be encouraged to advance in his venture.

Placer Economic Report Tables 1-4.