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Symptoms of recurring gold fever.

Nome, a former site of successful placer mining, now is attracting prospectors intent on tapping the mother lode.

Almost 100 years ago shouts rang out across the world that gold was discovered in Nome. Prospectors and fortune hunters swarmed to Nome's distant shores to pan for gold. Since 1898, the Nome district has produced about 7 million ounces of gold through placer operations that employ washing, dredging and other hydraulic methods to recover gold.

Today, rumors abound that the mother lode has been found. Five miles north of Nome on Rock Creek, Anvil Joint Venture is exploring a 25-square-mile area that it expects to identify as the source of Nome's placer gold deposits. Spearheading the effort is R.V. Bailey, president of Aspen Exploration Corp., headquartered in Denver, Colo. Bailey put together a joint-venture agreement between Aspen; Newmont Exploration Ltd., a subsidiary of Newmont Mining Corp.; and Golden Glacier Inc., a joint venture of Bering Straits Native Corp. and Sitnasuak Native Corp.

Newmont Exploration is performing the initial exploratory work and will complete studies to determine if hard-rock mining is feasible. While Nome traditionally has been the site of extensive placer mining, a process by which gold is extracted from loose material such as gravel or sand by washing, no substantial gold deposits have been recovered from hard-rock deposits.

Bailey is a geologist with a longstanding desire to discover the origin of Nome's placer deposits. He first visited Alaska in 1954 while doing field work. Nearly 30 years later, one question still nagged him: Where did all the placer gold come from?

In 1983, Bailey returned to Nome. After studying old mining records and other information, Bailey identified an area where he felt the mother lode might exist. It took him three years to secure leases from the landholders: Alaska Gold Co., Bering Straits Native Corp. and Sitnasuak Native Corp.

"Everyone said we were wasting our time and money," Bailey recalls. They concluded that since no one discovered a significant deposit during the 1898 placer gold rush and subsequent exploration, one didn't exist, he adds.

After securing the land leases, Bailey acquired aerial photos and sent soil samples for chemical testing. The area that proved most promising was Rock Creek, just north of what formerly were the most productive placer deposits on Anvil Creek and Glacier Creek. Anvil Creek was the location of the first gold discovery in 1898.

With a rock hammer and shovel, Bailey walked the shores of Rock Creek, examining the area where prospectors searched years before. "Geology is like playing Sherlock Holmes," he says. "You have to pay attention to the clues nature provides."

Digging down past the tundra to the gravel bed near Rock Creek, Bailey found what he was looking for -- a deposit of bedrock quartz fragments that were a peculiar color of red. He panned a portion of the find at the creek and discovered gold. The next day a backhoe revealed a promising deposit that averaged an extraordinarily high one ounce of high-grade gold per ton.

This strike, Bailey's thorough research and his savvy salesmanship enticed gold exploration companies to join the search. Placer Dome U.S. Inc. of Anchorage performed the initial exploration from 1987 until 1989. After that company abandoned the project, Tenneco Minerals Inc. continued the work. Despite promising results, Tenneco, too, quit after two years. Contract agreements allowed Bailey to retain all records and data.

Once again, the prospector was forced to take his dog-and-pony show on the road to attract another investor. In April, Newmont Exploration Ltd., a division of Newmont Mining of Denver, Colo., the largest producer of gold in North America, joined the project. The company has agreed to spend $10 million over the next five years on exploration and feasibility studies. Newmont Exploration retains the option of further increasing its ownership by making cash payments to Golden Glacier Inc. and Nome Gold Joint Venture, of which Aspen Exploration is 99 percent owner.

Tom Sparks, resource and development specialist with Bering Straits Native Corp., a Native regional corporation headquartered in Nome, says, "The region is real enthusiastic about the project."

Landholders Bering Straits Native Corp. and Sitnasuak Native Corp., a Native village corporation, also are participating in a joint venture with Kennecott Exploration Co. of Salt Lake City, Utah. That company is searching a track on the west side of Rock Creek, across the river from Newmont Exploration's prospect. Kennecott's project, involving 38,000 acres, was started approximately six years ago.

"Seven sites show good promise," says Sparks. Last year two core holes were drilled and this year Hawley Resource Group of Anchorage, which was contracted by Kennecott for exploration, is trenching.

Sparks feels that a gold strike by either project will spur other prospectors, increasing commerce in the region. "We're in a hurry-up-and-wait situation now," Sparks adds.

"The last gold strike was the Big Harrah in the 1930s on the Salmon River," Sparks says. The Big Harrah is in the Solomon-Bluff district, where Bering Straits Native Corp. is trying to promote additional exploration. According to U.S. Geological Survey records, Solomon-Bluff has produced more than 260,000 ounces of gold.

In a more recent placer mining venture, from 1985 to 1990, the Bima dredge was operated in an area one-half to three miles offshore of Nome by Westgold. The offshore mining vessel, working summers only, produced roughly 100,000 ounces of gold.

"The cost of doing business here is a major hindrance," Sparks says.

It's twice as expensive, Bailey adds, to do business in Alaska as in places such as Nevada and Arizona, largely because of the high cost of labor. "The grade (of ore) has to be really good to make it worthwhile," he notes.

Other obstacles to development are the costs of extraction and shipping. Nome is not accessible by highway, and waterborne shipping is limited to about a three-month ice-free window.

With two major players prospecting near the northwest city, Anvil Joint Venture and Kennecott Exploration Co., gold fever could strike Nome any day. Says Sparks, "Those placer gold deposits didn't percolate up from the beach."
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Title Annotation:Special Section: Slow Bore: A Tale of Obstacle Courses, Bright Prospects & High Hopes; Nome, Alaska
Author:Maschmeyer, Gloria
Publication:Alaska Business Monthly
Article Type:Cover Story
Date:Sep 1, 1992
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