May 07, 2006

By WAYNE HEILMAN - THE GAZETTE

Back in 1859, as wagons poured across the Plains proclaiming ìPikes Peak or Bust,î all a gold miner needed was a pickax, a strong back and a lot of luck.

Today, modern miners are armed with a fleet of $2.5 million monster trucks, a bucketful of government permits and plenty of sodium cyanide. At least one thing hasnít changed: Luck still comes in handy.

Gold made millions for Winfield Scott Stratton, Spencer Penrose and many others in the Pikes Peak region. But gold is more than a part of the past; it continues to be big business, particularly with gold at its highest price ó more than $680 an ounce ó in 25 years.

The price has more than doubled in the past four years, and some industry officials think it will head even higher this year.

ìThe price of gold should be $917 an ounce to keep up with inflation,î said Herbert Hampton, president of Colorado Springsbased Golden Cycle Gold Corp., a partner in Coloradoís largest gold mine, near Victor. ìI expect gold prices to go over $750 this year.î

Last yearís production in the region of 330,000 ounces of gold was the highest in 80 years, but still less than half of the more than 800,000 ounces produced in the Cripple Creek mining district in the early 1900s. In all, 21 million ounces of gold were produced in the district from 1891-1961.

The production a hundred years ago came from underground mines ó none on Pikes Peak ó but gold mined in the region today comes from openpit mines owned by Golden Cycle and its South African partner, mining giant AngloGold Ashanti Ltd.

That could change soon, however. Underground mining could return to Teller County this summer for the first time in 20 years. Minerex Corp. of Shawneetown, Ill., won approval April 13 from Teller County to begin mining its claim a mile north of Cripple Creek. The company plans to bring out small amounts of ore from more than 500 feet underground and ship it elsewhere for processing.

Plans for a second new mine are also in the works. Jim Watson, who owns a small goldprocessing plant near Victor and is helping Minerex with its mine, said he plans to seek permits to mine claims he owns on Tenderfoot Hill, also near Cripple Creek.

ìWe have to determine once we get underground how much gold is left in these old mines,î Watson said. ìIíve been doing this for 18 years, so the price of gold doesnít really have an impact on my decision (to seek a mining permit), but it certainly makes me happy.î

Hampton believes the future of mining in Teller County lies underground.

ìThat is where the majority of undiscovered gold is,î said Hampton, whose company is looking for more deposits in southwest Colorado. ìBut mining it is fairly expensive, so you need a high grade of ore and a high enough gold price to justify even exploring for it.î

AngloGold Ashanti, which manages the Cresson Mine, north of Victor, is seeking additional gold deposits. The company plans to spend $4 million this year ó the most in six years ó trying to determine if areas adjacent to its mine hold any promise for expanding the mine.

That decision wonít be made for at least two or three more years, said Ron Largent, vice president of operations and general manager for Anglo-Gold Ashanti Colorado Corp. The last expansion, built in 2004, resulted from five years of exploring for more deposits.

AngloGold Ashantiís plans call for shutting down production at the mine in 2013 and continuing to process the remaining ore for another four years. The company is required under state law to restore the mined area and the site of its processing facilities.


Surging gold prices havenít changed much at the mine, even though the partnership earns about $100 an ounce more in profit now than when gold prices were at $260 an ounce in 2002. But higher prices could help pave the way for the next expansion project.

ìWe operate such a big project that we didnít change what we did when gold went down to $260; we donít change what we do with either high or low (gold) prices,î Largent said. ìBut it does change how we look into the futureî by making deposits more valuable.

Golden Cycle and its partners have been mining new ore from the Cresson Mine since 1994 and have produced more than 2 million ounces of gold since then. The partnership estimates 3.5 million ounces of gold remain to be mined during the next seven years.

The ìPikes Peak Gold Rushî lured thousands of miners to the region in 1859, but Cripple Creek didnít attract much interest until ranch hand Bob Womack discovered rocks in 1890 that contained gold and launched a mining wave.

Gold mining turned Cripple Creek and Victor into boomtowns during the late 1890s, with Victorís population reaching 12,000 by 1900. Gold production declined starting with World War I and halted during World War II with a federal law that restricted mining.

The district remained largely dormant until the mid-1980s, when Golden Cycle and an earlier partner began processing waste ore from previous underground mining. The partnership reopened a series of openpit gold mines from 1988-91 before opening the Cresson Mine.

Open-pit mines allowed the partnership to mine low-grade deposits that had been ignored by underground miners as too costly to recover. Underground miners could recover just 16 tons of ore a day, while the partnership today recovers about 60,000 tons a day.

ìWe find our ore next to the tunnels of the historic mines. It just wasnít profitable to mine those deposits from underground,î Largent said. ìThe difference today is that mining is very capital-intensive. The last expansion of this mine cost $200 million.î

For example, the partnership spent $2.5 million on each of the 10 300-ton trucks it uses to haul ore from its open-pit mine to equipment that crushes boulders to the size of gravel so it can be soaked in a sodium cyanide solution that removes the gold.

By the time the Cresson Mine closes or the next expansion begins, the 1,000-footdeep pit will be dug another 600 feet deeper and the leaching pad where the sodium cyanide solution is applied will nearly double in height from 350 feet to 600 feet.

Despite two expansions of the Cresson Mine that have boosted its work force to 330 people, the partnership is not Teller Countyís largest private employer, and gold mining is not its largest industry.

The county now mines the pockets of gamblers. Limitedstakes gambling, which began in 1991, is the largest industry and Cripple Creekís Double Eagle Hotel and Casino is the countyís largest private employer.

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wayneh@gazette.com