Southern Cross Gold Consolidated Ltd. press release
California Gold Rush Begins Again
TSX - Toronto Stock Exchange · Australia
SOURCE: [Metal Investment News] - The U.S. is currently the world’s 3rd largest gold producer behind China and Australia. 2011 U.S. gold production increased 2.6% to 237 tonnes. Newmont Mining (NEM-NYSE), a $23 billion company, operates 14 open-pit mines and four underground mines in the U.S., producing about 1.7 million ounces of gold in the last 12 months.
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Although 80% of U.S. gold production is coming from Nevada, California is also returning to its mining roots. Newgold (NGD-TSX) recently reopened the Mesquite Mine, ATNA (ATN-TSX.V) has reopened the Briggs Mine, and Sutter Gold (SGM-TSX.V) is re-opening the Lincoln Mine.
Gold mining is in California’s DNA. During The Gold Rush (1848-1855) 300,000 people moved to the Golden State. When the boom ended, many of the prospectors stayed and formed the base of a diverse economy which blossomed for 150 years – but is now failing.
California's current unemployment rate is 11%. The state budget deficit is $16 billion. The City of Stockton has just declared bankruptcy. Desperate for jobs and tax revenue the government of California can look to the mining industry as a cash cow whose operations and labour pool cannot be out-sourced.
Modern extraction and processing technologies are also making it easier for California gold producers to meet the state’s stringent environmental standards. California has granted 30 of the last 30 mining permits.
Emgold (EMR-TSX.V) is one gold company operating in California with a large resource and a clear path to production.
The company’s lead asset is the Idaho-Maryland (IM) Project in Grass Valley, California which used to be the second largest gold mine in California, producing 2.4 million ounces of gold at a recovered grade of 14.7 grams per tonne from 1862 to 1956.
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The mine consists of 72 miles of tunnels to a depth of 3,280 feet. Underground mines within a three mile radius produced 13 million ounces of gold from 1850 to 1956. The mines were shut down due to the fixed price of gold by the U.S. government at $35 an ounce and rising labour and supply costs after World War II.
The IM deposit measured plus indicated resources of 472,000 ounces of gold, and inferred resources of 1,002,000 ounces.
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Historical data includes 67,000 metres of core drilling, 43,000 underground assay samples, and 4,000 mine maps. Management believes the exploration target at IM is 3 to 5 million ounces of gold, subject to additional diamond drilling that will be completed once the mine is permitted and dewatered.
If successful, Emgold would become one of the largest employers in Nevada County, employing an estimated 600 people at full production and creating many more spin-off jobs. Grass City, like the rest of California, could use these jobs.
In 2006, an independent survey by the City of Grass Valley showed 72% of residents were in favour of the project, 16% were undecided, and 12% were opposed.
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Grass Valley is the lead agency supervising the Environmental Impact Report (EIR), which analyzes all potential environmental impacts from the project. Grass Valley and Emgold are in the process of completing an EIR with a targeted completion date of 2013.
Image: http://www.metalinvestmentnews.com/wp-content/uploads/2012/07/MIN8.jpg In California, community support is typically the key obstacle to permitting, but Emgold has a clear path.
Permitting Overview
City Of Grass Valley is the lead agency - responsible for the EIR (Environmental Impact Report) and other key permits.Grass Valley residents 72% in favour of the mine.71 of 74 items in draft EIR deemed “No Impact”.Revised Project Application accepted by the city in May 2011.California has granted the last 30 out of 30 mining permits.EIR estimated to take 12 months
Permitting is the key to unlocking value. Emgold’s Measured and Indicated (M&I) resources are valued at about $5 an ounce in the ground, while Sutter Gold and Atna Gold’s M&I are valued at $65/oz and $120/oz respectively.
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In the late 1930’s, at its peak and prior to being shut down during World War II, The IM mine employed about 800 men. They mined and milled about 1,000 tons of ore a day, resulting in a recovery of approximately 120,000 ounces of gold per year. At $1,600 an ounce, that would generate annual sales of $192 million per year.
Ken Gerbino, Chief Investment Officer of Gerbino Gold [ranked in the top 1% of hedge funds by Bloomberg] says, “Once they get their permits, I would think every major mining company will want to own Emgold. They could produce 250,000 ounces a year for less than $300 per ounce. The risk is manageable. Our hedge fund has over 10% ownership in Emgold.”
"There is a new, modern, and environmentally responsible Gold Rush returning to California,” states David Watkinson, President and CEO of Emgold, “The state is seeing increased gold production from a variety of sources."
Emgold has several other early to mid-stage exploration properties including the Buckskin Rawhide and Koegel Rawhide gold properties in Nevada and the Stewart and Rozan poly-metallic properties in British Columbia where it is conducting exploration activities.
Emgold is currently trading at $.085 with a market cap of $5 million.