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naraburns  nihil supernum  1yr ago (text post)   4350 thread views

Small-Scale Question Sunday for December 4, 2022

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I want to start a mining operation and I need help figuring out what the best way to get off the ground is with limited starting capital and only a modicum of technical know-how.

Normally, this would be a pie-in-the-sky nonsense dream, but I have an unusual set of circumstances. I have inherited a 400-acre mountain property which was the site of an old mine about 100 years ago. That mine was started by my great^4 grandfather, but it died in the fuel-rationing of the World Wars.

My father attempted to start a new operation, but a lack of business-acumen, determination, and time prevented him from doing so.

The property itself is loaded. The 20th century operation was attempting to mine copper, not realizing the immense mineral wealth they were casting aside as refuse. Of particular interest to me are two things:

  • There is a particular mineral vein (about a 100ish feet wide, around 1000 deep) that tests show containing several ounces per ton of gold, an obscenely dense amount. However, this gold is AuO2, or gold oxide. I’d you’re thinking “gold doesn’t oxidize!” you would be mostly right. AuO2 has been made in labs, but I can’t find much info on it. A PhD student from a local college went and did a paper about it, but had few answers. No idea if it complicates extraction at all.

  • There is another deposit that tests show as containing around a half an ounce per ton of Rubidium. For those who don’t know, rubidium is a rare-earth metal used in many electronics which the US is currently 100% reliant on imports from China for. It is worth somewhere in the ballpark of $100 per gram.

It’s definitely an opportunity, but getting off the ground will be difficult with me having no idea what I’m doing. My circumstances are as follows:

  • Bank loans are usable, but the property must never be used as collateral.

  • I currently make $45,000/year in a low COL area, and don’t pay rent as I live in an RV on the property. I work 45 hours/week

  • I have a friend who inherited a fortune and is willing to bankroll me effectively for free but only if I have clear, well defined checkpoints and goals.

I need help figuring out where to start. I messed around with acid leaching in high school, and I’ve looked into making an arc-welder furnace, but I’m somewhat lost as to what the extraction process should even look like, or where I should start. I’m just rather scattered.

If anyone here can help, I’d greatly appreciate it. If there’s any interest, I can post mineral tests.

This is very interesting! I'd certainly love to see the mineral tests.

Unrelatedly, I'm on my way to being pretty wealthy myself. This sounds like just the sort of thing to be an extremely fun enormous project. Mind DMing me your email? I'll reach out in 10 years or so and if you're still working on this I'd love to help out or at least hear where you've gotten with everything.

...best way to get off the ground is with limited starting capital and only a modicum of technical know-how. Normally, this would be a pie-in-the-sky nonsense dream

I regret to inform you, it is a pie-in-the-sky nonsense dream. To succeed in a field as complex as mining, you need both a deep understanding of all of the technical and legal issues, and a shit load of capital. The fact that you are even posing this question to some internet strangers shows you are really out of your depth. I dont say this to be insulting, but to save you from throwing your money into a literal pit, then metaphorically setting it on fire. If you don't have, or know someone willing to be employed by you, an advanced degree in mining engineering, you have no way of even properly estimating the technical hurdles and therefore financials of your proposed mine. Without that baseline, any business plan you make is constructed on a foundation of sand.

Fortunately, there is a much easier path forward, which has the potential to be extremely lucrative both in the short term, and going forward: explore leasing out the mineral rights to an established mineral extraction firm. There are plenty of lawyers who specialize in this type of deal, I would suggest contracting one (or several) and see what sort of deal they would recommend.

It’s a fair point, and I fully understand why this is the majority of the responses I’m receiving, but I hold out hope primarily due to the sheer absurdity of the mineral richness of the property. No gold mine on earth has tests on the order of several oz/ton across a wide area, and rare-earths are typically so dispersed that they’re usually measured in ppm or tons/oz rather than oz/ton.

If a degree in mineral engineering is what I need then I suppose I’ll set out to get one; I just hoped that since mining predates degrees by several thousand years that I could make do without.

I think perhaps I didn’t get across the perspective well enough in my top-level post. Most mining today is basically scraping the barrel. We spent the last few thousand years taking the easy stuff, and now we have to try really hard to get the rest. I have a cache of the easy stuff that has been hitherto passed-over.

To use oil as an analogy, this property isn’t ‘we need advanced fracking techniques to access the oil reserve a mile underground.” It’s “I stuck a shovel in the ground and oil started shooting out.”

I don’t expect it to be easy, but I do think it’s at a level that’s attainable, even if it takes me the better part of a decade of hard work.

If it is actually true, on a practical level, that your property has a higher gold density than any other "gold mine on earth" then you should be able to negotiate a lease deal that is very lucrative for you. Actually trying to extract and market the minerals yourself without experience sounds like a great way to go bankrupt. In my limited understanding when it comes to mining in the United States finding good deposits is not the hard part. The hard part is getting it out without the EPA fining you into oblivion.

Look at Pebble Mine, as a for-instance. Second largest copper deposit in the world, and by far the largest deposit that hasn't been mined. If fully extracted would come out to "56.9 billion pounds of copper, 70.6 million troy ounces of gold, 3.4 billion pounds of molybdenum and 344 million ounces of silver." A multinational trust of mining conglomerates came together to attempt to develop it. They've been working since 2010 to get all the approvals and permits they need, and they still haven't got them. They've sunk tens of millions into feasibility studies, permit applications, and ongoing litigation with the EPA and US Army Corps of Engineers. 12 years of haggling, and it's still unsure if any mine will ever be approved.

Now, admittedly, Pebble mine is enormous and sits in the middle of prime salmon watershed. I'm not saying mining your deposit would be as difficult. However, it will likely take millions of dollars and years of work just to get the permits needed to start mining. You do not need that headache. You do not need that risk. Investigate leasing it out first, get some offers, and then consider whether you want to go it alone.

PERMITS AND ENVIRONMENTAL REGULATIONS. If you're going to do this at any kind of scale to actually make money, this is going to be the number one problem you face. I know nothing about your local regs or the local enforcement of them, you need to know everything about them before you sink a dime into this. Rivers or wetlands on your property? Whole nother set of regs. Employing any help? Whole new set of problems. No way around it in the end.

What you don't want to do is get the equipment and then get shut down, get started and get buried in fines, run it low key and get sued for noncompliance. That kind of thing.

Yeah, if OP is serious about this step one is hiring a lawyer who specializes in this area.

A very good point. Due to some strange workings of my states regulations, I am “grandfathered in” to the rights equivalent to a small-scale mining permit, or 5000 tons/year. Expanding beyond this would be difficult because of a recent push by environmentalist groups to halt all mining in my area.

Mt. Baker Mining and Metal. I have no idea if they're any good but they sell machinery and the guy has a YouTube presence doing all kinds of mining. He had a similar story to yours, where his dad owned some property that was mined.

The machinery is mills and shaker tables, so the high density ore moves along the table while the lie density rock gets flushed across the table. The YouTube content is also smelting gold with flux, mostly. The mill/table combo would recover whatever your gold oxide is, as long as it's denser than the rest. It will be mixed with copper and other metals.

If you want to watch someone refine gold from scrap, or what you'd be doing with the best off of the the table, Sreetips on YouTube has years of videos of basement precious metal recovery and refining. He uses the acid methods you mentioned, where the gold is inquarted with silver or copper, then the base metals dissolved away with nitric acid, leaving the gold behind which is the recovery. The refining is when he then dissolves the remaining gold in aqua regia, precipitating out lead and filtering, then precipitating out gold with sodium metabisulfite. He also runs a silver cell, where he grows pure silver crystals.

I honestly have no idea if this works with gold oxide. If not, I can't imagine a torch would have any trouble driving off the oxygen and melting the gold, especially with flux. Between the two of them I think you have a good start. Your friend would be out tens of thousands of dollars for the equipment, think a tractor or new vehicle. Some more for glassware and reagents if you're doing it all yourself. And then you'll be left with .999 gold which you sell at market rate.

https://mbmmllc.com/

https://youtube.com/@mbmmllc

https://youtube.com/@sreetips

Welcome to The Motte.

This is exactly the type of thing I’m hoping to do, thank you. I’ll dive into it.

Everything I know about mining comes from watching many seasons of Gold Rush, but the only guy on there who seems to consistently make money is Tony Beets, I'd probably lease it out for a royalty.

This sounds far broader scope than you can get useful advice for on the internet. There are probably consultants you can hire for things like this, and there might be mining companies that specialize in handling cases like this - doing all of the planning and work to actually extract marketable minerals on a property you own, taking no money upfront and giving you a cut of the revenue. I don't know if there are consultants that actually advertise, but you can probably go to a conference or something to find somebody with experience in the industry and pay them for some advice.

There are certainly places on the internet you can get somewhat-useful advice on this - trade publications, forums for mining businessmen / consultants / analysts / lawyers, etc. And some of those people may have twitter / reddit / blogs / accounts. The internet is large and varied. Agree with the main point though.

Can you subcontract or sharecrop to a mining company?

This always seemed like the best option, but my father had terrible experiences with it. He attempted working with a dozen or so mining companies over the decades, and inevitably they would try to pull some scheme to take the property, or cheat him out of the profits.

For instance, one company, after an entire god-damn year of planning and testing, insisted on including in a final contract a line that states the company could “remove any amount of material from the property as ‘mineral samples’ without pay. They were unwilling to accept any cap on this amount, and presumably planned to use that line to take as much ore as they wanted for free.

Just one of many examples. You’d be amazed what people try to pull when they think you’re too provincial to read a contract.

Just read this after posting my reply advocating exactly this, so a quick question: was your father himself the one dealing with the companies, or did he have a law firm do it?

Originally a law firm, but then a sort of legal scam between the law firm and a mining company left my father on the hook for about half a million dollars of legal debts. We found out much later that the our lawyer, the owner of the mining company, and the judge were all buddies, but by then it was a settled matter.

I understand it’s not a super typical case, but it left a sour taste for lawyers. I’m loath to repeat the mistakes of my father.

Do you know any friend of a friend lawyers who could introduce you to someone they trust? I understand you're loathe to interact with them but there is absolutely no way you're going to get through the red tape for something like this without some kind of legal representation.

Sadly no. My extended family is all more likely to fall on the other side of the law, and I haven’t made any lawyer friends, nor have any of my friends, to my knowledge. You have a good point though, and I’m going to need to find a way to foster that relationship. If you have any advice on how, I’ll take it.

Unfortunately I don't have direct experience with how to do it intentionally and expect it to be something that varies quite a bit by location.

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