Bates Hunter Gold Mine
Gold was frst discovered in Colorado in 1858. By 1859 over one hundred thousand people were heading west hoping to strike it rich. One of those people was a fellow named John H. Gregory. He is credited with the discovery of the “Gregory Lode” in a gulch near what is now Central City. That gulch came to be known as “the richest square mile on earth.” The Bates Hunter Mine takes its name from the Bates vein that is part of the Gregory Lode.
Since 1859, official tax records show that the Central City district has produced over four million ounces of gold, of which Bates Hunter produced two hundred thousand (these are tax reporting figures.) The Bates Hunter closed in 1936 after President Roosevelt declared ownership of monetary gold to be illegal and ordered all Americans to turn in their gold in exchange for $20.67 an ounce. The prohibition remained until 1974 when President Ford legalized gold ownership. That year gold reached $183 an ounce. At the date of this paper, gold was trading at $1,283 an ounce.
The Bates Hunter Gold Mine extends over 35 acres of ground cover and consists of a series of proven gold veins. The operation is fully permitted, holding a section 110(2) permit for mining and milling operations and includes an EPA approved water treatment facility. Expert analysis of the mine shows a potential for approximately 154,000 ounces of recoverable gold to the 300- foot level and significantly more below that. There is an approximate eight-hundred-foot shaft in place, and most of it has never had gold extraction. Other area mines have extended recovery to 2200 feet. Reports of the Bates Hunter mine indicate substantial gold resources at lower depths. Current reporting and vein mapping put the future reasonably expected value (just to 2000 feet) at over $2 billion, with potentially billions more at greater depths. The mine is currently served by infrastructure that would cost approximately $40 million dollars to replicate today. It has an elevator system that can service the entire “main” shaft of approximately 800 feet. It has its own mill that can service the tons of “rock” that will be removed and processed to be sent to a smelter. It has an EPA water purification system.
The current mine operation will have average labor costs of approximately $100 an hour per miner. Production per miner is anticipated to be an average of 1.5 ounces of ore per hour per miner, with the amount of gold increasing at greater depths. At full production and the mine fully staffed, the production rate may be 300 ounces of gold every day. This translates to a potential revenue of over $120,000,000 per year. As the mine is further exploited and richer veins expanded this revenue is expected to increase. Overall, the expected EBITA for this type of mine should exceed 75% of gross.
Bates Hunter Gold Mine - Technical Reports
GILPIN COUNTY AND ADJACENT PARTS OF CLEAR CREEK AND BOULDER COUNTIES, COLORADO
Professional Paper 94
Economic Geology of the
central City District
Gilpin County, Colorado
Professional Paper 359
The Company shall own and control both the Bates Hunter Mine and the “Golden Gilpin Mill”. The Mill can accommodate 15 tons a day in simple gravitation methods. Ore is hand sorted underground to levels of 20 ounces per ton or more. This allows recovery at the mill of upwards of 300 ounces per day.
The current work plan is a low-tech activity. One miner working on a vein averages the removal of 1.5 ounces of ore per hour. At current prices that means the Miner is generating more than $1800 an hour against a labor and benefit cost of less than $100 per hour. At full production, with the Mine fully staffed, the Mill can produce 300 ounces of gold a day, thirty days a month, twelve months a year – resulting in revenue of $121,000,000 million a year with less than 30% in total estimated costs and overhead. As digging proceeds to lower levels in the mine and additional richer veins are exploited, the Gilpin Mill maybe be expanded or replaced so that yearly production can ramp up to greater levels which are estimated to exceed annual revenues of $200,000,000.
It should be noted that the existing equipment at the mine, including the lifts, are fully permitted, still comply with applicable regulations and need only their own “tune-ups” to be brought back into operation and or compliance. Total equipment on site at the Mine and Mill and well as initial site work, including an approximate 800-foot main shaft have total replacement values estimated at approximately $30 - $40 million.