Susistance Mining

Andrew C. Lee in Nome working on sub-sea crawler.

Andrew C. Lee in Nome working on sub-sea crawler.

The life of a Bering Sea gold dredger is hard work and by no means a way to get rich quick; most dredgers are either recreational or subsistence miners. Recreational miners don’t make a profit, they are just there for fun and adventure; they hope to cover most of the expenses of their hobby with the gold they find. Subsistence miners make a net profit at the gold mining, but only really enough to cover their modest living expenses for the year and then reinvest any extra gold money into upgrades and improvements on their equipment.

Even with thin margins, the life of adventure and freedom, hard work and challenges, exploration and discovery, and all the other reasons is a strong calling to a few hardy souls. So much so, that they have made a hit TV series about the adventures and mishaps of my fellow gold miners and wannabees.

In the Nome Offshore Mineral Lease sale of 2011, we gained access to over 2400 acres of new ground, in addition to the 800 acres from the previous sale in 1999 that we have been mining on with the prototype for the past 10 years.

Over the years, we have figured out what works and doesn’t work, and have refined the design of a second generation machine that would operate much more efficiently and productively. But the prototype works well enough, we can cover expenses and make a small profit, enough to get us to the next year and to make incremental improvements. Yet it doesn’t work so well that we can afford to build a whole new replacement machine, without bringing on costly investors that would negate the value of the increased gold production.

The biggest threat to resource extraction is ignorant people who hate progress and mask their hate in the guise of protecting the environment. Luckily the State of Alaska recognizes that this type of mining (placer) is very safe for the environment; and has been extensively studied, both in general and in this specific area. However, with mining in the current political climate there is always the risk that anti-progress people will gain power, shut down mining, and kill jobs.

Along those same lines, being granted the needed permits in a timely manner is always a risk; a low risk in the case of mining offshore Nome. There are 13 government agencies at the State and Federal level that review these types of mining operation. Most of these either have a general permit that covers most operations, or do not require a permit they just want to be kept in the loop. For the other agencies, there has not been unreasonable issues in obtaining their permits. Alaska DNR has designed an excellent consolidated form called the APMA that applies for all the needed permits with one comprehensive application.

From a technical point of view, there is always the possibility that the design improvements people attempt on new mining machines will not work, or worse, would hinder production. Of the 10 or 12 operations similar to the one I work with, that have been designed and built for mining offshore Nome, only one has been successful and is still in operation; and that is the one we operate. Our extensive experience and years of trial and error serve to mitigate this risk and greatly improve our chances for success, but that took time, expertise, and a great deal of trial and error.

Weather is always a factor in the offshore Nome mining operations, but this is more of a risk to profitability. Even in the worst weather years, we have managed to get over 50 days of mining; but we always get more days than the smaller operations. While miners who get weathered out are still able to have a fun and interesting experience, the main attraction for them to Nome is working on a mining operation pulling gold out of the bottom of the sea, there are many days where this cannot be accomplished due to weather.

Mechanical issues are an important risk and challenge for any operation. Nome is an extremely harsh environment, with extreme temperatures, salt water and spray, storms, and other natural factors. Combine that with the complexity of the machines and rigorousness of the activity; the toll on the mechanics of the operation make it hard to keep running. We mitigate this risk by starting with the proper equipment, then we have backups for every component that could fail, critical components have a tertiary backup. Also, since our vessel is bigger (now only the 6th largest in Nome, down from being the largest five years ago) aboard we have welders, torches, tools, metals, and all the accessories needed to affect repairs quickly and on site.

The definition of success for each miner and wannabe is different. For some they want the adventure and are willing to pay tens of thousands of dollars for it. Others want to break even while having their adventure. Some have a much higher bar of success and actually want to make enough money to cover their costs and support their family, of the 200 to 300 people that attempt gold mining in the Bering Sea each year, only 50, perhaps as many as 75 actually succeed in subsisting mostly on their profits from gold mining.

If you are thinking about mining for gold in Nome, or if someone is trying to get you to invest in an operation, email me “nome” at-sign “safonatt.com” and I can provide more information and specifics on what and who to avoid.

-Andrew C. Lee

Buyers Guide

Tips and advice for how to buy a Nome Gold Dredge.

Whether you are commissioning a dredge to be built for you, or you are buying a dredge off someone else, here are some tips to minimize your expense and frustration.

…Update Coming

Bad Fad: Electric Air Compressor

A strange thing is happening this year. Several of the new people that have never been to Nome before, and have never stuck their head under water before, are showing up with electric air compressors. Luckily these do seem to be rated for breathing gas, and are suitable for diving. The problem is that they have no good way to power the compressor. They have a standard 12V marine starting battery, but the stock alternators on their dredge pumps are not enough to keep up with the demand of the electric motor. Thus they end up with no air and a dead battery. several people tried to modify their engines to have larger alternator or generator, sometimes belt-driven. Others buy extra batteries, at super-expensive Nome prices, and charge them up on shore. Others buy a Honda EU1000 and have that running all the time.

I don’t get this fad. There are very rare times when I want to run an air compressor without my dredge pump. Most of the situations are when the dredge motor dies while the diver is under water, and needs enough air to get surface. This can be mitigated by simply having a larger air reserve tank. There is no air quality benefit to running electric, since the dredge pump had 5x to 10x the horsepower, proper air intake placement takes care of this.

Electric stuff in Nome does not last long, and must be well protected. Salt air is brutal, salt spray is worse, salt water immersion is worse yet.

I prefer to run one dredge pump engine, that belt drives my air compressor, goes to a 9 gallon reserve tank, and down to the diver. This way when the pump dies, I can feel it immediately while underwater and I know that I have only 2 minutes of air. There is one large fuel tank to keep track of, since the dredge pump is so loud, it is hard for the deckhand to hear if a gas-powered air compressor cuts out because it’s fuel tank is so small, and hard to safely fill while running.

The Party Barge

Every year it happens. Yet another party barge lake boat shows up with a green crew who have never been to Nome before, and they try to make it into a dredge. The result is a tipsy platform that is top heavy and nose heavy such that it rocks too much and plows in the water. The design of these boats make it impractical to mount the sluice box between the pontoons. Some people mount the box on the side, which is a bit clumsy and accentuates the rocking. Most mount the box way up high on the deck, which both takes extra power to lift the material and adds to the top heavy nature of these lake boats. Another modification is to add outrigger pontoons to the sides of these boats. Not only are these pontoons often an expensive afterthought, the boat was not designed to accommodate this upgrade.

Like with all Nome dredges, these boats require a trailer, that is one good thing about these party boats: they either come with a trailer or fit most standard boat trailers. Of course for the 20 minutes twice a year that the boat is moved to and from the water, this is a small convenience at a large cost of a summer of discomfort and more limited operation versus a correctly designed boat.

How to Start Offshore Dredging in Nome

(Please Note: This guides is from 2009, many things have changed since then, including the price of gold being hundreds of dollars higher and the 2011 lease sale)

A friendly guide to get you started

With all the discussions over the years regarding dredging offshore Nome, I figured I would start an open-source primer for the newbie with hopes and dreams of making it big by dredging in Nome. Hopefully other experienced dredgers will add their thoughts and experiences, to save newbies some of the headaches and heartaches that so many of them go through.

More money has been spent to get gold from offshore Nome, than the value of all the gold that has been gotten from offshore.

In no particular order:

How to prepare to start an offshore dredging operation:

Note: I am amazed by how much people are willing to spend on gold mining, without any experience or research, there are no other undertakings I know of where people will shell out tens (hundreds) of thousands of dollars without doing prudent research. They wouldn’t spend that much to buy a stock or a vehicle, but many eagerly shell it out for a gold mining adventure.

-Talk to people that have done what you hope to do.

-Come and see in person the conditions and environment in which you plan to conduct your operations.

-Learn something about the trade. If you have never cleaned-up ten ounces of gold, but plan on getting hundreds of ounces your first year, then you are being unrealistic.

-Learn something about the location. Where will you be staying/camping, are you sure you are allowed to, is your information current and accurate? Where will you be mining, is there any gold there, are you allowed to, is your information current and accurate? Talk to people that have done so recently.

-Are you planning on dredging on the offshore Nome East Beach Recreational Claim? That area has been hammered by dredges for 15 years. There is almost no gold left. Enough to have a fun vacation, but not enough to pay for your trip, let alone pay for the equipment or make any income.

-Are you planing on dredging on some one else’s lease or claim? Do you know them? Do you already have permission? Are you planning on dredging the open areas? Why are these areas open, are they still open, is there any gold there, does anyone else dredge there?

-Determine what size dredge you want to run. A six inch is the smallest dredge size that makes sense. Smaller than a 6-inch and you are constantly moving rocks. Larger than an 8-inch and you need more permits. Most people run 6-to-8-inch dredges.

-On paper, an 8-inch runs twice the material as a 6-inch, because it is twice the size. But that’s not the case, gold is often in the rocks, and rocks slow down the operation. An 8-inch only moves a little more material than a 6-inch, maybe 20% more.

-On paper an 8-inch dredge moves 30 yards per hour. This is the volume of sand that it could move under ideal conditions. The offshore Nome gold is not found in ideal conditions. The “Golden Sands of Nome” do not have much gold. Gold is found in the rocks and gravel. A physically fit diver can expect to move 3 to 8 yards per hour.

-Offshore Nome, it’s not about the cubic yards per hour, it’s about the square yards. The gold is mostly located in a thin layer on the clay-pan, under the sand/gravel/rocks/etc. So don’t bother with the deep sand, or the the deep rocks.

-Offshore ocean dredging is not like river dredging, other forces move gold, concentrating and diluting it. Sea ice, ocean storms, glaciers, and currents are all factors.

-Offshore ocean dredging is not like river dredging, the current changes velocity and direction, or disappears. You need a good anchoring system and a hydrodynamic dredge, or you will only be able to work in the most optimal conditions.

-Offshore ocean dredging is not like river dredging, winds and weather are big factors. They cause turbidity and rough conditions. Waves will splash on deck, your dredge will get beat up, you will be weathered out for days or weeks at a time. Your dredge and budget needs to be able to take it.

-Offshore ocean dredging is not like river dredging, Norton Sound is salt water. Corrosion is a constant enemy, anything steel will be covered in rust, if it’s in the water or just in the salty air.

-If you plan to make money, you need an APMA and all the permits and licenses for dredging. Sure you may be able to dredge without one, in some areas offshore Nome if your dredge is small enough. But if your dredge is big enough to make a profit, then it is big enough to get the permits.

-Everything will break. You need to know how to fix anything on your dredge and support equipment, and be prepared to do so. This means a welder, a grinder, tool sets, spare parts for engines and electrical, etc.

-You will not make any money your first year, so don’t plan on it. You will be lucky to cover your operating expenses (fuel). Learning to be an offshore dredger by starting your own operation is a very expensive education. Plan the trip as an expensive vacation, doing a hobby.

-Do not be creative or inventive. Plenty of people have invented what they believe to be the be-all-end-all super dredging machine, they spent years and a fortune designing and building it. Then it doesn’t work. You might be smart. But hard work gets more gold than smart. That is a fact. If you have not spent a few hundred hours dredging the old fashioned way (a diver at the end of a suction hose), then you will not be able to come up with a working system to get rid of the diver. I know of several very smart people that have had hundreds of hours of dredging experience and still failed to design a working system that gets around having a diver.

-Look up the research papers and drill log data for the offshore Nome area. Then realize that it’s all mostly worthless. That data is 30+ years old, the ocean has moved the bottom materials, including the gold, for all of that time. The main point, that is still relevant, is that there is gold out there, but not everywhere, and it’s not consistent or uniformly distributed.

Here’s what happens to most people who come up here:

1) They buy the wrong gear.

2) They ship the wrong gear up here, then assemble while the season has started and spend some of the best dredging days working on stuff.

3) They troubleshoot and redesign their dredge for a couple weeks.

4) They go out, most to the Rec area, and dredge worked ground and tailings.

5) Many find out that they are not physically fit enough to dredge.

6) They think they have ten times as much gold as they actually do, because they are inexperience in judging the box/concentrate. Gold is deceptive, a little looks like a lot, when it’s not cleaned up all the way.

7) Stuff breaks, bad weather hits, they run out of money, then they sell everything for ten cents on the dollar, if they are lucky, often less.

8) They leave Nome broke with a great story and an amazing adventure that most people can only dream of. And, for most, it was worth it.

Here is my suggestion:

Take the $100k (a lowball number) that you would have spent designing, building, shipping, constructing, redesigning, fixing, etc. your own operation and give that money to me. I’ll give you back $10k plus let you work on my dredge for two weeks, and let you keep up to four ounces of the gold found. You will come out ahead, learn a lot, and have a great adventure.

Or, if you have $600k, give it to me, and I will design and build a dredge that might get enough gold to break even in three of four years, and you can own 50% of the operation, so long as the operating and repair expenses come out of your half. I’ll take 50% to pay myself and the crew. Or, if it fails, the operation could join the list of failed bright ideas.

(Update 2014: There are ways to make very good money mining offshore Nome in today’s markets, but you need to have the right experience, good ground to work, equipment, and people to work with. I am one of perhaps 20 people that mine professionally offshore Nome as my only source of income, making very good money)