2013 is a very big year for me. I have decided to retire from my day job and for the immediate future focus on prospecting and writing. I anticipated this for some time and have spent the last couple years trying different things looking for my best options for getting gold. I've decided for 2013 to focus on suction dredging for gold as my best option. My partners and I have ground up in the historic 40 Mile mining district of Alaska on Jack Wade Creek. The creek has been mined for over 100 years so there is no question there is gold there. The question is after all that mining how much can I get there with a suction dredge?
I would not get all that excited over the prospects except for some 100 year type flooding that occurred the summer before last. A lot of bank material which is composed of old tailings fell into and was reconcentrated by the creek. The tailings are not full of gold by any means, but the volume of gravel washed and reconcentrated was considerable. Chances are there are some decent prospects in the area. My last short trip in the fall was to drive up and look the creek over. I decided the stretch of creek below will be the target for a dredging operation in 2013. The long inside curve looks inviting and a stretch of steeper, fast water just downstream will act as a good tailings dump.
The gold in the area is heavy, thick, well worn stuff. Old gold reconcentrated from ancient river channels. Here is a couple ounces I found detecting in the area to give you an idea what the gold looks like. The largest nugget is 17.6 pennyweight (20 pennyweight in a Troy ounce). The stuff is deceptively heavy compared to the quartzy gold I am used to finding and adds up fast. There is a chance we will get into a good quantity of this stuff in deep pockets and crevices in bedrock that got missed in previous mining.
Gold from Jack Wade Creek - largest nugget 17.6 dwt
I am going to partner up with my brother and use a Keene 6218GHM 6" dredge for the main operation. We will generally work split shifts but double up if need be. Long daylight hours in Alaska means we can both get a full days work in each day. I am going to rig it with 30 feet of suction hose and outriggers to carry the extra forward weight of the motor and hose combo. The long hose is not for going deep, it is to allow the dredge to stay in one location while a large area is worked. We should be working well under 10 feet deep at most but that is another area a bit unanswered at the moment. I am hoping maybe 6 feet to bedrock on average but that is nothing more than an educated guess.
The 6218GHM comes with 20 feet of 6" suction hose. I ordered mine with an additional 10 feet of SH6 6" hose. It is important to do this at time of order to get one continuous piece of hose. It is possible to attach two pieces of hose together with a thin steel sleeve (part number SHC6) but this creates a clog point due to the sleeve catching and flipping long flat rocks. It is something I will avoid if possible but sometimes two pieces are preferable due to transportations issues, like stuffing the hose in a Super Cub. There are also cases where it may be desirable to have the flexibility of running 20 feet or 30 feet of hose, so again a splicer is an option.
Keene 6218GMH suction dredge
The PFA5OK outrigger kit consists of two extra marlex pontoons and frame extensions for side mounting the extra floats outboard of the motors. I think I would prefer the floats inline and ahead of the main float assembly as I am not sure I want to make the unit any wider. I have never used the system though and it is all set to go as a kit so it will probably get used as is. I can always modify it later if need be.
I expect we may get high water that keeps us from dredging at times so I have also ordered a Keene 175X12 power sluice with extended 12 ' sluice and 3" dredge attachment. I intend on adding more suction hose and a 3" HydroForce nozzle to vacuum shallow gold bearing gravel from an exposed bench location on the claim. The extra long sluice is not for gold recovery so much as getting sufficient clearance for dumping tailings.
The power sluice motor and pump also serves double duty as a backup unit for the 6" dredge. A 6" can run off a pair of the GX200 P180 pumps that run the highbanker so if a GX270 on the 6" goes down for any reason I can toss this on. Always good to have a backup pump if possible. I am still considering whether to get a frame and float set for the power sluice which would give us a floating 3" dredge for prospecting.
Keene 175X12 Power Sluice with 3" dredge attachment
I filed for the permits this summer while I was busy on other projects so have all that taken care of already. This is federal land and it took several months to get all my permits lined up due to heavy case loads these days so plan in advance on this stuff. The main issue was long term camping which took a bond in this particular case. The days of just going out and camping long term on "public land" are over and anything more than a couple weeks expect that you may need a permit.
So we will be mostly dredging, with some high banking, and also breaks for detecting in the area depending on our mood and weather, etc. We will start mid-June and run an open ended operation. If the gold is good we just keep going until we get froze out but we will probably burn out before then. It all really just depends on gold and weather more than anything.
I am starting pretty fresh equipment wise so will keep you all informed as I go as to thought processes and costs just in case anyone is actually thinking of doing something like this or at least just curious. Old hat for me but not something I have done tons of for awhile so a bit of a switch from detecting. I did get a couple solid weeks of nozzle time on a 4" this summer just to get back in the swing of things. That just made me miss a 6" more than anything. A 6" is a very good production unit for a one or two person operation. Anything smaller I use more for prospecting than mining. I considered an 8" for this operation but decided on a 6" for more flexibility in the future. If the summer pays well enough an 8" may be in the cards for down the road.
So far I am investing $6995 for the 6" and $2745 for the power sluice. The SH6 hose is $20.00 a foot so ten extra feet runs $200.00 and the PFA5OK outrigger kit is $450.00. In for over $10,000.00 so far and barely got started, but that is a big chunk of it. That will probably go in on a 5 year depreciation schedule though that is up to the accountant and new tax changes. I am not going to count claim costs and permitting costs directly as I have several partners in the claims so that all gets spread out over the years we own the claims. The main immediate overhead in that regard will be the 10% the partnership collects for claim expenses and cost recovery. Since I am funding the operation I will probably take another 10% myself to cover wear and tear on equipment and fuel costs. My brother and I will split the remaining 80%. All he needs to do is pony up for travel costs, food, and his drysuit.
Low water on Jack Wade Creek
While I am on the subject let's talk business for a moment. My prospecting is a for profit enterprise, one that has made me a surprising amount of money over the years. As such I run it as a business. I have a business license for Herschbach Enterprises and file a schedule C yearly. It has been a going concern under a couple different names for over 30 years now.
The key is to be serious about running things in a businesslike fashion. I have a business checking account and keep my business spending separate from my personal spending. I have been very low level the last few years but now that I am ramping up in 2013 I am cleaning up the books. I even went so far as to buy Quickbooks and am working on getting everything plugged into that now. Since I am retiring from my regular day job Herschbach Enterprises will now be my main source of income so I need to keep it neat and tidy in case the IRS comes knocking.
It is something rarely discussed, I assume because most people do this as a hobby. Even then if you do it right you can write off the expenses against the profits, but you cannot show a loss. I rarely show a loss myself though in a year where I make a lot of purchases and hold back on gold sales it can happen. However, with the price of gold as high as it is now it does not take much selling to end up showing a profit. In any case, if you are someone who is actually finding any quantity of gold it is something well worth learning about.
Business or Hobby? https://www.irs.gov/newsroom/business-or-hobby-answer-has-implications-for-deductions
Hobby Deductions. https://www.irs.gov/newsroom/is-your-hobby-a-for-profit-endeavor
Placer Mining Business. https://www.irs.gov/pub/irs-mssp/placer.pdf
Kind of boring stuff but extremely important things that need to thought about and planned for if you want to do it right. Needless to say I am pretty excited about the coming summer though! Now I need to start thinking about which drysuit I want to use. More to come so check back from time to time for updates.
~ Steve Herschbach
Copyright © 2013 Herschbach Enterprises
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