Digging for gold in Oregon

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Ben Jacklet
Thursday, August 11, 2011

By Ben Jacklet

With gold prices nearing $1,800 per ounce, a Canadian mining company has commenced drilling on Grassy Mountain, a remote swath of treeless land in Malheur County where mining companies have been trying — and failing — to extract gold for decades.

Vancouver, BC-based Calico Resources has received final approval from the U.S. Bureau of Land Management (BLM) and the Oregon Department of Geology and Mineral Industries (DOGAMI) and is drilling 14 exploratory holes in the area. The company's home page describes Grassy Mountain as its "flagship property" with "significant exploration upside." Past studies have estimated 924,000 ounces of gold in the area, worth about $1.6 billion by today’s prices.

Predecessors including industry giant Newmont Mining have invested $33 million in research in the area, drilling over 400 holes, only to drop plans to mine the area for economic and environmental reasons (low prices, strong opposition). But soaring prices could make the project economical at a far smaller scale. And the recent approval of a chromite mine in Coos County processing 700,000 tons of ore per year sends a signal to the industry that Oregon regulators do not automatically reject every large mine proposal they receive.

Calico CEO Bill Wagener told Oregon Business in a recent interview that the company can extract gold at Grassy Mountain without creating a large-scale, open-pit, cyanide-leach mine similar to others opposed by Oregonians in the past. His plan is to continue exploration for three years and establish a 100-employee operation processing 1,000 tons a material per day.

Oregon has not seen a significant gold mine in decades. But with the unemployment rate in Malheur County at 10.6% in June, local support for the project has been strong. The environmental groups that united against previous mining plans at Grassy Mountain have not declared opposition to the newer, scaled-down proposal. The contentious Newmont Mining plan in the 1990s called for an open pit impacting 1,800 acres, as compared to Calico’s more compact plans for a 150-acre operation.

Calico, a publicly traded company in Canada, plans to publish the findings of its research as it proceeds with exploratory drilling.

Ben Jacklet is managing editor for Oregon Business.

 
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