The Homestake Mine Legacy
The Homestake Mine in Lead, South Dakota, historically produced approximately 44 million ounces of gold from 1876 to 2002, making it one of North America's largest and deepest gold mines. The mine closed in 2001 when gold was around $300.00 per ounce when the then-operator Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) deemed it to be uneconomic.
Homestake Mine was founded by George Hearst, and some would say it was assembled by any means necessary at that time. Despite how it was built or acquired, the mine laid the foundation for the Hearst family fortune and media empire. The area surrounding super giant deposits like Homestake is believed to contain significant additional gold resources, making it prime real estate for exploration.
What is known about Super Giant Gold Deposits
The historic Homestake Mine, with 42 million mined ounces and 20 million unmined ounces of gold, is one of the largest individual gold deposits in North America and falls into the rare class of Super Giant gold deposits (containing +60 million ounces). There are fewer than forty known gold deposits of this size worldwide.
Super Giant deposits are characterized by clusters of geologically similar deposits within several hundred square kilometers, defining profoundly mineralized regions. These clusters often contain satellite gold endowments exceeding 100 million ounces. Examples include the Timmins-Abitibi Belt (Canada), Golden Mile-Eastern Goldfields (Australia), Obuasi-West Africa, and Carlin/Gold Strike-Carlin Trend (Nevada).
It is believed that at least twice that amount of gold exists in the neighborhood of these super giants. If that is true, then there are at least 100 million ounces of gold left to be found in this vastly underexplored precious metal district of South Dakota.
Some other examples of super giant gold deposits include:
Grasberg Mine (Indonesia): Operated by Freeport-McMoRan Inc. (FCX:NYSE).
Muruntau Mine (Uzbekistan): One of the world's largest open-pit gold mines.
Olympiada Mine (Russia): A major gold mine in Russia.
South Deep Mine (South Africa): One of the largest gold mines in South Africa.
Lihir Gold Mine (Papua New Guinea): Known for its large gold resources.
These mines have significantly shaped the global gold mining industry due to their vast reserves.
The World's Most Underexplored Super Giant Gold Region
Most known gold deposits in the Black Hills were found at the surface during the Black Hills Gold Rush (1876-1896). Exploration for new deposits has been minimal over the past 120 years. Despite the district's immense fertility, no comprehensive exploration program has been conducted, and very little by Homestake Mining Company itself. Remarkably, no new gold deposits have been discovered in the Black Hills since the early 20th century.
Homestake Mine operated continuously for approximately 125 years, with Homestake Mining Company holding a virtual monopoly on regional mineral lands. With ample reserves, Homestake saw little need to search for new gold regionally, focusing exploration within three to four miles of the original discovery, except between 1988 and 1993. During this period, limited regional exploration identified five largely unexplored areas with anomalous gold.
The Black Hills features significant gold deposit types of different ages within a single district. These include Precambrian-aged orogenic gold deposits, ancient paleoplacers, and Tertiary-aged replacement-style gold mineralization. This remarkable spatial superposition of deposit types offers diverse exploration opportunities.
Current Explorers in the Region
With gold prices reaching new highs, past-producing deposits and their surrounding areas are becoming prime targets for exploration.
Companies like Coeur Mining, Dakota Gold, and Solitario Resources are actively working in these regions, aiming to uncover what may have been left behind.
Coeur Mining
Coeur Mining Inc. (CDE:NYSE) is a diversified precious metals producer with projects in North America and the company continues to pursue strategic projects and exploration activities in prolific mining regions to provide a strong foundation for potential growth in share price both fundmentally and technically as shown in the chart below.
However, for the purposes of this article we are only looking at their South Dakota property, the Wharf Mine. The Wharf Mine is an open pit, heap leach gold operation located in the northern Black Hills of western South Dakota. This mine has been in operation since 1982 and represents 29% of Coeur's gold production and 3% of its silver production (2023).
Recently, the Lawrence County Commission approved Coeur Wharf's Conditional Use Permit for the Boston Expansion, potentially extending the mine life by one to three years. The South Dakota State Board of Minerals and Environment approved a new State Mine Permit in August 2023, incorporating the Boston Expansion area.
This is good news for the company and the region as it shows a willingness of both Federal and State governments to allow responsible, well thought out exploration in this highly prospective and underexplored area.
Dakota Gold
Since childhood, we have been fascinated by the allure of gold in the Black Hills of South Dakota.
Today, Dakota Gold Corp. (DC:NYSE American) is one of several companies in this area that interest us.
We believe this area is on the verge of making an exciting comeback with the recent breakout in gold to new all-time record highs.
Proximity to Past Producing Mines
The Dakota Gold project is located near the Homestake Mine, which historically produced more than 40 million ounces of gold. This proximity suggests a high potential for similar deposits. Being in the shadow of many old mines increases the probability of finding significant mineral resources.
Advanced Geological Techniques
Modern exploration techniques can lead to new discoveries that were previously missed or overlooked using older methods. These techniques improve the efficiency and precision of exploration, reducing the risk and cost associated with discovering new mineral deposits.
Diverse Mineralization Types
Homestake-Style Mineralization: Known for high-grade gold deposits, this type of mineralization is historically significant and economically viable.
- Epithermal Mineralization: Typically associated with gold and silver, this type of deposit can be rich and extensive.
- Oxide Mineralization: Easier to process and often found near the surface, making extraction less costly and faster to initiate.
Established Infrastructure
The area around the old Homestake Mine, the Wharf Mine, and the Gilt Edge Mine already has significant mining infrastructure in place, reducing initial capital expenditure for new projects. Good road networks, power supply, and water access facilitate smoother operations and logistics for mining activities.
Experienced Workforce
The region has a long history of mining, meaning there is a pool of skilled and experienced workers familiar with local geological conditions and mining operations. An established workforce can lead to better community relations and support for the mining project, which is essential for long-term sustainability.
Experienced Management
The management team includes notable figures such as Robert Quartermain, renowned for his success with Silver Standard and Pretium, and Jonathan Awde, known for his achievements with Gold Standard Ventures. Their proven track records in the mining industry provide strong leadership and strategic direction for Dakota Gold, further enhancing its investment appeal.
Solitario Resources
Solitario Resources Corp (SLR:TSX; XPL:NYSEAmerican) has the Golden Crest project in South Dakota, which has the potential to become a significant new gold discovery. With its strategic location, advanced exploration techniques, diverse mineralization types, strong infrastructure, and regulatory approvals, the company offers a compelling investment opportunity in the gold exploration sector.
Golden Crest Project
The Golden Crest project is positioned in a region known for hosting a super-giant gold deposit. Historically, regions with super-giant deposits are surrounded by districts containing at least twice the amount of gold found in the super-giant itself. Being in the shadow of such a prolific mine increases the probability of discovering additional significant mineral resources. The Golden Crest project is located near the Homestake Mine.
Surrounding Mines
The Wharf Mine: Approximately 8.4 million ounces.
The Gilt Edge Mine: Approximately 4 million ounces, owned by Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE).
Dakota Gold: Approximately 1.5 million ounces, and still exploring and adding ounces.
Modern Geological Techniques and Advanced Exploration
Employing modern geological and exploration techniques can lead to new discoveries that were previously missed or overlooked using older methods. The area features gold-hosted rock from 50 million to 200 million years old, Homestake-style, epithermal, and oxide mineralization, providing diverse opportunities for exploration and extraction.
High-Grade Surface Gold
Solitario has discovered 20 areas of high-grade gold on the surface, indicating a large gold-bearing hydrothermal system. Surface sampling has revealed some zones with mineralization exceeding 10 grams per ton, which is very high.
Strong Established Infrastructure
The project benefits from the existing infrastructure in the area, including roads and utilities, which reduces initial capital expenditure and facilitates easier project development.
Experienced Workforce
The region has a long history of mining, providing access to a skilled and experienced workforce familiar with local geological conditions and mining operations.
US Forest Service Approvals
The Golden Crest project received a Finding of No Significant Impact (FONSI) from the US Forest Service, allowing drilling to begin in the second quarter of 2024. This regulatory approval nominally de-risks the project.
Strategic Drill Targets
Solitario has identified several high-grade gold zones, with plans to drill them from multiple platforms, enhancing the potential for significant discoveries.
Conclusion
Investing in these companies offers speculative opportunities to benefit from potential gold discoveries in historically rich mining regions and the potential of a continuing rising gold price. With advanced exploration techniques, experienced management, and strategic locations near super giant deposits like Homestake, these companies present compelling cases for investment.
However, investors should conduct their own due diligence and consider the inherent risks in the mining sector.
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Important Disclosures:
- Dakota Gold Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Dakota Gold Corp., Barrick Gold Corp., and Agnico Eagle Mines Ltd.
- John Newell: I determined which companies would be included in this article based on my research and understanding of the sector.
- Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
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John Newell Disclaimer
As always it is important to note that investing in precious metals like silver carries risks, and market conditions can change violently with shock and awe tactics, that we have seen over the past 20 years. Before making any investment decisions, it's advisable consult with a financial advisor if needed. Also the practice of conducting thorough research and to consider your investment goals and risk tolerance.
