Boom times for Colo. gold

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The Cripple Creek and Victor mine produced 218.000 ounces of gold last year.

The Cripple Creek and Victor mine produced 218.000 ounces of gold last year.

With gold prices at an all-time high, the gold mining industry in Colorado is experiencing a boom it hasn’t seen since its heyday more than a century ago.

Between 1891 and 1906, the mines in Cripple Creek alone yielded nearly 20 million ounces of gold, worth more than $24 billion at today’s prices. By 1914, the boom had ended, leaving mansions and millionaires in Colorado Springs and crumbling, half-deserted mountain towns in the gold belt.

But there’s still plenty of gold in them thar hills.

Last year, the Cripple Creek and Victor mine produced 218,000 ounces of gold, and as prices have climbed, gold income from CC&V increased dramatically, rising from $24 million during the first quarter of 2009 to $69 million in the first quarter of this year.

Although the gamblers who throng Cripple Creek’s historic Bennett Avenue may not realize it, mining, fueled by the 10–year run-up in the price of gold, continues in the Cripple Creek district at a scale and intensity that 19th century miners could scarcely have imagined.

It’s likely that few who visit Cripple Creek even notice the Cresson Mine, located north of Highway 67 between Cripple Creek and Victor. A mined shelf is faintly visible from the site of the now-vanished town of Gillette, a few miles from Cripple Creek, and some of the mine’s workings can be seen from the city itself.

The CC&V mine, one of the largest open-pit gold mines in the world, covers more than 2,000 acres between Cripple Creek and Victor.

It operates 24 hours a day, 365 days a year. Trucks three stories high carry 350-ton loads of fractured gold ore to vast crushers and mills that reduce the rock to coarse sand.

The gold-bearing sand is spread on a 720-acre leach pad, which is isolated from the environment by impermeable liners. A network of perforated plastic pipes drips a cyanide solution through the sand and leaches out the gold.

The ore isn’t the richly veined quartz of popular imagination, but ordinary looking rock that contains microscopic amounts of gold.

Every ton of ore yields a little more than one-tenth of an ounce of gold.

CC&V’s output accounts for only 5 percent of the company’s production, but it appears to be an efficient, low-cost producer. Cash costs amounted to $482 per ounce in the first quarter, compared to a company-wide average of $619.

While there are many similarities to the mining days of the 1890s, there are many differences, as well.

Thousands of miners labored in Cripple Creek’s underground mines a century ago. Today, CC&V has just 350 full-time employees. It’s nevertheless a major contributor to the regional economy, paying its employees an average annual wage of $66,000, and using local suppliers whenever possible.

The wealth generated by Cripple Creek a century ago transformed Colorado Springs. Today, CC&V’s profits flow to the shareholders and managers of its overseas parent.

And although investors in gold have not always profited from the yellow metal, those who entered the market after 2000 have done well, as the late John Haigh of the Denver Gold Group, an industry association, noted last year.

“The period of intense investor accumulation of gold began in 2001,” Haigh said,” following the stock market bubble’s popping and a slide into recession in that year.

“Between 2001 and 2009, investors bought 356.8 million ounces of gold in bullion bars and coins. The buying of gold has never stopped. In fact, investors have added more gold to their collective gold bullion holdings between 2000 and 2010 than is estimated to have been accumulated by investors throughout all of history up to 1967.”

Since 2000, gold has risen from less than $300 an ounce to $1,200. In the same period, the S&P 500 has gone from 1,400 to 1,127 as of Tuesday.