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Surface Metal Mining


Surface metal mining in the Sierra Nevada Mountains has historically included open pit mining for minerals such as gold, silver, copper, and other base metals. Most of this mining occurred after the 1980's as technology for mining "bulk" tonnages from low grade surface deposits was developed.


Until 1971, the price of gold in the U.S. was controlled by the U.S. government. President Nixon elected to take the country off the gold standard, resulting in a dramatic rise in the gold price.  The U.S. subsequently found itself in a hyper-inflation cycle, with 30 year mortgage interest rates reaching 18 percent.  This was coupled with the effects of the OPEC Oil Crisis.  The price of gold rose from $35 per ounce in 1970 to over $600 per ounce in 1980.  


The increase in the gold price brought about the development of bulk open pit mining techniques using large trucks, excavators, and other equipment.  Heap leach gold mining using cyanide solution to leach out the gold was developed as a method for mining low grade gold ores.  In 1983, as shown in the graph below, California saw a resurgence in gold mining due to open pit and heap leach mining techniques, reviving a gold mining industry that had effectively been dormant since the mid 1960's.


The resurgence was short lived.  Between 1995 and 2005, many of the world's central banks elected to sell off their gold reserves, on the assumption that gold would not be required to support fiat currencies in the future.  The price of gold was driven below $300 per ounce, forcing the closure of all of the open pit gold mines in California by around 2003.  Closure also resulted from anti-mining legislation that was passed in 2003 forcing new gold mines to backfill their open pits at closure - driving mining investment to other jurisdictions.

In 2005, at the Great Recession approached, we started to see a resurgence of the price.  This lead to the reopening of several gold mines in California (ATNA Resources Limited's Brigg reopened in 2009 and New Gold Inc.'s Mesquite Mine reopened in 2008).  We also saw the reopening of a rare earth metal mine (Molycorp Mineral LLC's Mountain Pass Mine reopened in 2010).  Despite the high metal prices, the resurgence of mining in California was essentially limited to reopening of operations with existing permits.    


The mining industry believes California has a failed permitting process under the California Environmental Quality Act.  It is often taking in excess of 10 years to permit a new mine (where the process was originally designed to take 12 months).  Constantly changing regulation, unnecessary regulation, overlap of regulatory agencies' jurisdictions have all lead to a permitting process that is extremely expensive, technically politically, and legally uncertain.  For mining companies, California is viewed as a risky and costly jurisdication, with extremely low investment certainty.  This is in contrast to the industry recognizing the State is one of the most mineral rich jurisdictions in the world.  


The Sierrans for Responsible Resource Development (the "Sierrans") believe that regulatory reform and stream lining is needed in California to allow responsible and sustainable surface metal mining to come back to the State.  This includes creating a predictable and attractive investment climate that will bring mining investment, create jobs, support rural communities, and create local, federal, and state tax dollars.  The Sierrans believe that the surface metal mining industry in California could easily produce over one million ounces of gold per year, and with other metals (including rare earths), contribute over two billion dollars a year to California's gross domestic product.

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