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Gold Stocks in the Yukon 2011

Written By Brian Hicks

Posted September 24, 2010

The rush to find gold in the Yukon Territory is surging once again!

It’s been 113 years since the famous Klondike Gold Rush of the late 19th century…

Now, a new Yukon Gold Rush is on as one geologist is leading the way for a discovery of up to 200 million ounces of gold!

For investors, this discovery will provide a long series of lucrative opportunities to profit from Yukon gold stocks.

And those who invest now will be best positioned to profit as the story unfolds over the next several years.

In this report, I’ll introduce you to the geologist who is trailblazing the new Yukon Gold Rush — and tell you how to prepare yourself to take advantage rising share prices.

But before we talk about that, let me tell you exactly where geologists are looking for the yellow metal in the Yukon…

The Yukon’s 200 million ounces of gold

The Yukon gold deposits are the world’s largest known occurrence for what is known as placer gold.

Since the initial discovery of gold, it is estimated that between 15-20 million ounces of placer gold have been recovered from the streams and sediments of the Yukon.

Placer mining is the mining of minerals from loose, unconsolidated soil or sediments.

Placer gold that is panned out of streams and rivers always comes from a larger source. You’ll want to remember that because this is where the Yukon gold story get really interesting…

Geologists generally agree that the source of the placer gold is typically ten times larger than the total number of ounces recovered from placer mining.

That means the source of the placer gold could contain between 150 to 200 million ounces of gold!

The source of the placer gold in the Yukon has not yet been found; however, geologists are hot on its trail…

Recent gold discoveries in the Yukon are shedding new light on the lost source of the placer gold in the region, and geologists now believe the Yukon’s placer gold source will be discovered any day now.

Placer mining in the Yukon

Placer gold often travels up to hundreds of miles before reaching its final resting spot — thus the difficulty in trying to find the source from where this gold originally sprang.

During the Klondike Gold Rush in the early part of the century, most of the small placer miners were eventually replaced by large dredges that harvested the gold until recovery rates diminished sometime in the 1950s.

I was recently able to visit one of these dredges, now a historic monument:

September 2010 klondike dredgeThis dredge was built in 1912. It is five stories high and ran on electricity. Gold miners were using electricity in the Klondike before New York City.

September 2010 klondike dredge 2Dredges created their own pool of water so they could float by digging and kept moving forward, taking out the gravel down into bedrock. The gold was extracted from the rock and redeposited out the back of the dredge.

These were huge machines that moved tremendous amounts of rock while combing for placer gold. At peak production in 1939, the dredges of the Dawson City area recorded the recovery of 1 million ounces of gold that year.

All that is left of placer mining today in the area are small claims held by prospectors that may get 1,000 ounces of gold on their claim block in a good year, and 100 ounces in a bad year.

History of gold in the Yukon

In August 1896, a group of men lead by Skookum Jim Mason, Dawson Charlie, and George Washington Carmack found gold in a tributary of the Klondike River in Canada’s Yukon Territory.

But they had no idea it would set off one of the greatest gold rushes in history.

Truth be told, it may have been Skookum Jim’s wife that actually made the discovery while doing laundry by the stream.

Either way, beginning a few months later in 1897, an army of hopeful gold seekers boarded ships in Seattle and other Pacific port cities and headed north toward the vision of golden riches.

September 2010 jim yukonSkookum Jim with his friends and family. His wife, Mary, is standing on the porch.

Through the summer and winter of 1897-98, stampeders poured into the tent-and-shack boomtowns of Skagway and Dyea, the jump-off points for the 600-mile trek to the Klondike goldfields.

Skagway, located at the head of the White Pass Trail, was founded by a former steamboat captain named William Moore.

His small homestead was inundated with 10,000 transient residents struggling to get their required year’s worth of gear and supplies over the Coast Range and down the Yukon River headwaters at lakes Lindeman and Bennett.

Dyea, three miles from the head of Taiya Inlet, experienced the same frantic boomtown activity as gold seekers poured ashore and picked their way up the Chilkoot Trail into Canada.

Stampeders faced serious hardships on the Chilkoot Trail out of Dyea and the White Pass Trail out of Skagway. There were murders and suicides, disease and malnutrition, and death from wild animals, hypothermia, avalanches — even heartbreak, according to some.

The Chilkoot was the toughest on men because pack animals could not be used easily on the steep slopes leading to the pass.

September 2010 klondike rushProspectors at the head of the Chilkoot Trail. Each prospector had to have a year’s supply of food and essentials before they were allowed to go up the trails to the gold camps.

Until tramways were built late in 1897 and early 1898, the stampeders had to carry everything on their backs.

The White Pass Trail was called “the animal-killer”; anxious prospectors overloaded and beat their pack animals and forced them over the rocky terrain until they dropped.

More than 3,000 animals died on this trail; many of their bones still lie at the bottom on Dead Horse Gulch.

During the first year of the rush, an estimated 20,000-30,000 gold seekers spent an average of three months packing their outfits up the trails and over the passes to the lakes.

The distance from tidewater to the lakes was only about 35 miles, but each individual trudged hundreds of miles back and forth along the trails, moving gear from cache to cache.

Once the prospectors had hauled their full array of gear to the lakes, they built or bought boats to float the remaining 560 or so miles downriver to Dawson City and the Klondike mining district, where an almost limitless supply of gold nuggets was said to lie.

By midsummer of 1898, there were 18,000 people at Dawson with more than 5,000 working the diggings.

By August, many of the stampeders had started for home — most of them broke. The next year saw a still larger exodus of miners when gold was discovered at Nome, Alaska.

The great Klondike Gold Rush ended as suddenly as it had begun.

Towns such as Dawson City and Skagway began to decline. Others (including Dyea) disappeared altogether, leaving only memories of what many consider to be the last grand adventure of the 19th century. 

Searching for the legendary source of Yukon’s placer gold

As I mentioned, the source of the placer gold was never discovered, despite over a century of prospecting…

But one geologist has made recent discoveries that may lead to him to the location of the legendary source of Yukon’s placer gold. And this time Yukon gold stocks are gaining heavy media attention with the 21st Yukon gold rush well underway.

His name is Shawn Ryan, and I’m sure you’ll be hearing his name quite often as the Yukon gold story unfolds. Ryan — a determined and persistent prospector — has been searching for the source of the placer gold in the Yukon for the past 15 years. Recently he headed the discovery of the White Gold deposit in Western Yukon. 

Underworld Resources (Historic: TSX-V: UW) — the company that owned the White Gold project at the time — hit high-grade gold mineralization on their fourth drill hole. Underworld quickly built a million ounce resource after the discovery and was subsequently bought out by Kinross Gold (NYSE: KGC) nine months later.

The next junior to get some of Ryan’s claims was Kaminak Gold (TSX-V: KAM), which also recently drilled high-grade gold.

Many would say this is instant gratification for shareholders, but nothing could be further from the truth; the discoveries by Kaminak and Underworld represent nine years of Ryan’s work.

Kaminak is now trading around the $3.50 level with a $195 million market cap. It is a beautiful success story.

Kaminak Gold

September 2010 kam chart

Company Kaminak Gold Corp. yukon gold stocks kam september 2010Corporate Presentation
Exchange: Symbol TSX-V: KAM
Share Price $3.40
Market Cap $195 million

For Mr. Ryan, the new discoveries are a well-deserved reward for his years of persistent prospecting.

Having spent some time with Shawn recently, I can tell you he deserves everything coming his way. I couldn’t have met a nicer guy.

And while Shawn is getting most of the credit, his extremely patient wife Cathy deserves many kudos as well, since she is the grounding force on their team, Ryanwood Exploration.

Shawn has been prospecting ground in the Yukon with literally little to no competition for almost 15 years. He has cherry-picked numerous projects, and now controls over 12,000 of the existing 20,000 claims in the area!

Shawn explained to me his method of prospecting, which includes extremely aggressive soil sampling grids over large land areas.

He does this soil sampling using helicopters to transport lightweight backhoes so he can drill down about half a meter or so in the ground. Shawn samples the soil at surface and at the bottom of each hole.

The difference in what Shawn is doing is important to understand, and I believe it’s the main reason for his success.

Most exploration companies would probably do 2,000 to 4,000 soil samples on a particular land package. Shawn will do 70,000 soil samples in a massive grid pattern, which has opened the door to these discoveries.

The soil samples and geochemistry is the science behind the discovery. It’s working — and suddenly Shawn’s ground is being sought after by many mining companies.

This type of prospecting is nothing new…

There is no rocket science here, as Shawn is quick to point out. He simply is doing the hard work that very few are willing to do.

September 2010 shawn ryanShawn Ryan of Dawson City was chosen Prospector of the Year by British Columbia’s mineral exploration industry in 2009.

Shawn recently explained to me why there has been such a lack of discovery over the past 10 years in the exploration business.

He says with all the money that was raised, exploration companies “forgot to do the boots on the ground kind of work that leads to the clues of discovery,” and relied too much on their computer modeling.

In other words, companies were spending too much time in the offices when they should have been out in the field.

This has led to a real embarrassment in the industry having spent so much money the past ten years with so little to show for it.

I believe Shawn’s example will now make believers out of many company executives who will opt for more tried and proven methods of exploration.

As Shawn says, “It’s not easy work, but it is the most reliable kind of work that can tell you where to put a drill hole.”

What’s next for this area play

As you can imagine, a land grab has engulfed the whole area.

Competing companies are rushing to get as much ground near the White Gold area and other surrounding areas as quickly as possible.

Shawn showed me a map of the area that indicates taken claim blocks from 2007 and compared it to now. The difference is startling.

This, in my opinion, is all leading to a very large amount of drilling next summer. Unfortunately, one of the difficult things about this area is the limited time for drilling: May through September.

After that time, the weather is just too cold for drilling; things could get a bit quiet over the winter as we wait.

Time will tell, but I think we are about to see the most exciting area play in our lifetimes unfold over the course of the next five years.

Another factor to consider is the White Gold area is basically out in the middle of nowhere. While roads could be easily built without too much difficulty to these projects, power is another issue.

In my opinion, however, a big discovery like Kaminak will attract the necessary investment on the part of the Canadian government to get the needed power.

Another alternative is Southeast Alaska, which is not that far away and has plenty of extra power they could run into the White Gold area if necessary.

Why invest in Yukon gold stocks?

The Yukon Territory is an extremely prospective region for gold exploration that offers incredible opportunities for new major discoveries.

Many significant gold deposits have already recently been discovered, and many experts believe that the Yukon could become a new global hub for gold development in the years to come.

The recent gold discoveries in the Yukon by Underworld Resources and Kaminak Gold have led the way for investment gains as of late… But plenty more opportunity exists, as additional drilling hits the ground.

Not to mention the many more new discoveries of merit in this area — probably with the biggest still on the horizon.

For investors, the new Yukon gold rush will provide a series of great opportunities for new major discoveries and fortunes to be made in the years to come.

Wise investors who take positions now in the right Yukon gold stocks will be poised to benefit the most as the story unfolds over the course of the next several years.

Good Investing,

Greg McCoach
Editor, Wealth Daily
Investment Director, Mining Speculator and Insider Alert

P.S. My colleague Luke Burgess called me last week to talk about his latest junior palladium stock discovery. I learned that this company has some very interesting palladium projects located between two of the largest palladium mines in North America. Luke sent me his latest report, “The Auto Industry’s “Big Switch” Could Be Your Next Ten-Bagger,” which discusses the general palladium market and his new junior palladium stock. You can read this report for free right now by clicking here.