Turning Rock into Revenue
Assaying and refining in Alaska
By Joy Choquette
Lightboxx | Twenty20

ccording to state economists, Alaska’s most lucrative industries are oil, tourism, and fishing. Timber, agriculture, and mining also garner a good amount of state revenue. In the mining industry, coal, zinc, and silver extraction are big business, as is mining and refining gold.

In 2018, the US Geological Survey reported that domestic gold mine production was approximately 210 tons, valued at approximately $8.6 billion. Gold was produced in a dozen states in 2018, primarily at Alaska’s placer mines and in the western United States.

A Brief History

“There’s gold in them thar hills,” singer Frankie Marvin crooned in 1931. Gold’s ongoing presence in pop culture speaks to people’s long-running obsession with the precious metal. According to the International Precious Metal Institute, the process of extracting and refining precious metals dates to 2000 BC. Many cultures have used fire for centuries to extract metal from non-precious stone—a process first recorded in writing in 1556 in Asia Minor.

The most popular and prosperous time for gold mining occurred in the 1870s when prospectors moved in large numbers to the Last Frontier, then called the Department of Alaska. The gold rush hit in earnest in Alaska and parts of Canada in 1896—the start of the Klondike Gold Rush.

Though more than 100,000 people attempted to travel to the Klondike area, fewer than half successfully completed the journey, according The Klondike Gold Rush published by the History Channel. Those who did arrive were disappointed that the claims made about the prevalence of gold were grossly overstated.

After the initial gold rush, many miners turned to other ways of supporting themselves and their families—opening inns, saloons, and other retail establishments. Other large rushes, like those that occurred in 1909 at Iditarod and Flat, were perhaps the last of the great gold rushes.

But that doesn’t mean that mining for gold and other precious metals has dried up. Gold remains an important Alaska export.

Fast-forward to present day and the extraction and refinement processes look very different from the timeworn image of a grizzled miner panning for gold nuggets in a brook.

Man working in a refinery, heating metal
“It’s a very fast-paced, high-risk business… It’s really a tough business because there’s a lot of distrust in it. A simple guy like me, ten years ago with $5,000—a lot of people said that [it] was impossible to make a successful business. But just by being transparent with my clients, it’s been a real boon.”
Lee St. Pierre, Owner, GBA Assaying & Refining

Today there are four basic steps to mining and refining: prospecting—searching for precious metal deposits; mining—breaking up the ground to access precious metals; extracting—removing the rock that contains precious metals; and refining—separating precious metals from the surrounding stone.

How we find gold has perhaps changed the most. While geologists know that gold is present in almost all rock and soil, the concentration is so low that it’s often invisible to the human eye. With new technology and testing methods, finding trace amounts of gold and other precious metals becomes ever more feasible.

The way gold is identified has also undergone changes over the years. In the modern mining industry there are three primary methods: assaying, classical wet chemistry, and instrumental analysis. Assaying remains the most popular method because it is the most accurate and reliable.

Assaying Precious Metals

Simply put, assaying is the process of determining the content or quality of a metal or ore. However, assaying can be used for various purposes throughout the mining process. During exploration, for example, assaying involves removing small sections of stone that are then tested for concentrations of the target commodity. If the concentration is high enough, mining companies will then mine material from the identified deposit via open-pit, underground, or placer mining techniques.

Once large masses of material are removed from the earth, large chunks of rock are broken down into smaller pieces. Those smaller pieces are processed in crushers, which reduce them to the size of road gravel. The gravel-sized rock is then placed in drums that contain steel balls; when tumbled, the steel balls reduce gravel to powder or slurry.

According to William Harris in his article How Gold Works, the next step is to add water to the powder or slurry to form a pulp, which is run through a series of leaching tanks. In these tanks, there are several steps to produce a gold-bearing solution which then undergoes electrowinning, which recovers the gold from the leaching chemicals.

This gold is then smelted, which requires a furnace running at temperatures of 2,100˚F and produces nearly pure gold (though it still often contains silver) that is poured into molds to form gold dorè bars, which are sent to specialized refiners for additional processing.

Assaying comes back into the picture at this point, as there’s no set standard for the gold (or silver) content of a dorè bar, so any further refining requires assaying the bar to determine the ratios of gold, silver, and other material.

Assaying is also a vital step for companies like Oxford Assaying and Refining and Gold Buyers of Alaska (GBA) Assaying & Refining, the state’s two primary assaying and refining companies, which accept material such as old jewelry or dental gold. For jewelry, gold is often mixed with other materials to achieve a certain look or hardness. For example, 18 karat “white gold” is 75 percent gold mixed with copper, nickel, zinc, and/or palladium; 18 karat “rose gold” is 75 percent gold and 25 percent copper and silver; and 18 karat “yellow gold” is 75 percent gold alloyed with copper, silver, zinc, or cobalt. This means assaying and refining companies can only pay out an accurate value for the lot they received if they employ a careful assaying process.

The Business of Precious Metal Refinement

Although assaying and refining precious metals is a highly technical and detailed process, Lee St. Pierre says it remains a profitable venture in today’s market. St. Pierre is the owner of GBA, which is headquartered in Fairbanks and has locations in Nome and Eagle River/Anchorage. GBA offers fire assay and X-ray fluorescence (XRF) assaying services; refines placer gold, scrap gold, silver, platinum, palladium, and dental alloys; and buys and sells coins and bullion, diamonds, and Rolex watches.

St. Pierre, who’s been in the business for the past decade, says his company’s gross volume averages between $20 million and $40 million and continues to grow rapidly.

The industry has been on an upward trajectory for some time. “It used to be $8 million, then $12 million, and it’s just been growing from there,” St. Pierre says, though he notes that prices for gold tend to be volatile. “Right now, it’s a very good price, but I believe it’s got room to go further. We’re expecting a very good two to three years.”

Young boy mining for gold
Jennyrsmith | Twenty20
There are 120 active mines and Mining Operation Plans on public lands. The state also still allows placer mining (or stream mining) for recreational purposes, a big draw for tourists.

Because gold and other precious metals extracted in Alaska generally aren’t fully refined by the mining company, GBA performs several different refinements to create close-to-pure substances. For its own purposes, the company uses fire assaying (which is more time consuming, but also more accurate) and XRF to determine the percentage of gold in any material it’s testing. “You’ve got assays from everywhere between 65 percent to 95 percent gold in Alaska,” St. Pierre says. “The fire assaying really helps us determine what percentage of gold it is.”

There is little room for error, which is why GBA uses both assaying methods. “We use both methods on everything. Because there’s only a 1.5 percent profit range, you have to be pretty accurate,” St. Pierre says.

Even with extensive testing, the turnaround time for the company—from crude material to shipping to buyers—is only three days. Most of the gold refined by GBA eventually enters the investment market; once it has been turned into bullion coins or bars it’s used to back loans to secure risk.

“We sell it to a major company on the East Coast and they refine it into pure gold,” says St. Pierre. In addition to being used for bank investments, some also goes into the jewelry market.

“It’s a very fast-paced, high-risk business,” St. Pierre says, one that has become ever more challenging with increased cases of money laundering and drug cartel involvement in the market.

“It’s really a tough business because there’s a lot of distrust in it,” St. Pierre says. “A simple guy like me, ten years ago with $5,000—a lot of people said that [it] was impossible to make a successful business. But just by being transparent with my clients, it’s been a real boon,” he says.

A Golden Future

Over the years, protocols and stricter monitoring of the various parts and players in the precious metals industry have been put in place with the hope of eventually eliminating illegal activities. St. Pierre says Alaska’s due diligence policies, designed in part to make sure gold is being extracted on US soil, require businesses such as GBA to visit mine sites to ensure the company is legitimate, following state rules and guidelines, and conducting background checks.

Even with these challenges, Pierre is bullish about his work and believes that the gold industry will continue to grow and prosper in the coming years because of the many opportunities to mine precious metals in Alaska. There are three different types of mining land available: patent ground, state leases, and federal leases. Though there is little patent ground left—pieces of property that can be purchased for mining purposes—there are still some properties available.

Leasing land from the state of Alaska or the federal government is a popular option for mining companies. Federally leased land though is strictly mandated according to St. Pierre. “It’s a lot tougher,” he says. “There are more regulations to mine that you have to comply with.”

As of 2020, the Bureau of Land Management Alaska manages more than 5,000 federal mining claims in the state. In addition, there are 120 active mines and Mining Operation Plans on public lands. The state also still allows placer mining (or stream mining) for recreational purposes, a big draw for tourists.

Businesses in the precious metal industry face ongoing hurdles to be sure. But there are also unique opportunities for growth and revenue streams.

Gold, after all, continues to prove itself worthy as a valuable commodity in both Alaska and the world at large.