Sept/Oct 2008

Economic Geology

Homestake, South Dakota (Part 2)

By R. J. Cathro

Aerial view to the northwest of the town of Lead and the ‘Glory Hole’ in 2005, with the Ross shaft headframe at the lower left | Courtesy of Johnny Sundby Photography, Rapid City, South Dakota

“The stamp-mill as a combined ore-crushing and gold-saving device was never put to more successful use than by the Homestake Company. The success was due in large part to the design of the mortar, which combined two excellent features: an opportunity for amalgamation and a rapid discharge of pulp … (which) gives a capacity nearly twice that of the ordinary California battery.”

(Rickard, 1932)

The Black Hills are situated mainly in western South Dakota but overlap slightly into Wyoming. The gold district occurs within an intensely folded and metamorphosed core of Early Proterozoic and Archean rocks that are exposed in a northwest-trending oval about 100 kilometres long and 40 kilometres wide. The core has been intruded by two stages of igneous rocks: amphibolite bodies derived from Proterozoic gabbroic rocks, and small porphyritic stocks, sills and dykes of Tertiary age that range in composition from rhyolite to syenite. The Proterozoic rocks are surrounded by concentric bands of Palaeozoic and Mesozoic rocks that dip gently away from the core.

The Homestake mine and nearby smaller deposits occur in the northern part of the Proterozoic core and are centred about 35 kilometres east of the Wyoming border. The first rich placer paystreaks, which proved to be small, were found in a creek on the northeast side of a high ridge named Deadwood Gulch. The drainage on the southwest side of the ridge, named Gold Run Gulch, hosts the Homestake mine. (In yet another example of how key place names were carried from one significant mining camp to another, the name Gold Run was also given to one of the main creeks in the Klondike Goldfield, Yukon, in 1896).

The city of Deadwood grew into the unofficial ‘capital’ of the new camp, with a population of 10,000 by the spring of 1877. It has been memorialized in history by such names as Calamity Jane, Deadwood Dick, and Jack McCall and his victim ‘Wild’ Bill Hickok. Although the popular image is of shoot-outs, lynchings, brawls, murders and robberies, mining engineer Louis Janin, an associate of George Hearst, found it quite different when he visited in July 1878. He reported, “All the conveniences and even the luxuries of life can be obtained (there) … It is by no means the rough mining camp that exists in the imagination of many. On the contrary, it is one of the pleasantest of all mining localities I have visited; and in no other district is justice more ably administered, or greater security afforded to life and property” (Watkins, 1971, p. 114-115).

The Homestake mine was discovered about four kilometres from Deadwood soon after the first placer claim was located in Gold Run Gulch by Thomas E. Carey in February 1876. The entire gulch was soon staked, and overstaked, several times with both placer and lode claims. The town of Lead (a word rhyming with greed that was used by prospectors to describe a vein) was surveyed downstream from the Homestake claim, and cabins were soon built on any lots that were flat enough. Before long, shafts were sunk and adits were driven beside each cabin and on each claim. As a result, the town was built and rebuilt as the distribution of the mineralization became known and it became clear which areas were more valuable for mineral potential than as building lots. By the end of 1880, the population of Lead was about 1,500, much smaller than that of Deadwood.

George Hearst returned to the Homestake property with a small team of managers and lawyers in October 1877, a month before the incorporation of the Homestake Mining Company, to select a mill site straddling the Homestake and Golden Star claims and ensure a smooth startup for the mill. However, he quickly realized that the mineralization was much more extensive than originally thought and concluded that the potential for costly and lengthy legal disputes was extremely high because of apex law and overstaking disputes. The legal problems were exacerbated by the fact that the earliest staking in the gold district had taken place while it was still Indian Territory and not covered by U.S. law. In addition, he recognized that an adequate water supply was critically important if development was not to be impeded. Within a short time, several neighbouring owners were already building their own mills and Hearst appreciated that consolidation of the best claims under a single owner would result in more efficient development. These challenges kept him at the camp until at least May 1878.

His growing optimism for the economic potential of the camp, combined with his experience, judgement and strong personality, drove his aggressive program of acquisition and consolidation of water rights and key mineral claims, placer rights and building lots. He expressed this optimism in a letter written to his partner James Haggin in May 1878, as follows: “You, nor your children, will never live to see the end of the time when this property will not be worked for a profit” (Fielder, 1970, p. 57). Mine developers often make statements like that but, in this case, Hearst wasn’t speaking publicly as a promoter trying to raise money, and he was proven right!

Hearst returned to the project for the last time in March 1879, in time for the arrival of a second steam-powered mill of 120 stamps. By this time, the company employed 500 men in ten operating mines and mills using 540 stamps. In April, after a fatal shaft accident, the company began to initiate a community medical service and a company hospital, one of the earliest industrial health services of the era. His efforts were directed mainly to claim and water rights negotiations as well as evaluating the ore potential of the various properties. When he returned to San Francisco in September, he left the growing operation in the capable hands of Sam McMaster, an experienced mine operator with a good understanding of the local geology.

Over $500,000 was spent on claim acquisition from 1892 to 1894, and even more was invested in 1899 and 1900, taking advantage of slowdowns in gold mining speculation. By 1900, the payroll had risen to 1,500, several shafts had been sunk below 300 metres and the company had produced over $60 million worth of gold. In 1902, the company owned 350 key claims covering an area of about 1,060 hectares, which had resulted in a substantial increase in ore reserves. The property increased to 654 lode claims covering 2,280 hectares by 1931.

Although the grade of the Homestake ore was relatively low for this era, it proved quite profitable because it was mined at such a large scale. Other important reasons for success were that the ore proved to be highly amenable to simple crushing and grinding, and that the gold grains could be easily separated from the sulphide and other gangue mineral. George Hearst recognized these advantages early and summarized them (in the same May 1878 letter referred to above) as follows: “You must wake up Tevis [the third partner in the syndicate] to the importance of protecting our interest here, for while the quartz is not very rich, the amount of quartz that will pay a profit is truly enormous.” That may have been the source of his favourite toast: “Here’s to low-grade ore and plenty of it” (Cash, 1973, p. 112).

Rickard (1932) divided the history of the Homestake mine into three main stages. The first, extending to 1890, consisted of development, including road and rail construction, shaft sinking, mill construction and improvements in stamp-milling. Because of the steep slopes, mining was conducted initially with a series of open cuts that gradually resulted in one large open pit. Difficulty in finding miners who were experienced in surface mining hastened the introduction of underground mining methods. Because of the large thicknesses of some oreshoots, they were supported initially with square sets like those used at Comstock, but the mining method was changed to shrinkage stoping when the ground was found to be quite solid.

The second stage, between 1890 and about 1910, was marked by expansion. The mining and milling rate was gradually increased until there were 1,000 stamps operating in six mills in 1912. As the mine went deeper and an underground fire broke out, the upper timbered portions began to collapse, ultimately resulting in a huge ‘Glory Hole’ over 250 metres deep that gradually swallowed part of the original town. The use of mill tailings for backfill, instituted in 1932, brought the problem under control.

In addition to better efficiency achieved with large-scale mining, two other factors contributed to the success of the operation. One was the creation of a geology department in 1920, with Lawrence Wright as the first mine geologist (Spence, 1970), and a new emphasis on geological research. Pioneer geologists such as Donald McLaughlin, John Gustafson, James Noble, Clarence Kravig, James Harder and Archie Slaughter made key discoveries that expanded the mine (Caddey, Bachman, Campbell, Reid, & Otto, 1992). The main initiative, however, was a strong effort to improve gold recovery by reducing the losses from the amalgamation process used with the stamp-mills. After experimenting with tables and jigs and obtaining slight gains, Homestake achieved a major advance using a combination of fine grinding and cyanidation of the stamp-mill tailings. This was a major metallurgical breakthrough that had profound impacts on the global gold industry, including an explosion in gold production in South Africa. One of the unintended consequences was the creation of new opportunities for the study of economic geology.

Carl Wilhelm Scheele (1742-1786), a chemist who was born in Stralsund, Germany, while it was under Swedish rule, discovered hydrocyanic (prussic) acid (HCN) in 1783 and found that it could dissolve gold. This unique quality wasn’t applied to gold mining until 1887, when a process was developed in Glasgow by John Stewart MacArthur, an industrial chemist, with funding by brothers Robert and William Forrest. It consisted of two steps: dissolving the gold from the crushed ore in a weak sodium cyanide solution and then precipitating the gold with zinc chips. The MacArthur-Forrest process was tested extensively worldwide, including at a mine at Deadwood in 1892, where it was not very effective.

Metallurgist Charles W. Merrill patented an improvement to the process in the United States that substituted zinc dust for zinc chips, which had proven inefficient because too much gold was allowed to remain in solution as it passed through. He was given a five-year contract in 1898 to increase gold recovery at Homestake, and a 60-ton per day pilot plant was constructed the next year to treat the tailings from the Amicus mill. When it proved successful, the process was added to all the mill flow sheets in 1901. By experimenting with the oxygen levels and the cyanide content of the solution, adjusting the retention time in the circuit and introducing filtration, gold recovery was increased from 72 per cent, using amalgamation only, to 88 per cent in 1902 and 94 per cent by 1908. After Thomas B. Crowe made additional improvements for the Merrill Company, it became known as the Merrill-Crowe process.

Even after more than a century of use worldwide, the cyanide process remains controversial. It has been found that weak cyanide solutions are not hazardous to human health but are extremely toxic to fish and waterfowl, and several well-publicized spills have resulted in it being totally banned in several jurisdictions. Modern plants typically use a cyanide solution of 0.05% sodium cyanide and are carefully monitored because the solution has to be kept alkaline to prevent the release of hydrogen cyanide, which is very volatile and highly toxic. In 1973, use of the process on crushed ore placed on surface pads, called heap leaching, was pioneered by Placer Development Ltd. at the Cortez mine in Nevada.

The Homestake mine, which reached a depth of 2,485 metres, was incredibly successful, producing over 500,000 ounces of gold annually between 1934 and 1973. In total, 167.6 million tons (151.6 million tonnes) of ore were milled until mine closure in 2002 to yield approximately 39.61 million ounces (1,100 tonnes) of gold and 9 million ounces (255 tonnes) of silver. The recovered grade was 0.237 oz/ton (8.13 g/t) gold and 0.054 oz/ton (1.85 g/t) silver. Rickard (1932) estimated that the total value of the production for the 42-year period from 1888 to the end of 1930 was approximately $223 million, with gold priced at $20.67/oz. About $59 million was paid as dividends during that period, a remarkable payout rate of 26 per cent.

The history in this article is derived mainly from Cash (1973), Fielder (1970) and Watkins (1971). Greever (1963) and Petersen (1991) are useful for background reading.

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