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stiffnecked
01-26-2011, 09:11 PM
Interesting article about a fraudulent Alaska mining venture. Seems like the crooks got there goose cooked.

http://community.adn.com/adn/node/155495


Two Lower 48 businessmen who committed to raise millions of dollars to develop an Alaska gold mine on an island just south of Kodiak were arrested Wednesday on counts of securities and wire fraud.

The men are accused of bilking millions of dollars from unwary investors in the Sitkinak Island gold mine and an unrelated real-estate scheme in the Lower 48.

One of the two is a former Alaskan, William Lange, 63. He had a checkered history in Alaska. In the past, Lange has been fined by the state for consumer law violations involving condo time-shares in Seward and for illegal moose hunting.

polardds
01-26-2011, 09:54 PM
Usually when somebody wants to develop something that sounds too good to be true it usually is.

AKdredger
01-27-2011, 05:38 AM
I had a conversation yesterday with Brian in regards to crooks out there and gold. I don't trust anyone with my money or gold.

Zooka
01-27-2011, 06:52 AM
I've seen all sorts of crooks in the gold game, from employees dropping nuggets down into their gloves and muck boots, to corporations which defraud investors as a way of doing business, to smart, capable men who nevertheless just plain like to steal for stealing's sake and lie for fun; and even had a lawyer from a western state admit to me that his firm specialized in assisting guys with lots of money in stealing claims that had been proved out with suckers' money. Process: Use the rubes' capital to lease the ground, set up wells, ponds, etc. and get some ancient equipment and prove up the mine, and if it is a good one, then declare that you are out of money and have to fold up shop, so you lose the leases; then the real behind the scenes angel moves in and leases the ground from the claim owners and works it for mega profit. Another common trick is for a claim owner to make a "deal" with some hungry but undercapitalized folks, wherein the owner leases them some claims, and provides them with some ancient equipment, all for one low, low price. The equipment will not last long enough for them to make enough money to make the lease payments, they spend all their time and money fixing junk equipment, so you string them along until you have bled them dry or another wealthier sucker shows up. Then the claim owner again leases the junk equipment and claims. The gold never gets used up on the claims, and you can make 100% profit per year on junk equipment. Some deal!(That is why I am a fan of leasing equipment from equipment leasing companies / distributors. Leasing a new or nearly new excavator for a season means you are probably never down for repairs; and costs about the same or less than the piece of junk that'll send you to the poorhouse when it fails. In a 100 day mining season, every day you are not moving dirt means 1% off the gross revenues. Being down for 10 days means 10% less money coming in, and if your projected profit margin is say 15% above the season's costs to mine, you have reduced your profits by 2/3, not counting the repair bill.)

fish5050
01-27-2011, 08:15 AM
Thanks for that awsome mining insight Zooka, it kinda "fills in the blanks" on a couple of potential mining "deals" i've been shown. I have always wondered about the ancient equipment vs the modern lease and your evaluation makes perfect sense.... Question, Have you ever thought about "trading places" with someone in the lower 48 for a long weekend or so. You come to the country club, reside in a very nice home overlooking the courses premier green & fairway while traveling to the clubhouse & restaurant in private cart. No possible dui in that situation bud.
In exchange I get to do the same thing, and experience Alaska mining at your facility at a later date. I've done the Alaska flyin fishing trips as a tourist before, but i'd bet your life and approach is much different. Appreciate your thoughts.

Fish

Zooka
01-28-2011, 04:52 AM
LOL Sorry Fish I am currently not in possession of a mining facility in Alaska, or anywhere else for that matter. Had to get a real job after the last debacle / life lesson / mining venture! I've been involved in (real) prospecting ventures in the Seward peninsula, Fairbanks district and the 40 mile, and was a part owner/operator of a mining operation in Nevada for a couple of years till a judge took it away from us; but i'm not yet a true sourdough, just a summer time visitor like yourself. So far.

Here's another pitch for the inexperienced: Guy shows you awesome sample data, has long list of credentials, "currently not mining" though, because he needs startup money for this incredible new project. It can't lose. So you sign up, contribute tens or hundreds of thousands, and he goes and buys a bunch of equipment and supplies, gets them to this site, digs a few holes, and says, oopsie, there is not enough gold there for a mine. You say, darn and shucks, i thought it was a sure thing; oh well, at least we can sell the equipment and get some of the money back.
He says, "uh, what this "we" bizness? Agreement says you just get a % of the gold we get from that locale, you are not even a part owner of this lovely dozer and excavator and support gear, it all belongs to me." And sure enough that is what the contract says. You get a % of the "NSR" (net smelter return) from the Suchandsuch Claims group. Period. If he goes and hits it big on a different location, using that equipment and stuff your dollars paid for, it's all his.

Or one more oldie but goodie: Salty looking guy shows up with a bunch of nuggets and photos of his incredible claims (I am thinking of some on the San Miguel in Colorado, specifically that this allegedly happened with). He shows prospective investors this whole big presentation, to include real live claim paperwork, testimonials, and real live gold. Investors buy stock in his company. He then pays himself his handsome salary out of the proceeds, and goes on to next physicians' conference, investors' seminar, or fancy retirement area for the next presentation. He visits the claims a couple of times a year, and buys nuggets off of Ebay every once in a while, and basically has a pyramid scheme going. Early investors get some "profit" to keep them happy, and a couple even might get a big payday so that they can give testimonials. But it is all a Bernie Madoff. he never really works the claims. And one day when his bankroll is big enough, poof, he's gone.

"Due Diligence" takes on an even deeper significance in the gold mining business. Something about the way that that shiny stuff makes novices (and others!) get all sweaty palmed and flushed, when they get to see/hold some. Makes people get into risks they'd never get into if it was a copper mining project or a grocery store venture.
-Z

Brian Berkhahn
01-28-2011, 07:27 AM
Special thanks to Kerwin Krause and Linda Books at the DNR who unraveled this scam, we were discussing this yesterday in our AMA meeting.

Unfortunately this happens more than you know, I know of a guy up in the Fairbanks area that sold his claim 5 times, he made millions and was never caught and I was just told by a good friend of another one down in Idaho that just happened.

fish5050
01-28-2011, 09:33 AM
Sorry to hear you are mineless, but Thanks again for the insight Zooka. Your background and experience is still quite valuable to potential deal evaluations. I actually work in the commercial finance arena of Southern Oregon, and since gold has gotten over 1K an ounce it seems we have seen more mineing proposals for the first time in many years. I'm pretty good at due diligence, and would still like to use you as a resource because of your background. I only do win-win deals, with no losers involved, so i'm finding it takes a lot of research and negotating to be able to put a legitimate opportunity together. Like one miner told me "Knowledge is knowing that a tomato is a fruit, but wisdom is knowing not to put it in the fruit salad". All the Best to you and your family.
Fish

Zooka
01-28-2011, 08:48 PM
Fish, I appreciate the kudos, and would just say that there are a bunch of people on this forum that are better qualified to do such evaluations! I'd start with Steve H, that is a man with a nose for gold, and for truth, like just about no one else I have seen. The list goes on to Mike Busbee, who definitely knows the genuine process of making a mine work in Alaska better than anyone else here, and Dick Hammond, who is right there with him; they are the two most experienced "real miners" I can think of off the bat here for investor- level heavy equipment projects.
Then there are the geologists; Geo Jim is an old placer hand in Ak, and there is the hard driving Kringle, and GeoWiz is no tenderfoot either;
All in all, that group would be a great place to start for an evaluation team.
And for all you other full time miners and mining consultants who I left out, my apologies! I am sort of shooting from the hip here! Chime on in!
I have a suspicious nature when it comes to dealing with mine promoters, and some experience with the business of prospecting and evaluating potential placer projects, but these guys can shoot you the straight skinny from many more years' experience in the field than I can, from the site evaluations and logistics estimates to the permitting process (and hurdles), to the mine plan, to the appropriate contracts, leases, NSRs, lease rates, where to sell product, and when and how, recovery, real versus lab/classroom/internet mining, et cetera.

Me, I just type faster, and more, mostly...
Definitely give me a shout if you have any questions on potential projects, but there are better, more specialized and experienced folks for most (well, OK, all) of your queries right here on this forum. It is a terrific resource, and the price is right! All you have to do is ask.

-Z

Bill Bohan
01-29-2011, 12:16 PM
Thanks for the high five Zooka,
But I would not consider my mining fine-a-see and spelling as that of Busbee and Hammond as my mining projects are not in order to turn a profit. ...yet I think AkDan (Rodrigues) and Tenderfoot (Walt S.) crossed the financial hump with their projects as well this last summer. I think B.Berkain broke through the yellow tape this Summer but myself I am still running the longest yard.
My claims will ultimately require mechanization . I am of the opinion that one who tries gold rushing from the lower 48 is better off owning his own equipment.
He can always find a low budget claim holder to park his equipment on, and short term colaborate on better terms since he owns the equipment. And any solid running equipment brought up here to Alaska is worth its weight in gold.
Oh, and I have to print this disclaimer that I am not certified to give professional evaluation on mining properties as Jim Halloran, but that I am qualified to give subjective opinion of my own mining claims heh heh.
At the expense of the group hug ya did forget Overtheedge. Over and the Geowizard will tell you common seuth sense even though you may not want to hear it. It is commendable. Although sometimes the Wiz needs to be put on the bulldog's short rope and and choker collar, he does know the business.
Bill Bohan aka Kringle

Steve Herschbach
01-29-2011, 12:23 PM
I am more of a prospector and developer, not a real miner like Dick or Mike. If the price of gold is still high enough when I retire I might give a little small excavator based operation a go but for now it is something to dabble in for a few weeks here and a few weeks there.

tenderfootminer
01-29-2011, 02:36 PM
not sure if I can see the top of a financial hump yet hahahaha but Zooka has made a bunch of good points,However I believe I can run an old excavator a long time for the price of leasing one. For that matter alot of company's won't even lease or rent one to "a miner" At least where i am from.As for dozers if you rent one here in Delta it can't go near a tree lol new equipt.and they don't want it scratched.Airport Rental gave me a quote yesterday for an excavator "if it didn't go to a mine" and in one season I could buy a very nice one for the price.When I asked why they and others won't lease to miners they said simple we don't get paid and they tear stuff up! Wouldn't even lease if a miner paid up front for the season . Oh well On that note alot of folks keep scabbing there equipt along (me included)till its junk but a little maintanance all summer and alot of repairs in winter old Iron can be profitable example I am picking up this hoe for the cost of 2 months lease its old but in great shape so.....If i do no maintanance and it makes it 3 months I saved alot of cash.however New equipt. sure is sweet :) I am an operator and grew up on old Iron if not I might think otherwise.A new guy in the dirt game would not get the hours out of old stuff that I do so may be better off leasing. back to the subject Zooka points out alot of ways people scam the new guy.My theory is trust everyone but....cut the cards research first and wonder why they are not mining it themselves :-) http://i372.photobucket.com/albums/oo165/tenderfootminer/100_3086.jpg

Zooka
01-29-2011, 09:20 PM
Yikes! Sorry, OTE! My big bad!

Tenderfoot, your points about old iron are spot on. But very few of the people trying to gold rush Alaska have even operated heavy equipment, much less pulled maintenance on it. So getting those tenderfeet wrapped up in a deal with old iron is begging for trouble.

And is that a grey beard i see on that excavator??? I bet that bucket was double its original weight by the time you had all that armor aytached...


-Z

P.S., nice camp!

overtheedge
01-30-2011, 12:25 PM
Yikes! Sorry, OTE! My big bad!


No apology needed or due. By definition, I am only qualified as a lay geologist/prospector. Were actively mining my sole pursuit, I would see the Copper River Basin (CRB) in the rear-view mirror as I headed north of the range. If you hunt tigers, you better go where they are.

Sure there is the Dan Creek-May Creek areas, but I don't need NPS head-aches. Then there is the Slate Creek area, but it is miles from the nearest road. Nabesna is NPS again. It appears that someone has claimed the Ahtell Creek area although it is lean diggings at best. I note that it is for sale.

Mining infers profitability. It hasn't and probably won't exist in CRB except possibly as small lode. I have little doubt that a concerted effort won't produce a small poke, but long-term profitability demands relocating efforts north of the range.

fish5050
01-30-2011, 09:16 PM
Ok Tenderfoot, and any of the rest of you folks needing a good trommel, check out the attached pictures. This unit is owned by a miner friend down near the Oregon/California border about 5 miles from Interstate #5. He is closing the claim in the next couple months and moving to a new remote mountain side location that requires small portable equipment. This 30ft x 5ft barrel is turned by a Toyota 20R engine with 3spd tranny. The shaker is powered by a 10hp Honda. TYH is 75, but if you use a conveyor feed instead of excavater, it can be adjusted to be run by 1 man. If you have a crew and tractor then simply enlarge the hopper and it will do well over 75tyh all day long. He is asking 20K but will listen to all offers, especially trades involving small portable equipment for his new venture. The nearest airport is Medford, Oregon. We will provide transporation, room & board for anyone wanting to come evaluate & test the trommel. Any questions call 541/944-3457. All the Best.

Fish

Aristotle
02-01-2011, 09:38 PM
I've seen all sorts of crooks in the gold game, from employees dropping nuggets down into their gloves and muck boots, to corporations which defraud investors as a way of doing business, to smart, capable men who nevertheless just plain like to steal for stealing's sake and lie for fun; and even had a lawyer from a western state admit to me that his firm specialized in assisting guys with lots of money in stealing claims that had been proved out with suckers' money. Process: Use the rubes' capital to lease the ground, set up wells, ponds, etc. and get some ancient equipment and prove up the mine, and if it is a good one, then declare that you are out of money and have to fold up shop, so you lose the leases; then the real behind the scenes angel moves in and leases the ground from the claim owners and works it for mega profit. Another common trick is for a claim owner to make a "deal" with some hungry but undercapitalized folks, wherein the owner leases them some claims, and provides them with some ancient equipment, all for one low, low price. The equipment will not last long enough for them to make enough money to make the lease payments, they spend all their time and money fixing junk equipment, so you string them along until you have bled them dry or another wealthier sucker shows up. Then the claim owner again leases the junk equipment and claims. The gold never gets used up on the claims, and you can make 100% profit per year on junk equipment. Some deal!(That is why I am a fan of leasing equipment from equipment leasing companies / distributors. Leasing a new or nearly new excavator for a season means you are probably never down for repairs; and costs about the same or less than the piece of junk that'll send you to the poorhouse when it fails. In a 100 day mining season, every day you are not moving dirt means 1% off the gross revenues. Being down for 10 days means 10% less money coming in, and if your projected profit margin is say 15% above the season's costs to mine, you have reduced your profits by 2/3, not counting the repair bill.)

Hey Zooka,
If you have information on leasing companies for both mining and dirt moving equipment please let me know. Would like to do the 1 season lease thing myself.

Thx

Zooka
02-02-2011, 07:01 PM
Well, it's best to lease locally, just for the transportation savings, so i cant give any specifics for you. But also, as a general rule, the bigger/ more national the leasing company, the pricier it'll be, but the more likely the equipment will not be fancy painted junk. Some fellows here are saying that miners can't get a lease even if paid up front; but i think that might be a bit of an exaggeration. In other words, you get what you qualify for, pay for and negotiate for. Just like most other things.

Put it this way. Would you rent yourt $250,000 yellow iron to someone who had never operated or maintained such items, who was undercapitalized and desperate, and who had little left to lose if they failed?

Or, (and this is based upon a true tale): What would you think if you were investing in a sand and gravel plant for road construction et cetera and the operator came to you, the investor, and said that he had bought 2 D-8s, a Terex D-8 equivalent, 2 Cat scrapers, an offroad 30 ton haul truck, an oiler/fuel truck, a 5 yard Terex loader, a 9 yard Terex loader, plus a grader, a huge 10 inch sand pump with a cat diesel motor, and two 20,000 tanks for diesel, all for just $120k? Would you think he was some kind of fancy dealer/negotiator, a junk merchant, or a shyster?
Now, substitute GOLD MINE for sand and gravel roadbuilding operation. Funny how that answer changes. And the equipment renters know this from hard experience. And will price accordingly. I don't blame them, actually.

I don't see a Discovery Channel show called "Asphalt Rush", about some guys down to their last nickel who are bound and determined to mine the government's economic stimulus package by starting a road construction company and getting government contracts to lay asphalt, having never built a road or even operated a roller or broom. Why not?

Whoah. wait a derned minute. Light bulb went off. I could make millions... especially with Disco channel backing my play..... Be back later....

-Zooka

Geo Jim
02-12-2011, 11:33 AM
Well thanks Kringle for the pat on the back, but the compliment should be more narrowly focused. I can give geologic advice about placer mining. For example I know from experience that Sitkanak Island does have plenty of gold and platinum in its beaches. The metals are very fine grained, like most beach gold, and difficult to recover due to the fine size and the abundance of other heavy minerals. I have been there and sampled some of it. The island is composed of uplands and huge compound beach deposits. The mineralization is shallow but extensive.

So what is wrong with it, you ask? It has the worst weather in Alaska! The high winds dont slow down to change direction. Also it is over run with mean feral cattle. Prepare to hunker down when you go out there!
Geo Jim