Placer Mining Remains an Important part of the Yukon’s Economy

A recent economic survey of the Yukon Placer Industry commissioned by the Government of Yukon and authored by BDO Dunwoody in March 2002, concluded that:

“Survey results indicated that the placer mining industry is a major player in the Yukon economy.”  and

“In 2000 the industry had an economic impact of between $30.6 and $58.2 (million) before considering the cost and economic impact of government regulation.”

The same survey concluded that:

q       Placer mines purchased over 89% of their heavy equipment in Canada   and spent almost 92% of their operating expenses in the Yukon;

q       Operating expenditures were split between wages and salaries, royalties, fuel and lubricants, equipment repair and maintenance, equipment lease or rental, accommodation and food, permits and licenses;

q       Over 90% of placer mine owners and over 68% of their employees are full time residents of the Yukon and pay their taxes in the Yukon.

The Dawson City Economic Profile completed in 1994 by the Government of Yukon concluded that;

q       Placer mining has the greatest economic impact in the Dawson Geographic Area (DGA).  Placer mining purchases total 54% of the DGA economic activity, well in excess of any other economic sector.  Purchases by sectors were:

Placer mining                          54%
Government                            20%
private sector services           20%
pleasure visitors                     4%
business visitors                     1%
renewable resources              1%.

q       Placer Mining provides the most person months of employment of all the basic sectors, for a total of 42% of the employment in the DGA ($22 million in salaries);

q       Even at low gold prices, the Placer industry represents 15% of the private sector in the Yukon (source: Clive Aspinal, Northern Report, October 6, 2002, prepared for the Yukon Chamber of Mines);

q       “The same industry that spawned the Klondike Gold Rush and established Dawson City is still a major contributor to the Dawson and Yukon economies”.

Currently, placer mining is the second largest private sector income earner and employer in the Yukon (after tourism), but the net economic impact may in fact be the largest as the Yukon tourism industry is heavily subsidized.  Hard-rock metal mines have traditionally been the largest private sector employer in the Yukon; however, there are currently no operating hard-rock mines.  The Yukon economy is very depressed and there is a net emigration of people leaving the Yukon.  The largest single issue for all three political parties in our current Territorial election is the battered state of our economy….everyone wants and needs jobs.

BDO Dunwoody stated:   “Survey results indicate that the mining industry has a significant impact on the Yukon economy.”   In these dire economic times, it is clear that placer mining is extremely important to the Yukon’s economy.

Is the Yukon Placer Industry Unstable?

The answer is no, but it has not been immune to global economic factors and metal market cycles.

 Since 1980 there have been dramatic fluctuations in the price of gold  (US$613/oz to US$250/oz) and the gross value of placer gold production has varied from Can$70 million to Can$22 million.  However, the number of operating placer mines has remained relatively constant (see graph below).

Source of data:  DIAND “Yukon Gold Production 2001”, William Lebarge.

The recent BDO Dunwoody report states:  “Many of the respondents have operated their mines for over 20 years while only 15% have operated for less than 5 years.  This indicates that most Yukon Placer miners have been around for a long time and are committed to the industry.” There have been claims that placer industry is a “come and go” industry; however, the data shows quite the contrary, with the number of placer operations remaining fairly consistent despite price fluctuations.  

The Canada Business Service Centre advises in its article “The Odds of Success

Starting your own business is risky”, that “…of all firms started, just about a third fail within one year, and 80% fail within three to five years. However, after five years, the rate of discontinuation drops rapidly…”.

This report also concludes that “the future outlook of gold is promising. Despite the frequent pullbacks attributed to profit taking by speculators, a rebounding global economy, reduced political interventions, investment trends, and gold’s lucrative safety feature all point towards a strong gold in the future.”  As an example, gold prices over the last year have steadily risen from a low of about US$ 260/oz to a high of US$ 330/oz.

The Yukon’s placer industry has been working steadily since 1885 when they were mining on the gravel bars of the Stewart and Yukon Rivers. By 1896, with the discovery in the Klondike there were already 250 miners in the Fortymile area.  The placer industry has prevailed throughout several downturns in the economy and through the great depression of the 1930’s.  There is no evidence to indicate that placer miners go out of business frequently.  When gold prices are low and/or operating costs are high the mines may cut back or temporarily suspend production but placer miners are in the industry for the long haul, as the evidence and facts clearly show. Virtually all Yukon placer mines are family owned and operated, with personal capital invested and personal guarantees on financing.