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WHEN GOLD DREAMS PAN OUT

Tuesday, August 17, 2010

Pursuing precious metal in a place made famous by the gold rush of 1896, Shawn Ryan scrimped and saved for years. Now, after many years of digging, his work has spurred a claim-staking rush and a multimillion-dollar takeover

BRENDA BOUW

VANCOUVER -- MINING REPORTER




Sean Ryan and Cathy Wood at their home in Dawson City.


Gold fever is gripping Yukon for the first time in more than a century following a discovery by a penniless and persistent prospector that was determined to find the source of the original Klondike deposits.

Shawn Ryan lived in a tin shack for years before uncovering the so-called White Gold district, not far from the fabled Klondike zones. While his work has yet to result in an operating mine, it has already sparked a record-setting staking rush and led to the multimillion-dollar takeover of a junior gold explorer by a senior producer.

More deals are expected as junior firms flock to the area around Mr. Ryan's findings and raise millions to finance further exploration, making big bets on what they hope will be the next motherlode of gold.

Michael Wark, executive director of the Yukon Chamber of Mines, said Mr. Ryan may in fact have discovered a source of the Klondike gold from the late 1800s, but "regardless, they have a significant gold discovery there."

For Mr. Ryan, the discovery south of Dawson City, near where the White and Yukon rivers meet, is the reward for the years spent hunting for gold in one of the world's most storied mining districts.

The area was made famous by the Klondike gold rush of 1896, but has received only sporadic attention since. In recent years, other companies came close to making the same discovery as Mr. Ryan, but walked away after running out of money or deciding other opportunities looked better.

Mr. Ryan hung in. He and his wife, Cathy Wood, and eventually two children, pinched pennies for years, surviving mostly on an annual $10,000 exploration grant from the Yukon government. Living on the outskirts of Dawson City, they paid $250 a month to rent a 365-square-foot tin shack that had served as the local barbershop at the turn of the previous century.

In 2004, after about eight years of hunching over maps and sampling soil, Mr. Ryan finally found the first signs of what he had been digging for so deeply, when assay results indicated geochemical markers associated with gold.

It took a few years for others to take notice, but now that they have, other exploration firms are flooding into the area, bringing with them a much-needed boost for local businesses ranging from hotels to helicopter companies.

The number of mining claims in Yukon surged to just under 110,000 in the first seven months of this year, about 38 per cent more than all of 2009, which itself was a record year with just under 80,000 claims.

Prospectors obtain claim tags from the mining recorder, a unit of the territorial government, then stake their claims on Crown land, in the traditional manner by using posts to mark out a rectangle no bigger than 1,500 feet on each side. Each claim costs $10 and prospectors have to do at least $100 of work a year on each claim (or pay $100) to maintain their rights to the land.

The staking rush has turned Mr. Ryan into a hometown hero. "He's a gem for Dawson," said Josée Savard, who has been operating Klondike Kate's Restaurant & Cabins with her husband in the town for the past two decades.

Mr. Ryan's story is a rags-to-riches tale of a miner's son from Timmins, Ont., who moved west as a young man for a job in the bush picking morel mushrooms. He met his future wife at work. It was when she was seven months pregnant that the two decided they needed to find a new way to make a living. Mr. Ryan, who had done some geological work for his dad's company when he was younger and wanted to go on working outdoors, decided to become a prospector.

Today, the self-taught geologist has become one of the rare prospectors to hit the jackpot. He has made millions through the share options and cash that he has received, and will become even richer if one of the properties he has uncovered turns into an operating gold mine and he begins collecting royalties on the output.
 
 Mr. Ryan and his wife now run Ryanwood Exploration Inc., a geology consultant that has expanded to more than 50 employees.

"There haven't been too many prospectors that found a discovery that opened up a mine. That will be neat if that happens," Mr. Ryan, 47, said in a recent interview from his home in Dawson City, which he describes as an upgraded 900-square-foot shack.

The secret behind his fairy-tale success? Science, persistence and a lot of patience.

Mr. Ryan believed that the source of the Klondike gold rush was out there, somewhere. He did his homework, and discovered that the White Gold region had unique soil that provided good clues as to what might lie beneath the surface. Navigating by those clues, he dug deeper than most prospectors had in the past. Then he stuck with it, for years.

"It's just perseverance. A prospector has to believe there is something out there. Now it's just coming true. I can tell people, 'See, I told you so.' I always believed in it," said Mr. Ryan, who is moving to Whitehorse in the coming weeks with his wife and two children, now 12 and 14.

"I kind of feel like the Clampetts on the way to Whitehorse and into a bigger house," Mr. Ryan joked. The family also went on their first vacation this summer, a two-week trip to Europe.

While Mr. Ryan has become the latest poster boy for prospectors, his road to riches was long and rocky.

The first option agreement he signed with a junior mining company around 2004 fell through after less that two years, when the company decided it wanted to pursue oil and gas exploration instead. Mr. Ryan continued working the property and brought the data to a mining conference in Toronto in 2007. It was there that his work began to attract attention. One startup company, Underworld Resources, was particularly eager to get its hand on the property.

"Even though it was an early stage property (never been drilled before), it had all of the geological and geochemical indicators that I look for in a property," Rob McLeod, founder of Underworld and now head of exploration at Full Metal Minerals, said in a recent e-mail to The Globe and Mail.

"We knew that there were other junior and possibly major companies that also wanted to option the property from Shawn, so we offered a very generous deal, including a lot of Underworld shares and a good royalty. Fortunately we had the best bid, and the rest is history. Some said we paid too much at the time."

Underworld hit gold on only its fourth drill hole, an amazingly fast result in the mining business. The grade proved to be higher than expected and, as more drilling led to more positive results, the discovery caught the attention of Kinross Gold Corp., a Toronto-based producer. Last summer, Kinross  perfectlybought an 11-per-cent stake in Underworld and then took over the entire company nine months later for about $138-million, a 50-per-cent premium to Underworld's average trading price before the acquisition.
 His wife and partner, Cath, is vyery business savvy, and complements his technical skills"

"That made it real ... it validates the discovery," said Michael Gray, an analyst at Macquarie Securities.

It also resulted in Mr. Ryan being named Prospector of the Year by the British Columbia mineral exploration industry. "Shawn is the most talented prospector I've met in my career," Mr. McLeod said. "He uses a systematic approach, and invests his money wisely in sampling ...
While Underworld was drilling Mr. Ryan's first property, the prospector was already working on his second discovery in the area, which he optioned to explorer Kaminak Gold Corp. last year. Kaminak recently announced its third discovery on the property in the so-called Double Double zone. Its stock has climbed sevenfold over the past year to around $2.30 and the company recently raised $14.5-million to finance further exploration on the property.

Kinross said it was drawn to the area in part because of its proximity to its Fort Knox mine in Alaska. "The acquisition [of Underworld] put us in a position to be right in the middle of all of the action in the Yukon,
which is where we want to be," said Glen Masterman, vice-president of exploration at Kinross.

How soon a mine will be built on the site is unclear. Mr. Masterman said there are years of exploration still ahead. "There are positive signs the resources are robust," he said.

For Mr. Ryan, his past discoveries are just the beginning, as he continues to work on finding "one or two more" deposits in the area.

"There is more," he said. "Because it is such a new district ... we expect to find a few of these in the next few years. It's coming back again, the gold rush from 100 years ago."

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YUKON GOLD, THEN AND NOW

1896

Prospectors discover gold by the side of Rabbit Creek - soon to be renamed Bonanza Creek. Miners rush to the Klondike region and Dawson City is founded at the junction of the Yukon and Klondike rivers.

1898

Gold rush subsides as newcomers find all productive land has been staked. Discovery of gold in Nome, Alaska, in 1899, draws away prospectors.

30,000 Population of Dawson City in 1898.

2,000 Population of Dawson City today.

$16 Price per ounce of gold dust in 1896, when it was the common currency of Dawson City.

$1,226 Price per ounce of gold today.

110,000 Number of mining claims in Yukon in the first seven months of 2010, a 38-per-cent increase over all of 2009.

Sources: Government of Yukon; Bloomberg News

______________________________________________

Dawsonite named Prospector of the Year

Wednesday January 27, 2010

By John Thompson

Yukon News

Submitted Photo/Yukon News

Shawn Ryan of Dawson City was chosen Prospector of the Year by British Columbia’s mineral exploration industry last week.




Shawn Ryan likes to compare his day job to the search for Sasquatch.

The Dawson City resident is tracking something mysterious. No one has had a clear view of it, but everywhere Ryan looks, he finds evidence of its existence.

He’s hunting for the Klondike’s fabled motherlode. Or, as he likes to call it, “the beast.”

There’s good reason to think that if anyone can succeed in finding such a thing, it’s Ryan.

Over the past 13 years he’s discovered a string of promising gold properties, the most prominent being Underworld Resource’s White Gold project, which is currently estimated to contain 1.5 million ounces of gold.

In the past year, the White Gold discovery set off the biggest staking rush the Yukon has seen in at least a decade.

Fitting, then, that Ryan received kudos last week from British Columbia’s mineral exploration industry, which named him Prospector of the Year.

He and his wife, Cathy Wood, are partners of Ryanwood Exploration. The company has grown from having the couple as its sole employees, and being based out of their old “tin shack,” to employing 28 workers last summer to help with Underworld’s drilling work.

When Ryan options a claim to a company such as Underworld, he’s given right of first refusal for future exploration work. Underworld’s CEO, Adrian Fleming, calls Ryan “the best in the business.”

Ryan, 47, credits his success to patience, determination and a few hi-tech tools in his arsenal. When he started prospecting, Ryan depended on transparent paper, light tables and hand-coloured maps. He now relies in global positioning system co-ordinates, Google Earth and the latest geophysical maps produced by the Yukon and federal governments to chart his latest findings.

The focus of his problem-solving techniques is not limited to gold.

He used similar methods to ferret out explosions of morel mushrooms in the Klondike bush when gold prices had slumped, but there was a hot market for fungi in Europe.

While hunting mushrooms, he conducted methodical helicopter surveys in search of bush charred by recent forest fires - ideal conditions for morels to thrive.

In search of gold, he started with the latest geophysical maps produced by the Yukon and federal governments, and the hunch that something big has yet to be found.

“You have 13 to 20 million ounces of placer in the Dawson area,” he said. “It had to come from somewhere.

“It’s all detective work. It’s really a scientific game. That’s what’s fun about it. They say this is the only business where the probability to fail is the norm. You’re starting with a low probability of success.”

Like a shrewd investor, Ryan spreads his risks. He’s watched other prospectors bet it all on a single claim and lose.

Ryan, likening his work to a card game, prefers to “play 25 card games at once.” And he spends several years trying to build each case.

“You’re hoping out of that, you’ll win on three of them,” he said.

And it pays to be careful. The Golden Saddle deposit that became Underworld’s White Gold property could easily have been overlooked. What is now believed to amount to $1.5 billion worth in gold showed up in just two soil samples.

“We just walked right over top of it,” said Ryan.

The deposit could have been easily missed because only a small tip of it protruded into soils shallow enough to be captured by Ryan’s sampling work.

Later drilling work has revealed a deposit that extends at least 12 kilometres long and three kilometres wide.

The moral of the story: every sample counts. “They’re all little pieces of the puzzle,” said Ryan.

Behind Ryan’s vision and strategy is plenty of grunt work. Ryan and his workers explore an area by walking a grid and periodically pulling half-metre plugs of dirt from the earth using special probes that were originally designed by the Dutch to plant daffodils.

These samples are later tested at a lab for indicators of gold. The results are then plotted on a map.

Cathy Wood is affectionately called “the mainframe” by Ryan for the work she does to manage the more than 10,000 mineral claims registered in their company’s name.

She also hires their team, sizes-up prospective clients and, at one point, cooked enough lasagna and shepherd’s pie to provide 1,200 man-days of meals in the field.

Ryan is convinced more discoveries like the White Gold deposit will be struck in the next five years. And he’s determined to be the one who finds them.

“I’m working on fear. My biggest fear is to stop a mile short from the next deposit,” he said.

“It’s the best Easter egg hunt going.”