New Jersey Goes For The Gold(en Chest)

Wallace, Idaho – Some guys talk about mining. Someday. (Hoo-wah, there was a passel of that at the PeeDack show in Tarahtah last week.) Other guys just do it.

It was one of those by-the-way things, no big deal, just-mention-it-in-passing remarks calculated to set you back hard on your stern-bearings. “We’re going to help Barrick with their hedgebook,” deadpanned New Jersey Mining Co.’s (NJMC) Grant Brackebusch, as we scrambled along the newly excavated dump outside the newly constructed ramp at the Golden Chest Mine in Murray, Idaho Wednesday last.

Say what? Yes, gang, you heard it here first. Stop the presses. We are committing news here. New Jersey is shipping. NJMC just signed its first purchase order with Barrick, and will send 180 tons of gold-rich concentrate to Darth Vader from NJMC’s mill near Kellogg. They’re hiring miners and putting on a mill crew. The ore is coming out of the legendary Golden Chest. The Chest is one of the oldest lode claims in the Coeur d’Alene District, filed while the pioneers were still placer- and dredge-mining gold in Prichard Creek in the wake of the John Mullan Road construction in 1859 – two decades before silver was discovered on the South Fork of the Coeur d’Alene River.

It’s finally payday for the father-son team of Fred and Grant Brackebusch, and for New Jersey’s shareholders. Yeah, 180 tons may not sound like a lot, but it’s just a start. Take one look at that giant vein they cut in to last year, and plot out the drill patterns a bit (the vein is wide open on strike and depth) and it’s not hard to imagine a couple hundred guys at work, and a crew turning a 1,000 ton-per-day mill, in the very near future. Everything is in place.

This is the first “new” mine production from the Coeur d’Alene District since Asarco fired up the Coeur Silver Mine in 1976. Twenty-nine years. That’s how long a bust cycle lasts. Which means, what? Three decades of good times ahead. Let’s hope so. And let’s hope there’s still time to get out of your GM stock and in to something meaningful – like a silver or gold MINING stock.

The Golden Chest’s history is as colorful as the district’s. For a half century it was owned by Oscar- and Emmy-winning composer Johnny Green (Easter Parade, Oliver, They Shoot Horses, Don’t They? West Side Story.) Green leased the mine out a few times, but rarely saw a penny from it. Ore from its famed “popcorn” stope – nuggets literally the size of popcorn – disappeared into the Butte pipeline, unrecorded except in the memories of the guys who stole it.

In the summer of 1983 former Minnesota Vikings tight-end John Beasley showed up on my front porch in Wallace – literally. I wasn’t there, so he left a note saying to meet him at a certain Murray saloon; he’d just got control of a gold mine up there and wanted to talk about it.

The Beaser is a meat of a guy, 18 hands high, with a fetching grin and an aw-shucks attitude that belies his serious-as-a-heart-attack approach to all things mining, derived from the Cal Berkeley MBA degree he earned while playing football for Joe Capp’s Bears. And in case I didn’t believe his schtick, there was that Super Bowl ring, big as a house, earned catching passes and hand-offs from quarterback Fran Tarkenton. Beaser and other alumni of the Minnesota Vikings. Beaser’d been injured playing for the Chargers a few years later and was out on disability and had decided with his former teammates to put a portion of their meager pension earnings into investments. Golden Chest was one of their acquisitions. Beaser bought out his teammates’ interest in the Chest and wondered what was going to be his next move. After years of hustle and sturm and drang, not to mention hosting a few chili-cooking contests in Murray and signing a few autographs, Beaser was living in a cabin on the Golden Chest dump and schlepping beers at the Prichard Tavern to augment his $2,000-a-month NFL pension, one eye on the Chest, the other on his future wife, Patty. Quite a spin from his previous Laguna Beach trappings.

Beaser’s badgering paid off. Newmont came a-knocking in the mid-1980s, an exploration deal in hand. They poked and prodded the property and drilled out a 250,000-ounce gold resource – too small by their standards but monstrous by district standards: Newmont turns its nose up at anything less than a million ounces. But Newmont had the decency to hand over all of its drill results to Beasley’s Metaline Contact Mining Company (MTLI) in exchange for first refusal, should MTLI and NJMC should decide to JV the Golden Chest.

New Jersey, meanwhile, was poking around the old New Jersey claims, which are just below the Sunshine Mine, and found sufficient interest to build a 100 ton-per-day floatation mill which went fully operational, complete with a permit to use cyanide-leaching, two years ago. (Folks who attended last year’s Silver Summit had a chance to tour New Jersey’s spanky new mill, and will get the same chance this year.)

So here was NJMC, with a brand-new mill, and MTLI, with the “ brand-new second-hand” Golden Chest Mine. It was no small bit of serendipity that got them together. Grant and Fred hustled 350-large out of a couple of investment conferences, hired the gypos, and went looking for ore below where Newmont’s drill-holes ended with their ramp. The first few hundred feet through garbage argillite were discouraging; ratty ground, no showings. Then bang, and you can see the contact zone like a lightning bolt, the ground firms up into quartz and pyrite, and you’re into the Katie-Dora. The vein fattens out and ripples like the biceps on a weight-lifer. It’s an extension, Grant believes, of the larger Idaho vein structure that outcrops way out yonder. If the veins tie together, it will prove up a pet theory of his that this major fault was the conduit for much of the gold in the Murray district, the Mother Lode. If Newmont had hung in for another thousand feet, they might have found their million ounces of gold.

Unlike Newmont, however, NJMC is viewing Golden Chest as a full-blown underground, vein-mining operation, not an open-pit. They’ve blocked out 8,000 tons of ore in the proven and probable reserve category, enough to yield about 3,000 ounces of gold. Divide 3,000 ounces into 1 million, and you get an idea of the potential scale of this mine. MTLI gets between 3 and 6 percent of net smelter returns, depending on the gold price.

Here’s what you can like or dislike about New Jersey. They’re a bootstrap operation and they’ve avoided brokers in their IPOs and private placements. The Brackebusch family owns a lot of NJMC stock. You get whatever they say you get, without a lot of recourse. If you’re a shareholder in NJMC you’re a passenger on the plane; you don’t get to drive. On the flip-side, this debt-free flight is in the hands of some very capable pilots, and they’ve pulled off something we haven’t seen here since the Coeur went on-line in 1976 – a working precious metals mine with a potential our grandchildren could see. And I gotta tell you, a new mine is a fine thing to behold. So’s a paycheck. New Jersey’s got both.