Salting has a lengthy history

In the opinion of folksy American writer Mark Twain, “a mine is a hole in the ground with a liar on top.” He was a newspaper reporter at the time in the boom town of Virginia City, Nev.

After the discovery of the fabulously rich Comstock lode in 1859, a new stock exchange was established in San Francisco to serve the burgeoning mining market of California and now Nevada.

The stock exchange was imbued with the vibrant spirit of the West and anything and anybody were fair game. Obviously, Twain’s investments had turned sour. In the process, he learned a great deal about the ways of the mining promoter.

Despite all the stock market shenanigans, the Comstock lode prospered. Even today, 130 years later, it is still considered to be one of the world’s richest silver-gold deposits ever found. It produced more than 15,000 tonnes of silver. Together with Michigan’s copper, it financed the northern states’ military machine that finally wore down the Confederacy in the Civil War in the 1860s.

Though Twain’s losses in the stock market were painful, they were business losses. There was nothing smacking of illegality or fraud, at least under the laws of the time.

But “salting” is illegal, and the practice was likely honed to a fine art on the Comstock. It still comes to light today.

It is always a possibility whenever precious metals, or valuable mineral properties, are being purchased.

All that has to be done is to “plant” high-grade mineralization in such a manner as to suggest that all the mineralization that can be seen, or that is presumed to be present, is of the same high grade.

It is an easy fraud to perpetrate. It is also not too difficult to detect. But cash has often changed hands or the stock rocketed on the news of “phenomenal” assays in the diamond drill core before fraud is suspected. In the meantime, and especially if cash is involved, the birds will have flown.

If it is a stock market scam, the RCMP will often be able to point fingers after they have examined the day-by-day record of stock transactions. But that is just about as far as they can go. The evidence is circumstantial. There will be many heavy traders of the stock who will be innocent of any wrong-doing or who have the slightest knowledge of any conspiracy. Evidence that will stand in court is difficult to come by and convictions are few.

One of the historic salting techniques was noted more than 100 years ago. A shotgun is used to blast fine metallic gold against the quartz vein that will later be sampled by the purchaser’s geologist. Gold is a soft metal and smears of gold remain on the hard quartz. The resulting workmanship is understood to be quite authentic.

Other methods use liquids containing gold in solution. The solution is dropped sporadically into the fluxing-agents in the sample furnace room, or, allowed to soak into the drill core itself.

Sometimes, finely powdered metallic gold is sprinkled on the core. As one mining director found out to his cost, it pays to exercise a degree of caution when considering the purchase of placer gold property, especially if the owner is a roll-your-own cigarette buff.

The property in question was in Idaho, a state with a long history of placer gold production. The vendor obligingly panned samples from wherever the director wanted and each time there was a pleasing amount of fine gold left in the pan. The director never saw the vendor again, or the $5,000 he paid out to clinch an option agreement, or another speck of gold despite a 5-week placer drilling program.

It turned out the vendor had pulled the same trick a score of times in practically every western state. He rolled his own and, as he puffed and panned away, his cigarette ash invariably fell into the gold pan. Needless to say, the ash was loaded.

Sometimes, the fraud of salting can backfire. The new owner goes ahead with development and finds an orebody. But that’s an infrequent story. For how often will the owner publicly acknowledge he was duped in the first place? If a handful of conspirators benefit from salting, the price that is paid is the bad name given to the mining region in which it was perpetrated. Few entrepreneurs will have anything further to do with new exploration and the region slips into undeserved obscurity.

The Blue Mountains of northeast Oregon are an example. This well-mineralized country saw dozens of small but profitable gold mines in the last third of the 1800s. Some of the ores were refractory so far as mercury amalgamation was concerned. They yielded less than two-thirds of their gold content. This was years before cyanidation came into general use, and cyanide would have given a far better recovery.

The net result of poor metallurgy was mine closure as soon as the mill heads dropped to 0.5 oz. gold per ton.

Half-ounce ore is now high-grade ore. How much remains to be mined, in pillars, in yet untouched oreshoots? A generation may pass before there are answers. Perhaps never.

It will be many years before the scandals involving Omega Mines (in 1969) and Tapin Copper (in 1974) are forgotten. Both companies were developing properties in the Blue Mountains. Both were the victims of salted gold samples.

Some of the shareholders of these (one-time) Vancouver-based companies were losers. The biggest losers are the state of Oregon and the industry that might have been.