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 mining companies 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 in the area south of Dawson City, near where the White and Yukon rivers meet, is the reward for the years spent hunting for gold in the heart of 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 bought 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.
"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 ... His wife and partner, Cathy, is very business savvy, and complements his technical skills perfectly."
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.
"These are really exceptional mining entrepreneurs," said Ali Pejman, managing director of mining at Canaccord Genuity, the lead investment firm for both Kaminak and Underworld.
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."