"You will have pieces of gold by the bushel," said the fortune cookie that realtor Bart Conn broke open at a Chinese restaurant. With the fortune in his waller, Conn went to Nevada and dug up two buckets of dirt from land that was for sale. Then he put the dirt through a machine -- and out came a small nugget of gold. Four years later, his gold-mining general partnership, Proquip Co., has sales estimated at $3 million a year, and it operates a mine in Nevada called Fortune Cookie.
Proquip is one of several small mining start-ups that seized the moment when the price of gold soared to $850 an ounce early in 1980. Although the price has since dropped to below $350, gold still can be one of the most profitable metals for the mining industry. The Bureau of Mines reports a 103% increase in domestic gold production over the past five years and predicts rising demand for the next two decades.
Gone are the days when hard-drinking drifters loaded a burro with pans, picks, and shovels and headed for the gold fields. It takes at least $1 million to enter the market today, but Donald Busby, president of Goldsil Mining & Milling Inc., in Denver, insists, "I don't think there's any long-term risk." Goldsil, which processes 1,500 tons of ore a day during the summer, started in 1979 as a partnership and, like many other small mining companies, raised additional funds by going public.
Marathon Gold Corp., a subsidiary of Centennial Gold Corp. in Craig, Colo., is another start-up that has profited from the investment community's faith in gold. In December 1982, before Marathon had mined even a nugget, the year-old company went public and raised about $2 million. According to controller Warren Jaynes, the company is still in the exploration phase, but expects to start mining soon.
Striking a rich lode still depends largely on one factor. "Intuitiveness and perseverance lead to success in exploration, but the biggest factor is luck," says J. M. Lucas, a physical scientist at the Bureau of Mines. A prescient fortune cookie might help, too.
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.