Tuesday, March 6, 2012

Gold Rush Alaska Should Be Called... DIESEL BURN


Last week was the final episode of GOLD RUSH ALASKA. I have to give the Hoffmans credit for actually mining some gold their first year at the Quartz Creek mine. That being said, the show should be renamed DIESEL BURN rather than GOLD RUSH. The truth of the matter is the Hoffman’s operation was not really mining, but rather running large earth moving machines back and forth on the property consuming large amounts of diesel with the added bonus of finding 93 ounces of gold.

In my research on the top 5 Gold producers in the world, they consumed as a group on average 24 gallons of diesel for every ounce of gold they produced in 2010. I discuss this in detail in my upcoming article. If we compare this to what the Hoffmans did at Quartz Creek, you will realize why the name of the show should be changed.
Here is some basic math from remarks made by the Hoffmans during the show:

Todd or Jack stated that they consumed about $1,000 in diesel per day. I would imagine diesel is more expensive being delivered up there in Alaska. If we estimate diesel ran about $4.00 a gallon, the Hoffmans consumed approximately 250 gallons of diesel a day during their operation. If we also estimate that they only burned this for 90 out of the total 150 days that would be about 22,500 gallons of diesel consumed for the year. Again, these are just ball park figures as we don’t have the exact data.

HOFFMANS = 22,500 gallons diesel / 93 gold oz = 242 gallons of diesel per oz gold

TOP 5 GOLD MINERS = 470 million gallons diesel / 19.7 million gold oz = 24 gallons of diesel per oz of

If we take the Hoffmans total of 22,500 gallons of diesel and divided it by 93 ounces of gold, we would get a figure of roughly 242 gallons of diesel consumed for every ounce of gold produced at Quartz Creek.

In 2010, the top 5 gold miners consumed a total (estimated) 470 million gallons of diesel to produce 19.7 million ounces of gold. This turns out to be 24 gallons of diesel per ounce of gold produced. If we estimate that these gold big cap miners only had to pay about $3.50 (maybe less due to hedging) for diesel, their grand total diesel cost per ounce was:


$3.50 X 24 Gallons = $84 diesel cost per ounce of gold

$84 / $1,600 (average price of gold) = 5% diesel cost per ounce of gold

The top 5 gold miners’ diesel consumption was only 5% of their total cost per ounce of gold. However, if we look below, the Hoffmans spent a staggering 60% on diesel to produce one ounce of gold. This is why I am going to contact the Discovery Channel and have them change the name to DIESEL BURN.


$4.00 X 242 gallons of diesel = $968 diesel cost per oz gold

$968 / $1,600 (average price of gold) = 60% diesel cost per ounce of gold

If we take this a step further and multiply the Hoffmans total diesel usage for the year by the price of a gallon of diesel we have the following:

22,500 X $4.00 = $90,000 total diesel cost for the year

$90,000 / $1,600 (average price of gold) = 56 ounces of gold

I remember Jack coming out and saying that they had mined 15 ounces in four days which brought their total to 70 ounces. This was their breakeven amount which turns out to be about $110,000. We must not forget that they had repairs and other things as well to pay for during the year.

Even though these are rough figures, we can now see that the kind of gold mining the Hoffmans participated in the show GOLD RUSH is not the way to make money… it is a way to make the oil companies money. The Hoffmans consumed approximately ten times more diesel per ounce of gold they produced compared to the top five gold miners in the world.

Some say that the Hoffmans get paid for the doing the GOLD RUSH show. I sure hope they do, because if you figure all the work they did for those five months and each of their crew only got about five ounces of gold… that comes out to be about a salary of $53 a day for 150 day season . This is about $6.62 an hour for an eight hour day. They would have done better working at McFATs.