Black Hills Gold Discovery and early Development Bald Mountain Gold Mill, Lead South Dakota
Reports from miners and geologists on Custer's 1874 expedition to the Black Hills gave official confirmation to reports of gold deposits in the hills. For the next two years, the army attempted to protect the Indian-owned hills from prospectors while demand for entry to the gold fields grew. When negotiations to purchase the Black Hills and/or its mineral rights from the Sioux broke down in 1876, the army withdrew and a gold rush ensued. Gold camps were established quickly at Custer, Lead, Deadwood and Hill City, while 'Hay Town' to the east of the Hills, (later Rapid City) became the major supply center for the region. The two principle road links to the hills were from Fort Pierre to the east, and from Bismark, North Dakota, where the Northern Pacific Railway had its terminus. The railroads were of vital importance, bringing labor and supplies such as mining machinery to the remote region. The Chicago and North Western constructed a line to Pierre, and the Chicago, Milwaukee and St Paul reached Mitchel, both in 1880. The first railroad to the hills was the Fremont, Elkhorn and Missouri Valley Railroad (later part of the Chicago and North Western) which reached Buffalo Gap in 1885 and Rapid City the following year.
The first wave of gold prospectors worked the placer gold, gold eroded from the surrounding rock and deposited in gravel found in creek beds. Although groups of miners would sometimes cooperate to work large water sluice systems or extensive claims, the gold rush period was essentially characterized by small groups working low-cost sites. Many claims were staked on underground deposits of hard rock ores early in the gold rush but most remained undeveloped due to the easier profits to be made from the placer sites and the low levels of capital available to the prospectors. Claims on gold-bearing quartz rock had already reached considerable numbers by the end of 1876: 147 in the Deadwood area and 70 around Custer. Once underground working started in earnest, production quickly outstripped that of the rapidly diminishing placer resources. The early hard rock mines brought a second boom to the towns of the southern Black Hills while new towns, such as Rochford, grew up on the previously unexploited mine sites.
The processing of the ore from hard rock mines was undertaken in mills, larger and more specialized facilities than the elementary technology of the placer operations. Many small, independently owned mines were unable to find the capital to construct mills that could operate at a cost-effective scale and yield large profits from the relatively expensive underground workings. An alternative was to send the ore out to "custom" mills, subcontracted to do the processing. The Hidden Treasure mine, near Central City, was established in 1876, and successfully processed its ore through a custom mill. An attempt to install milling facilities of its own only served to erode profit margins and bring the company into financial difficulties.
As the size of mining operations expanded outside investment became an important factor. Capital was forthcoming from local banks, businessmen in established mining regions, such as California, and the industrialized East. The Homestake mine was initially financed by a Deadwood merchant and a ten-stamp mill was built, but it was investment from California that brought an eighty-stamp mill and set the mine up as a large-scale producer. By 1878, over $1,000,000 of California capital had been invested in the Black Hills.
As the scale of hard rock mining increased, there was a parallel decline in reserves of "free milling" ores (those from which gold and silver could be removed by simple milling techniques). The resulting move towards the working of deeper refractory ores - whose metal content was held in complex and hard to dissolve chemical bonds - required the construction of new mills using the techniques of chlorination and cyanidation. With correspondingly rising overheads, both in the mines and in the mills, the small, independent mines began to be consumed by large corporations financed from outside the region.
The Bald Mountain Mining District
The Bald Mountain district had been worked during the initial gold rush in 1877-78 when prospectors centered their interest on the Empire, Des Moines, Huxley, Golden Bubble, Decorah, Lady Elgin and Magnolia claims. The Decorah, Lady Elgin and Empire mines were opened during this period, but these early ventures were poorly financed and suffered from an inability to process Bald Mountain's refractory ores profitably. Bald Mountain mining subsequently shifted from individually owned efforts to large, well-financed companies owning multiple mines and often constructing their own mills. Although this trend may be discerned in the 1890s, numerous small mines continued to operate for some time, making the region a curious patchwork of mining operations. From this consolidation, several dominant companies emerged. By 1920, these companies had combined to give the Trojan Mining Company and its successor, the Bald Mountain Company, dominance in local gold mining.
The Portland Mining Company was one of the earliest and most important to work the Bald Mountain district. By amassing considerable amounts of property and capital, it served as the launchpad for the later Trojan and Bald Mountain companies. The Portland Mining Company was formed in 1879 when the Portland, Gustavus and Paragon claims were purchased by Ankeny and Co. of Clinton, Iowa. A mill was constructed and was operational by the end of 1879, drawing water from a mine at Squaw Creek. The company came under new ownership in 1883, under the name of The Portland Consolidated Milling and Mining Company, with George M. Curtis of Clinton, Iowa as president. The mill was fitted with new machinery for a more profitable level of recovery, earning approximately $20 per ton of ore. However, these efforts proved to be insufficient and by 1886 ore was being shipped out to Rapid City for more cost-effective custom milling.
In 1884, the Portland Company purchased the Trojan mine. The Trojan claim had been staked in 1877 and was being worked in conjunction with the Empire and Perseverance mines by 1879. These three, together with the Folger, Oliver and Indispensable mines were purchased by successive English and Boston-based companies in 1881 and 1882 before finally being taken over by the Portland Consolidated Company in 1884. In 1890-91 the Fremont, Elkhorn and Missouri Valley Railroad extended its track from Deadwood to the Portland mine, and large quantities of ore were sent to Omaha, Nebraska for custom processing despite attempts to improve the operation of Portland's own mill. Portland and Trojan mines also sent some ore to the Deadwood and Delaware Company's smelter in Deadwood.
The Decorah mine, working a claim that was staked in 1878 and sending its ores to a custom mill, was purchased by the Portland in 1900 while the Clinton Mine also came under the same management. The Clinton had operated independently since 1879, and when incorporated as the Clinton Mining Company in 1890 owned seven claims, including the Leopard, Jessie Lee, and Ashland. The 1900 takeover additionally brought the Rosenthal, Ajax and Burns properties into the Portland company. Both Clinton and Portland mines were run by the same management and ore was transported out from a tunnel on the Empire State claim.
Ore from the properties of the Portland companies was taken to a succession of custom mills during the early years of the twentieth century. Recently constructed cyanide mills at Deadwood and Spearfish were utilized as well as the American Milling and Smelting Company's facility in Kansas City. In addition, a fifty-ton-per-day cyanide plant at Gayville in the Black Hills was purchased from the Boston and South Dakota Mining Company. In 1906 ore from the Portland and Clinton mines was being taken to the Lundberg, Dorr and Wilson cyanide plant at Terry, a smelter at Rapid City, and to Omaha, Nebraska. By 1908, only the high-grade ore was being shipped out for custom milling, and that was to a smelter in Denver.
By 1911, Portland had attained a position of considerable stature in the Bald Mountain district. In that year it was reorganized as the Trojan Mining Company, and purchased the American Eagle Mining Company along with the Bald Mountain mill. Later additions of the Two Johns (1917), Republic (leased 1917) and Opher (1920) mining companies made the Trojan Mining Company's local dominance complete. Particularly substantial were the properties of the Ofer Mining Company. Consideration of the events leading up to Trojan's acquisition of Ofer gives a good indication of the extent of Trojan's dominance of the district.
Among the early large companies was the Imperial Gold Mining Company. Formed in 1890, it mined the Dividend, Burlington, Apex, Reindeer, Ophir, Rudolph, Dolphin, Costello, Baltimore and Chance claims. In 1902, it built a cyanidation mill in Deadwood capable of processing 100 tons of ore per day. Imperial gained a controlling interest in the Dakota Mining Company in 1907. The Dakota had been established in 1900 and worked properties including the Jack Pot and Gunnison mines and the Rehl, Lucy, Tiger, Mono, Peggy, Gunnison and Vulcan claims as well as operating cyanide mills in Deadwood and Central City. A series of accidents and the effects of a prolonged miners' strike in 1907 weakened the company and enabled Imperial to acquire it. The Ofer Mining Company was set up in 1916 and took over the Imperial later that year. In 1920 further expansion brought the Dakota, Imperial, and Reliance mines under Ofer management. That same year the Ofer and its new acquisitions were taken over by the Trojan Mining Company, which also included the holdings of the former Portland company. Acquisition of the Ofer Mining Company was the final phase in Trojan's growing dominance of the district, but before 1920 the company had already acquired the Bald Mountain mill and made profound changes.