It would be wise to discuss how you are going to split the costs and rewards with your partner(s) before you strike a rich gold deposit!
There are several good reasons to team up with another person in a gold prospecting or mining program. One good reason is safety. A dredging accident is less likely to be fatal if there are two people on the scene keeping an eye on each other. A buddy is also able to offer a huge amount of assistance when it is time to move gear around during the sampling stages. Still another good reason to have a partner is the emotional support that two persons can give each other when you are just learning to sample.
It is true that two gold prospectors are likely to finish off a pay-streak around twice as fast, with only half as much gold going to each person. But it is also true that two motivated people tend to spur each other on to get more accomplished – as long as both of you are hard workers. It can be much easier to locate the pay-streaks when two people are sampling and seeing it through together. And one other thing: In gold prospecting, there can be some amazingly-good moments which carry an incredible emotional impact – like when a very rich deposit has just been discovered and the first bit of high-grade is being dredged up the suction nozzle. These are experiences which could never be wholly communicated to and understood by most others, so it is nice to experience them alongside someone else.
Most pay-streaks can be dredged up, or dug up, with two people working side by side. To try and mine pay-streaks with more than two dredges at once can become unwieldy. It can be difficult to mange a third dredge (knocking out plug-ups or whatever) when it has other dredges tied to both sides of it. Under the majority of conditions, two-person teams are better than larger-sized group dredging programs. By that, I mean that the individual prospectors are likely to end up recovering more gold for their effort.
There are several ways that two people can team up in gold prospecting or mining: They can form a full partnership and find, recover and split up all the gold equally between themselves. They can form a more limited partnership, helping each other to locate the deposits; and then clean them up together, with each person keeping what gold he or she recovers. Or, they can form an even more limited association whereby they agree to help each other move gear around when needed, with each person finding and recovering his or her own deposits. Each of these different arrangements has its own advantages and disadvantages, and each can be most-optimally used under different sets of circumstances. It is good to be able to shift from one of these arrangements to another, depending upon what the situation is.
Teaming up with one other person on a full 50/50% partnership basis is done best when both partners are of relatively equal mining and sampling ability, when both are willing to put equal amounts of time and energy into the operation and when both have about an equal share of financial investment into the program. Just by the nature of the way gold affects people, if the gold being produced by an operation is going to be equally split up, then the amounts of input into the operation should be reasonably equal, too. Otherwise, uncomfortable feelings can begin to separate the partners.
The more gold that is being recovered, the more that the inequities tend to express themselves. This can happen in varying amounts, depending upon the relationships, how much gold is being recovered and how far the exchange of time, financial investment and physical work has gotten out of whack between the people involved.
I was dredging on a 50/50% deal with another dredger in a moderately rich pay-streak not too long ago. We each had our own dredges in the pay-streak side by side, but I was recovering two to three times more gold every day than he was. This can happen once in a while in a pay-streak when one guy will uncover a richer section of pay-dirt, but this was happening every single day!
The water was very cold, and it was towards the end of a long and hard-working, successful season. We were both kind of burnt-out, but I had set a quota for myself to put another pound of gold into my poke before knocking off for the season. The gold was there; I just needed to dredge it up! My buddy needed the gold too, but he was not as motivated as I was. The only reason why he had not called it quits for the season, he said, was because I hadn’t.
One day we sat down and I told him that I only wanted one more pound before ending off; and that I wanted to go after it on my own – keeping what I recovered, and allowing him to keep what he recovered. Since the pay-streak was just as rich on his side as it was on mine, and since he was an ethical man and close friend, he could see the fairness in what I wanted to do. What I wanted was to change the nature of our partnership. So he agreed, and we started dredging side by side, each of us keeping what gold we recovered. Well, you will never guess: I started recovering a little more gold than I already was, and my buddy started recovering about three times as much gold as he was before! The pay-streak did not get any better over there. We just changed a working agreement. This is fruit for thought.
There are various ways that different people can contribute to a prospecting or mining program to keep the input relatively equal. One person may have the equipment and the experience, while another person might have the money to finance the operation. Full partnerships under these circumstances can be made to work more often when both parties are equally willing to put time and physical energy into the operation.
The kind of deals where one partner is going to put up the money and end up with half the gold, while the other person does all the work, generally do not turn out as well. Be careful about agreeing to a partnership on an equal basis with somebody who is not going to put in his equal share of mining alongside of you. While these deals seem fine in the beginning, they can become unfair to the guy doing all the work once a rich deposit is located.
Since you can really only put in so many hours a day at mining or prospecting, there is still plenty of time left over to clean-up, cook, repair gear, and do the other necessary things around camp. So there is no good reason to give an equal share of the recovery to someone else to do these things for you (unless it is your spouse or mother). If you do, you will be feeling the pain out of your own pocket once you get into a high-grade gold deposit.
Grubstake deals seem to work out better when the percentage to the silent financier is kept down to about ten percent or less of the gross find. Unless it means not going at all, you should try and avoid having to give any more royalties (especially of the gross recovery) away than you positively have to. As a matter of business, the larger cut of the pie you must give to others, the more lower-grade pay-dirt you will have to pass up that would otherwise be acceptable mining under other circumstances.
Unless some very rich area has already been located and just needs to be dredged or dug up, an absent financier and the property owner will likely make more gold in the long run if the amount of gold the miner needs to pay out is not kept down to a minimum reasonable percentage of the recovery. It is not in anyone’s interest for the miner to go broke, especially when a more fair distribution of recovery will allow a gold deposit to be mined up! In this light, it is unwise for the property owner or grubstaker to require more than a small percentage of the gross recovery.
I met up with a guy in Alaska who had agreed to pay a grubstaker 50% of his gross recovery, because the grubstaker had sent along enough groceries to last the dredger all season. Now let’s see; that’s 50% to the grubstaker, 10% to the claim owner, and the dredger still had to pay his own travel expenses, fuel and other operating expenses and repairs. How was he going to make any money for himself? He didn’t, and neither did the grubstaker! And the worst of it is that he was into a very nice pay-streak, which he had to leave behind for someone else to dredge up. See how this works? Unreasonable deals also plant the seed of dishonesty, where the only way the miner can make the deposit pay for himself, is to cheat his partners. I have talked about the challenges of gold and integrity in a different discussion.
In some partnerships, one person may receive a higher percentage of the gold recovery because he or she has invested more into the program than the other. Regardless of the agreement, and how right it is, when split-up time comes, and one person’s pile is larger than the other’s pile, both people are likely to feel a uncomfortable about it. As an example, doing one of my friends a favor a few years ago, I invited him to dredge with me on my 8-inch dredge, in a rich gold deposit I already had discovered through previous investment of my own, on a mining property which belonged to me.
A) Ten percent off the top to whoever owns the dredge (someone had to put out the money to buy it and make it available).
B) Ten percent off the top to whoever owns the mining property (someone had to put out the money to buy it and make it available).
C) Five percent as a finder’s fee to whoever discovered the gold deposit (as long as it is really there).
Since we were buddies, and I already was concerned with the potential hard feelings that could arise when it was time to split the gold, I chose to forgo the 5% finder’s fee, even though I had invested months into locating the rich deposit in the first place. We had agreed that we would split the operating costs. We dredged side-by-side, both working very hard. The daily recovery ranged from 2-to-5 ounces per day, depending upon how much bedrock we were uncovering (we were having to remove 10 feet of overburden and boulders to get to the gold).
We cleaned-up the high-grade portion of the sluice box every day and did a split. Once the gold was clean, we separated out 10% by weight for the dredge, and another 10% for the mining property. Then we split the remaining 80% right down the middle. This was what we had agreed upon. Sound right to you? It was! But on the days when we were recovering lots of gold, my 60% pile was so much larger than his 40% pile that there were always uncomfortable feelings. It is always that way!
Actually, I did my friend a huge favor. On his own, he would not have had access to a dredge or established rich gold deposit. But it is hard to keep all that in perspective when you are weighing out gold shares of different proportions on a scale. I could give you many, many examples of this just from my own experience.
This all comes into play more when large quantities of gold are being recovered, making the difference in piles even more noticeable. This is always the way it is with gold. Plan on it! If you don’t believe you would experience these feelings, it is only because you have not found high-grade gold, yet!
When forming partnerships, and the contributions are not all equal, it is common to allow 10% of the gross recovery to whoever owns the mining property. It is also common to allow 10% of the gross recovery to whoever owns the dredge. This is an exchange for putting up the capital for the main elements required to start a mining program.
If someone is putting up the money to keep everything going, rather than a percentage of the gross recovery, if you can swing it, it might be better to just agree to pay that money back (perhaps with a little interest) right off the top of the gold recovery. Then the guys who are doing all the work usually split up the balance. This isn’t always possible. Sometimes the guy putting up the money wants in on the gold production. All I can say is keep your obligations as small as possible. Because the more you have to give to someone else, the less chances there will be enough gold remaining to make your time and effort worthwhile.
SPLITTING FROM THE GROSS
Here is something really helpful: Unless it is just two guys sharing all the costs and rewards, it is much easier to work a deal where you are providing a percentage of the gross (total) gold recovery for each person’s contribution. Trying to work deals where you are going to first subtract the various operating costs makes the program more complex and opens up the chemistry to seeds of discontent. As an example, I would rather have 5% off the top of your total gold recovery than 10% of your net profit after you subtract all the things you decided to spend money on! If I just take mine off the top, I don’t have to get involved with the way you decide to spend money. Reversing that, I would rather not have you involved with the way I am spending money, either! There is a lot to be said about weighing up the clean-up, and giving everyone their share right there on the spot.
By the way, it goes without saying that good record-keeping is a must if you are providing a share to someone who is not present!
OVERMANNING AN OPERATION
One non-optimum way to set up a full partnership, is by teaming up in a small or intermediate-sized prospecting or mining program with a second person who does not have an additional dredge or surface mining gear to operate. One dredge or sluice can only process so much material in a single day. Two dredges of similar size, coordinated properly, ought to be able to double what one dredge can do by itself, as long as both operators are hard workers.
If you take on a partner using a small or intermediate-sized dredge, without also having a second dredge for him or her to operate, you will probably make less gold than you would if you just work alone. Since digging is slower, sometimes there is enough hard work for two people to keep a single sluicing operation operating efficiently.
There are exceptions to this, like when developing a high-grade gold deposit in deep streambed material where there are a lot of cobbles to be moved; enough to keep a helper productive full time without getting into your way. Another exception is when operating a large dredge, when it is a two-handed job to move the nozzle around. This creates the need for a helper to move the cobbles and boulders out of the way.
When two people are put to work on the same dredge, they need to be able to process at least twice as much volume of streambed material through the dredge, and recover twice the amount of gold. We have developed underwater team-work systems for this that contribute to productive production dredging programs. Otherwise, the arrangement can become inefficient, and the team might be better off operating two separate dredges, or take separate shifts on the same dredge.
In theory, you might figure that if one person can move a certain volume of material with a dredge or through a sluice, then two people working together on the same dredge or sluice ought to be able to process twice as much material. Sometimes this is true. If conditions are right for it, a well-orchestrated team under or above the water can process much more than double what either person could accomplish on his or her own. I have devoted a substantial discussion to underwater teamwork in Volume 2 of Advanced Dredging Techniques, so I won’t go into that here.
If there is not enough work to keep a second underwater person productive on a dredge, without the person cutting into the nozzle-man’s production and slowing him down, then it is not a good idea to put a second man there. What do I mean by cutting into the nozzle-man’s production? When a second person runs out of productive activity to keep busy, to stay busy, the person can start moving cobbles that are not ready to be moved. In doing so, streambed silt will be released into the water. Then if not immediately sucked up, water currents can cause that silt to spread around and cloud-out the hole. Then the nozzle-man must wait until the water clears up enough again that he can see what he is sucking into the nozzle. This is just one example of how a second person can actually slow down the production in a dredge hole.
As an example of an over-manned (and therefore underpaid) production dredging operation, I teamed up with two other guys one time in a sampling activity to locate a pay-streak. We found a very nice one which was sitting underneath about two feet of hard-packed material over top of some really rough and irregular bedrock. The pay-streak was about 45 feet wide; so there was no problem placing our two dredges side by side to clean up the gold.
We were each operating 5-inch dredges. Our partnership agreement was that after working together to locate some high-grade, we would develop the deposit side-by-side, keeping our clean-ups separate. I was running my own 5-incher and keeping all the gold that I found. The two of them teamed up on their 5-inch dredge and were splitting what they found equally between the two of them.
The streambed material was very hard-packed, and the water was moving pretty fast. A deep orange-colored silt in the material made it necessary to take apart the streambed in an orderly fashion, sucking the silt and material from the same spot that you were moving cobbles. Otherwise, that part of the dredge hole would be entirely clouded-out by silt, and you would have to wait for a half-minute or more before it would clear up enough that you could see what you were doing again. This is standard operating procedure in most dredging situations, anyway.
The hole we were dredging was so wide, that if I clouded myself out, their side would still remain clear enough that they could continue on dredging, and vice versa.
Since we agreed that each would keep what we separately recovered, and agreed that each could spend as many hours at it as we wished, the game was to produce like mad to dredge up as much gold as possible before the other guys recovered it. The friendly competition between us really spurred us on. Those were some hard-working guys and they surely kept me moving all the time, me knowing that they were dredging up all that gold as fast as they were. They had teamed up on their dredge and were going at it hot and heavy on the other side of the hole. But at the end of each day, my tailings pile was at least twice the size of theirs, and I usually had twice as much gold, too. Sometimes more!
In wonderment at this, I slowed down enough one day to have a look at what they were doing. Sure enough, they just kept clouding each other out. In 2 1/2-feet of material, there just was not enough work to keep two guys effectively busy on one dredge. I then went over and watched myself dredge, to see what a second man could do to help me get material through the nozzle faster, and there wasn’t much. I was pouring it through about as fast as it could be done most of the time.
The best bet for those guys would have been to split the day into two shifts: One starting at daybreak, and the other one ending at dark. In that way, each one of them would have ended up dredging about the same amount of gold that I dredged. As it was, they probably would have about doubled their gold intake if one of them did not dredge at all! This is something to keep well in mind when organizing a dredging operation.
SPLITTING UP GOLD
My various partners and I have worked out a method of splitting up gold over the years which has always seemed to work out very well. On group ventures where everyone involved is getting some share of the gold we recover together, all recovered gold is deposited into a group collection jar. We pull out any and all pieces (nuggets) of gold that seem to be of extra value, and put those into a separate group jar. We split up the nuggets at the end of the venture, because there will be more of them then, so everyone is more likely to get a more fair portion of them. The rest of the gold (the fines and flakes) are split up on a regular basis. We do it every day if there is enough gold to make the effort worthwhile. Sometimes we classify the gold through window screen or 8-mesh, and measure up shares by weight of each size to each partner. If any partner is to receive some lower or greater percentage of the recovery, the person will receive it in both sizes. This is good, because each partner gets something back every day from the work he or she has invested.
At the end of the venture, when it is time to split up the nuggets and jewelry gold, we pick out the most extraordinary nuggets and set them aside for the moment. Then we make equal piles of all the remaining pieces of gold as equal by weight as possible, and equal by size and apparent value of the nuggets involved. Sometimes this can be a bit challenging, because each nugget is different. But when everyone is satisfied that the piles are all as equal in value that we are going to get them, we draw cards or tickets. Whoever has the highest card or first ticket gets to choose the first pile. The second-highest card gets to choose the second pile, and so on.
In our program, if one partner has some slightly-higher percentage of gold coming to him, he will usually receive the proper amount out of fines and flakes which were set aside for this purpose.
Then we take the most extraordinary nuggets that were set aside for last, and bid them off one by one-just like in an auction. Everyone involved in the partnership has an equal opportunity to bid up the amount of fine and flake-sized gold they are willing to pay for each nugget. Each nugget goes to whoever is willing to pay the most. The gold payments are directed into the group jar. Once all the nuggets have been sold off this way, the final gold from the jar is split up properly amongst all the partners according to our agreement.
While there are plenty of other ways to do it, this system has worked out very well, with no hard feelings amongst the partners, even though we often find very high-grade gold deposits with a lot of nuggets.