Gold Rush Season 5 spoiler: Does Todd Hoffman find gold at McKinnon Creek?

On the current season of Gold Rush Todd Hoffman hopes to salvage his pride and his dignity after a disastrous mining season in the jungles of Guyana in 2014 by returning to the Yukon to mine for gold. Despite his reputation and despite it being so late in the year to be looking for a claim, Todd manages to strike a deal with Peter Tallman and his company, Klondike Gold Corporation, for a claim at McKinnon Creek.

As an added bonus, the ground was already partially stripped with paydirt exposed, theoretically lessening the amount of time it would take the Hoffman Crew (which at the time consisted of only Todd and his dad, Jack Hoffman, after everyone else decided to bail) to begin mining.

Todd and Jack agreed to a deal where they would pay Klondike Gold 20% of all raw gold recovered during the 2014 mining season, with a minimum of 100 ounces. So the big question is: Will Todd Hoffman be able to redeem himself and find enough gold to pay the 100 ounce minimum and pay his crew?

At least part of that question appears to have been answered thanks to a press release issued by Klondike Gold Corporation after the Gold Rush Season 5 premiere episode. In the press release, which announces the partnership between Klondike Gold and Jerusalem Mining (the new name for Todd Hoffman’s mining company — he apparently has left 316 Mining behind), it reveals that not only was Todd Hoffman able to pay the 100 ounce minimum, but that Todd and crew have approved a lease for the 2015 season!

“As of October 2014 this payment to Klondike Gold has been made,” the statement reveals. “The lease agreement is renewable annually for three years subject to annual approval by both parties. As of October 2014 the lease for 2015 has been approved by both parties.”

Here is the full press release from Klondike Gold Corporation:

Klondike Gold Announces Lease Agreement with Todd Hoffman’s Jerusalem Mining

VANCOUVER, British Columbia — Klondike Gold Corp. (TSX.V:KG) (“Klondike Gold” or the “Company”) announces that the Company has entered into a lease agreement with Jerusalem Mining LLC (“Jerusalem Mining”) whereby Klondike Gold assigns to Jerusalem the rights and permits to placer mine on the McKinnon Creek property, Yukon. Under the terms of the lease agreement, Klondike Gold will receive from Jerusalem a direct 15% production royalty payable in raw gold and will receive an additional 5% on behalf of an underlying, pre-existing royalty holder. The lease agreement is subject to a minimum annual payment by Jerusalem Mining to Klondike Gold of 100 ounces raw gold or cash equivalent. As of October 2014 this payment to Klondike Gold has been made. The lease agreement is renewable annually for three years subject to annual approval by both parties. As of October 2014 the lease for 2015 has been approved by both parties. The agreement also acknowledges that during the term of the lease as part of the development and production activities Jerusalem Mining will be allowing employees and agents of Discovery Channel television access to the McKinnon Creek property.

The principal of Jerusalem Mining is Todd Hoffman. Todd Hoffman and his ‘crew’ are prominently featured on the Discovery Channel (USA) cable TV show “GOLD RUSH” which focuses on the trials of the Hoffman crew mining for placer gold. GOLD RUSH is Discovery Channel’s #1-rated show and is distributed to 100.8 million U.S. homes and over 200 million households globally in 210 countries.

GOLD RUSH returned for its fifth season on Friday, October 17 at 9 PM ET/PT in the United States, and will air as a 2-hour special in Canada Tuesday, October 21 at 8 PM ET/PT, and weekly thereafter at 9PM ET/PT. Klondike Gold and Peter Tallman, the Company’s President and CEO will be featured in the first episode and periodically throughout Season 5.

Peter Tallman, states “The lease agreement with the ‘Hoffman crew’ represents a positive business opportunity for Klondike Gold in terms of increasing production at McKinnon Creek while decreasing Klondike’s operating and carrying costs. Additionally, it has been a pleasure to work with Todd, his crew, and the film crew personnel on an interesting mining season. We look forward to watching the fun fifth season of GOLD RUSH.”

ABOUT KLONDIKE GOLD CORP.

Klondike Gold Corp., is a Canadian exploration company with offices in Vancouver, British Columbia, and Dawson City, Yukon. The Company is focused on the development of its Yukon gold properties, and also holds a large portfolio of gold and base metal projects in southeastern British Columbia.

On behalf of Klondike Gold Corp.

Peter Tallman
President and CEO
(604) 559-4440

It should be noted that the contract does allow for cash in lieu of gold, and it is no secret that Discovery Channel does have quite a budget for its highest rated show. Either way, it does appears as though what fans will see this season is a successful mining season for Todd Hoffman and his crew!

And if you’re curious as to what happened to the previous mining crew that Tallman says went bankrupt mining at McKinnon Creek last season, there is an article on Energy Business Review from July of 2012 about the “Indian River gold project,” which McKinnon Creek is a part of. It states that Klondike Gold and 46799 Yukon had entered into a 50/50 deal to “further explore and develop the Indian River mining project.” It later states that “as part of the agreement, 46799 Yukon will provide the equipment and initial capital to the [joint venture] while Klondike Gold will provide the property and an extensive exploration database.”

In September of 2014 (which actually would have been after the on-screen deal between Todd and Klondike) it was announced that Klondike was buying out 46799 Yukon’s 50% stake. “Upon completion of the acquisition, [Klondike Gold Corp.] will hold an undivided 100% interest in the property subject to an existing third party 5% royalty on production of gold or other minerals.”

Interestingly, it actually provided a dollar amount (albeit in Canadian dollars I assume) for how much 46799 Yukon had spent on “equipment and initial capital” for the Indian River project. “The shareholders of 46799 Yukon Inc., have provided funding of $1,287,000 to advance this property to date and are vending in their interests for their out of pocket costs.”

The Klondike Gold website also says of the McKinnon Creek claim that “mining continued in 2013 with a total of 210 ounces of gold reported as recovered.”

I’m not sure what all of this means, but I thought it would be of interest to Gold Rush fans wanting to know more about the behind-the-scenes stuff. 🙂

And speaking of Gold Rush behind-the-scenes stuff, here are the details on the McKinnon Creek claim from Klondike, including a map. (It is part of Indian River highlighted in gold at the bottom)

Title Holder: Klondike Star Mineral Corporation
KG Ownership: 100% – via Klondike Star Mineral Corporation
Acquisition Method: Takeover
Underlying Royalties: 5%
Land: 1,341 ha
Claims: 239 claims leased
Location: 48 km SSE of Dawson City at Indian River
600125 E 7062600 N, UTM ZONE 7N (NAD 83)
Mineral Targets: Gold (Placer)

Asset Considerations

The Indian River property, including McKinnon Creek, is a 7 kilometer long by 2 kilometer wide property that hosts one of the largest unmined White Channel Gravel-hosted placer gold resources in the region. The property is owned 100% by Klondike Gold Corp. through the acquisition of Klondike Star Mineral Corp. (now a subsidiary of Klondike Gold Corp) completed July 2014 and the acquisition of 46799 Yukon Inc. 50% interest completed September 2014. An underlying 5% gross production royalty is payable to 19651 Yukon Inc.

In 2014 Klondike Gold Corp. entered into a lease agreement with Jerusalem Mining LLC (“Jerusalem Mining”) whereby Klondike Gold assigned to Jerusalem the rights and permits to placer mine on the McKinnon Creek property, Yukon. Under the terms of the lease agreement Klondike Gold will receive a 20% production royalty from Jerusalem Mining (including the 5% payable to 19651 Yukon Inc.) subject to a minimum annual payment of 100 ounces of raw gold (paid as of Oct. 2014). The lease agreement is renewable annually for three years subject to annual approval by both parties.

Property Geology

The Indian River valley is located south of Dawson City and forms the southern boundary of the “Klondike Gold Fields”. Bedrock is Jurassic age Klondike schist dated at +/- 260 Ma. Gold-bearing White Channel Gravel is Pliocene age and was deposited in the Indian River Valley between 5 Ma and 2.6 Ma in a braided river environment. The lower portion of White Channel Gravel at Indian River is a clast-supported cobble-size gravel comprised of predominantly angular to sub-round quartz clasts plus other Klondike schist lithologies. The highest gold concentrations consistently occur in this subunit. The upper portion of White Channel Gravel is oxidized, matrix-supported sand and gravel. Stacked channelized scours on 10-30 meter scale occur, with coarser material in the bottom of the scour. Locally high concentrations of gold can occur in these scours.

Work Completed

Approximately 60% of the property has been tested by 350 auger drill holes between 2005 and 2014 to locate and delineate White Channel Gravel ‘pay streaks’. Gold was recovered from nearly 100% of the holes in the main target area. Drill results indicate gold-bearing gravels extend over a distance of more than three km (1.9 miles) and remain open for expansion to the east and south.

Test mining beginning at the north-eastern claim boundary began in 2012. A total of 120 ounces of gold was reported as recovered that year. Mining continued in 2013 with a total of 210 ounces of gold reported as recovered. The fineness of the gold assayed at 82%. This operation was terminated by the Joint Venture in late 2013 and Klondike Gold subsequently repurchased full ownership and control.

(Special thanks to the Gold Rush Alska Gossip Facebook page! Be sure to give them a like if you want to keep up with some rather non-pro-Hoffman coverage of Gold Rush!)