Shawn Ryan on the cover of New York Times Magazine. Photo: Finlay MacKay for the New York Times

Shawn Ryan on the cover of New York Times Magazine. Photo: Finlay MacKay for the New York Times

It was mushrooms that brought Shawn Ryan to the Yukon, but gold that secured his fortune and reputation. Specifically, soil sampling leading to the discovery of gold, millions of ounces of it.

His Yukon exploits also brought him a measure of fame -- the prospector appeared on the cover of the New York Times Magazine in May 2011, with gold at US$1,500/oz and on its way to $1,900.

“Gold Mania in the Yukon” was the cover story and Ryan “the king of a new Yukon gold rush, the biggest since the legendary Klondike stampede a century ago.” The glamour came after years of grit, hard work and tough times but when Ryan hit, he hit big.

The new Yukon Gold Rush, a century after the first, came after Underworld Resources’ 2009 discovery of the White Gold district in Yukon (Underworld sold to Kinross the following year for $139 million). Ryan had prospected and optioned the White Gold ground to Rob McLeod’s Underworld, as told in the NYT magazine article:

Every winter there is a giant mining convention in Toronto. There, in a quiet room away from the frenzied exhibit floor, the drunken parties and the aggressive lying, McLeod looked over the soil-sampling data from the White. The data was thorough and precise. It amazed him to see it just sitting there, as it had for a century: 5 miles by 2 miles of anomalous minerals, surrounded by creeks that had been full of placer gold. There was no way to be sure without further exploration, but McLeod wanted those claims.

Ryan has a new business venture, GroundTruth Exploration, but remains very interested in prospecting. And he’s once again working with McLeod, who founded and was VP exploration for Underworld Resources when it was taken over. More on the new Ryan-McLeod alliance later.

I caught a glimpse of Ryan’s evolving presence in the Yukon during a series of site visits in August, my first time in the Yukon. One of our scheduled stops was Rockhaven Resources’ Klaza property, a high-grade gold deposit that also contains silver, lead and zinc.

ryanwoodWhile Klaza is road-accessible -- an anomaly in the Yukon -- the itinerary was fairly tight and a helicopter was our transportation mode of choice. Specifically, a Ryanwood Exploration helicopter owned by Ryan and his wife Cathy Wood (Ironically, weather prevented us from visiting Klaza that day).

Ryan’s pivot from gold prospector to supplier -- following in the footsteps of other savvy prospectors during the original Yukon Gold Rush -- is a reflection of his entrepreneurial instincts.

Ryan’s latest business venture is GroundTruth Exploration, which uses technology such as drones and remote-controlled RAB drills for initial-stage exploration work including soil sampling, aerial surveys and shallow drilling.

I finally met Ryan in a hallway at AME-BC’s Roundup in Vancouver, and he brought me up to speed on his latest enterprise during an impromptu interview.

He likens GroundTruth to a “commando-style” advance team that goes in and gathers intelligence in a low-impact, cost-effective way to narrow down targets for junior mining companies. Most of GroundTruth’s methods are so low-impact they don’t require a permit in the Yukon, Ryan said.

“The idea is to get in and out, because 95 per cent of the time, there’s nothing there …” he said.

“This way we don’t have to go in with the big artillery at the beginning.”

groundtruth1It’s disruptive technology that sometimes pits Ryan against juniors who may only have one project -- and don’t really want to find out that it’s a marginal one. He said he also gets some pushback from explorers accustomed to doing things the way they’ve always been done.

“The probability of me killing a project in 2 or 3 weeks is extremely high now, and so now what do they do if they only have 1 project?”

GroundTruth’s costs are dramatically less than the same work done using conventional exploration techniques. It was a key motivator for Ryan, who is accustomed to spending his own money to explore for gold.

“What used to take us two field seasons in the Yukon and roughly 500,000 bucks to trench and drill a target that we found in soil sampling, we can actually do it in two weeks now for roughly 25 cents on the dollar,” he said.

Ryan is blunt on the topic of the ailing junior market system, describing it as “broken.” He said he got tired of watching some junior mining companies waste other people’s money - particularly flow-through financing dollars - exploring ill-defined targets.

“It’s a high-risk game and there was a lot of blown money, a lot of wasted money, and that’s what drove me up the wall,” he said. “I’m used to spending my own money, so you’re watching millions go out the door.”

“We had companies … because they had flow-through, they’d say forget it, we’re not doing any geology or geochemistry because it’s not burning enough money -- we’re going to do an airborne survey and drill it -- so they were jumping steps.”

“The problem is, in our business, just by being five feet away from the deposit, you might miss it. It’s that much of a needle in a haystack.”

Coming from Ryan, it’s a sales pitch -- but not only a sales pitch. The Latte deposit at Kaminak Gold’s Coffee -- the project’s second largest store of gold -- was discovered based on one soil sample, he noted. The Golden Saddle deposit at the White Gold property was identified based on just three soil samples.

“So if you’re screwing around and not paying attention, even if you’re doing hundreds of thousands of soils, that one soil is the winner. Our point is, each soil counts and how to make sure it’s done right.”

“The idea is we have to kiss a lot of frogs to find the prince.”

GroundTruth recently did a large program for Auryn Resources at their Committee Bay project in Nunavut project. It involved mapping over 1,500 square kilometres and digitizing the outcrops using drones, giving Auryn geologists valuable clues on features including glacial drifts and till.

“We’re going to see this take off,” he says of GroundTruth.

Ryan still has skin in the game at Coffee, which he optioned to Kaminak Gold. He retains a 2% royalty on the permitting-stage project, which has generated a market capitalization north of $160 million for Kaminak.

When Ryan talks about a broken junior mining system, he speaks from firsthand experience. For a time he was president of Ryan Gold, a cash-rich junior that held several of Ryan’s Yukon properties. Ryan Gold went into hibernation and was swallowed last year by Oban Mining as part of Oban’s consolidation of Temex Resources, Corona Gold, Eagle Hill Exploration and Ryan.

And it was the Oban deal that planted the seeds for Rob McLeod’s latest collaboration with Ryan. In December, IDM Mining picked up a huge portfolio of Ryan’s Yukon properties from Oban Mining in a $1-million deal that saw Oban take a 19.9% stake in IDM.

The Yukon properties consist of 14,482 claims in 51 groups. The agreement with Oban makes IDM Mining -- whose flagship project is the Red Mountain high-grade gold project in northwestern B.C. -- the second largest claims holder in the Yukon (behind Doug Eaton’s Strategic Metals).

Rob McLeod: his IDM Mining now the Yukon's 2nd largest claims holder

Rob McLeod: his IDM Mining now the Yukon's 2nd largest claims holder

McLeod told me in a phone interview that he’s excited about both returning to the Yukon and working with Ryan again.

“Shawn is a very creative thinker when it comes to exploration,” said McLeod, an exploration geologist. “So we think we’re in a really good position, because we have the data, including over 150,000 soil sample data points, and we have the tools - working with Shawn - to explore these.”

Ryan’s GroundTruth will play a role in that exploration, following up on hundreds of thousands of soil samples taken by Ryan and Ryan Gold. As McLeod pointed out, Ryan Gold went dormant before the most exciting stage of exploration: testing the anomalies.

“These (soil samples) have outlined multiple properties with some widespread targets, particularly in the Kluane region and in the platformal carbonates near the Cantung road.”

McLeod now has some big decisions to make, but a rising gold price environment gives him options: “I think the time is right for consolidation and there are some interested parties.” Increasing shareholder value is his primary consideration. Among IDM’s options:

  • sit tight on the Yukon properties, most of which are in good standing for many years (with low holding costs);
  • keep them 100% and explore themselves;
  • spin them out into a new company; or
  • sell all or some of the properties or do joint-venture deals.

In the meantime, IDM is planning a summer work program and has brought on two consultants who are Yukon specialists -- geologists Andy Randell, who worked previously with Ryan Gold, and Brandon Macdonald.

“We’re compiling and analyzing the data and putting together a work plan for the highest-priority properties.”

An earlier, pre-Underworld connection between Ryan and McLeod’s chief geologist at Full Metal Minerals and Underworld Resources, Ricardo Presnell, hints at the scientific genesis of the prospector’s latest project, McLeod noted.

The late Ricardo Presnell: soil sampling pioneer

The late Ricardo Presnell: soil sampling pioneer

Ricardo Presnell was a larger-than-life geo who had previously spent more than 20 years with Kennecott/Rio Tinto before signing on with McLeod’s companies. Presnell, a “wonderful man,” was a “phenomenal scientist” who brought a rigorous approach to soil sampling, McLeod recalled.

“Ricardo hired Shawn Ryan, who was a mushroom picker but had some mining background (he grew up in Timmins), to be a bushrat,” said McLeod. “Ricardo was a big believer in good quality when it came to geochemical sampling, specifically soil sampling. So the technique that Shawn adopted - learned from Ricardo - was to do soil samples on a reconnaissance level. He took these techniques to outline the anomalies at White Gold and Coffee.”

Presnell was killed in an avalanche while skiing in Utah in January 2010.

“It’s interesting to see how Shawn’s evolved and how the relationship with me has evolved through multiple iterations,” McLeod said. “That’s what, historically, has led to success in this business.”

As for Ryan, he wears many hats but the descriptor on his business card may reveal his true passion.

“Yukon Prospector.”

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Disclosure: Author owns shares in Rockhaven and Strategic Metals. This article is for information purposes and should not be considered investment advice. We seek safe harbour.