This view looks across Ryan Lake, past blowdown left to preserve the lake basin, to the hillside area where the Ascot Mining Company wants to do more exploratory drilling on the border of the Mount St. Helens National Volcanic Monument.
Bob Evans, CEO of Ascot Resources Ltd., likens the process of exploring for precious metals to playing the lottery. And, indeed, the Vancouver, B.C.-based company has been touting its prospective Mount St. Helens-area mine as a potentially big prize for struggling rural Southwest Washington.
In a July 2011 letter sent to Lewis and Skamania County citizens, Ascot President John Toffan wrote that the company's volcano-area deposit, while not yet proven, "could be a financial lifeline for the region's struggling economy."
Copper, gold and molybdenum deposits "of this size and quality could generate approximately 2,000 direct jobs and 4,000 indirect jobs, as well as considerable tax revenue," Toffan wrote.
But the chances of local communities winning big — or at all — are slim.
Ascot is not actually in the business of developing mines, and in the company's 26-year history of exploring for minerals in South, Central, and North America, none of its projects has ever resulted in the construction of a mine. Part of this is simply due to the highly volatile and speculative nature of the industry, and in Ascot's case, its success at Mount St. Helens will depend on investors' willingness to continue bankrolling the company.
Evans himself was careful to point out that the deposit is still unproven, and he acknowledged that chances of successfully developing a mine are remote.
This month, the company got U.S. Forest Service clearance for another round of test drilling on its claim, which is in the upper Green River Valley at Goat Mountain, about 10 miles north of Mount St. Helens. The claim is just north of the Mount St. Helens National Volcanic Monument, a 110,000-acre protected area.
Eventually developing a mine for the area, however, is a long ways off, and if one gets opened up, Ascot would not likely be the developer.
Ascot is a what is known as a junior resources company, operating by raising money from investors to explore suspected mineral deposits, hoping to profit by increasing its stock prices and, ideally, selling a proven claim at a tidy profit. It's mode of operation, then, is to scout out prospects and hope to prove them valuable to investors.
There are "thousands" of these companies, trading primarily on the Vancouver (B.C.), Toronto and Australian stock exchanges, said Mat
Wilson, analyst at Pinetree Capital, a Toronto investment fund that focuses on resource exploration and development. Few of them ever hit pay-dirt, and many flame out, Wilson said.
"The odds of turning a beginning stage exploration project into a mine are about one in 10,000. That is an important thing to know. In junior exploration, you can be right and still not end up having a mine develop," Wilson said.
A deposit that is too small or poor can hang a project up. So property and land-use disputes and environmental concerns — there potentially are many of these in the Mount St. Helens area.
"It's a theory until you spend the five years and the tens of millions of dollars to prove up what's there," Wilson said.
Evans acknowledged that Ascot never has been involved in a project that led to development of a mine. But he isn't daunted.
"It's simply the odds of the game," Evans said.
It a 2006 report, Ascot warned prospective investors that "the mineral exploration business is very high risk. … The chances of finding an economic ore body are very small. The junior resources market, where the company raises funds, is extremely volatile, and there is no guarantee that the company will be able to raise funds as it requires them."
Founded in 1986, Ascot initially focused on finding gold in Canada and abroad. In the 1990s, the company unsuccessfully tried to find diamonds on two properties in Canada's remote Northwest Territories. In the middle of the past decade, Ascot invested in a company called Cardero in an effort to explore for gold in Peru, Argentina and Mexico. All those projects were abandoned by 2004.
Around that time, Ascot shifted its focus toward Canada, where the political climate for mining had become more favorable, Evans said.
Hoping for a steady source of independent cash, Ascot purchased a gravel claim in northern British Columbia from one of its own directors. The idea was to make itself less dependent on external financing from investors.
Ascot invested heavily with plans to ship gravel to California. But the recession hit in 2008, bringing real estate construction to a halt. By the end of 2010, no work had taken place in two years, and the company is now actively looking to sell the gravel claim, Evans said.
Like most junior mining industry, Ascot is not about profiting by striking gold. It's mostly about profiting off speculation.
"Success isn't determined by developing a mine. It's determined by whether shareholders and stockbrokers are able to make money," explained Tom Ferrero, a former prospector and mining consultant who now works for the California Department of Mine Reclamation.
Share prices will increase even on the rumor of "good news." If a real deposit is discovered, junior companies are often bought out by more senior companies, Ferrero said.
Prospectors mostly make their living off their shareholders — as long as they're willing to stay in the game — and by working out deals with related industries and prospects, such as Ascot's foray into gravel.
"What they do is create a flow of money that they can scrape some of off as they go. It's the shareholders' money. That's the game," Ferrero said. "When you get that money flowing, there are ways to make money off of it. You don't have to build a mine there to get that energy going."
Despite the extreme risks, investors continue to buy into Ascot for two key reasons, Evans said.
First, he believes investors have faith in his reputation. In the 1980s, both Evans and Toffan were involved in a company called Stikine Resources Ltd. that, according to Evans, discovered a major deposit of gold and silver in British Columbia, which was later developed into a mine.
Secondly, he said, the looming possibility of striking it rich draws investors back, however remote it is.
"It's like the lottery. The odds are huge, but if you do win it's huge. They're not the companies you'd want to invest your pension fund in. These are where you put your gambling money," Evans said.