By Harriet McLeod
CHARLESTON, South Carolina (Reuters) - A Canadian mining company and a tiny South Carolina town are leading what could be a modern gold rush to the southeastern United States.
Romarco Minerals Inc reopened the historic Haile Gold Mine near Kershaw, S.C., this year and expects to pour its first gold bar there in early 2014, Chief Executive Diane Garrett told Reuters this week.
Once environmental impact studies and permits are complete, Haile will be the only modern gold mine east of the Mississippi River, Garrett said, and the first since the Kennecott Minerals mine closed in Ridgeway, S.C., in 1999.
Based on the proven gold reserves found in samples, the Toronto company estimates it has 3.1 million ounces of gold at Haile. The mine will produce an average of 150,000 ounces of gold a year for five years, according to its website.
"It sits on one of the most significant trends of gold in the United States," Garrett said. "A lot of people had forgotten just how significant the gold production was in this area."
Romarco's success at finding the gold left at Haile has sparked renewed industry interest in the southeastern United States.
The gold is embedded in microscopic flecks in volcanic rock along what geologists call the Carolina Slate Belt, which winds from northern Georgia through the Carolinas and into Virginia.
Vancouver's Revolution Resources Corp said in early October that it had begun drilling at several historic North Carolina gold mine sites along the Slate Belt.
Strongbow Exploration Inc, also of Vancouver, said this summer that it had bought mine properties in South Carolina and had begun drilling at North Carolina's historic Parker Gold Mine.
Erin Ventures Inc, another Canadian company, also is prospecting for gold in North Carolina, according to its website.
The "unprecedented climb into the stratosphere" for gold prices has spurred the eastern development, said Michael George, gold commodities specialist at the U.S. Geological Survey in Reston, Va.
"We may have three or four mines started up in the next 10 to 15 years" in the southeastern United States, he said on Friday.
Gold prices this week posted their biggest gain in six weeks, buoyed by optimism about European plans to contain the region's debt crisis. U.S. gold futures for December delivery were up $14.50 at $1,683 an ounce.
Gold was first discovered in the United States in 1799 when a 12-year-old boy found a large nugget in a North Carolina creek. The story goes that his family used the nugget as a doorstop until a jeweler bought it for $3.50, said Kenneth Taylor, North Carolina's chief geologist.
"There are hundreds of old gold mines all over North Carolina," Taylor said. "When the gold rush in California came in (in the 1840s), the experienced miners were here in North Carolina, so they went west."
Gold was first found on the Haile property in South Carolina in 1827. Mining continued off and on into the 1990s.
Romarco owns about 10,000 acres that include the 4,200-acre mine site. The company has spent about $350 million on site preparation and hiring and, by the time it produces gold, will have spent about $650 million, said Garrett, the chief executive.
"Mining is a capital-intense industry," said Garrett, whose company also owns two gold exploration sites in North Carolina. "When you look out West, this mine is quite small. Out there you've got mines that go for 20 miles and go thousands of feet (meters) deep."
The microscopic gold at Haile will be extracted by crushing tons of rock into dust and using a cyanide solution to separate the gold.
The Army Corps of Engineers requires an environmental impact study from Romarco on how it will replace 160 acres of wetlands it plans to destroy.
Environmentalists also are concerned about an endangered freshwater mussel, the Carolina heelsplitter, found in creeks near the site.
Garrett said the company, which expects to be at Haile for at least 13 years and likely 20, would propose land restoration and creating wetlands to replace those destroyed.
The environmental impact study will take about a year and has set back groundbreaking and hiring, she said. The mine has 106 employees, she said, and Romarco expects to hire up to 800 mostly local workers.
Kershaw Mayor Wayne Rhodes said the company would have a huge impact on his economically depressed town of about 1,800 people, and he is concerned about the delay in hiring.
"People here are begging for jobs," Rhodes said.
(Editing by Colleen Jenkins, Ian Simpson and Vicki Allen)