KALGOORLIE, Australia—In a backyard of this dusty, isolated town in the heart of Australia's outback are signs of a modern-day gold rush.
Stuart Hooper, 60 years old, has turned material available from a hardware store and a hodgepodge of parts into a contraption that processes about 10 troy ounces of gold each week from his private mine about 150 miles away.
"I probably make $250,000 to $300,000 Australian dollars (US$264,000 to US$317,000) a year," the former farmer and cattle hand says. "It's not difficult to put a plant together. You just have to be a bit of a boilermaker and electrician."
The allure of gold prices that hit new intraday records above $1,900 an ounce this month is propelling a return of gold fever in this remote region, known as the Goldfields after an 1892 find sparked one of the last gold rushes.
Mr. Hooper is among 6,000 part-time or full-time gold prospectors who are active in Western Australia, according to the Amalgamated Prospectors and Leaseholders Association of Western Australia, an industry group.
The state's Department of Mines and Petroleum granted 1,721 miner's rights to small-scale prospectors in the first six months of this year. That tops the 1,594 licenses issued in 2006, when gold was about $600 an ounce.
In an industry dominated by Canada's Barrick Gold Corp. and Denver's Newmont Mining Corp., which together produced 443.2 tons of gold in 2010, or 15% of global output, Kalgoorlie is a rare corner of the world where small-scale miners like Mr. Hooper still have a toehold.
A century ago, as the last gold rushes were petering out, the vast majority of the world's gold was produced by small miners. These days, an estimated 330 tons are produced by prospectors in 70 countries, or 11% of global mined production, according to the Artisanal Gold Council, a nongovernmental organization in Canada.
Located near the southern end of a 500-mile field formed 2.6 billion years ago when gold-bearing magma from deep under the earth welled up in a series of earthquakes, the region surrounding Kalgoorlie contains about 6% of all the economically recoverable gold in the world, according to Geoscience Australia, a government agency. At the gold rush's peak around the turn of the 20th century, Kalgoorlie had 30,000 residents and eight breweries.
With such abundant reserves, Kalgoorlie's modern-day prospectors are more than just hobbyists. According to the Amalgamated Prospectors and Leaseholders Association, small prospectors produce four to six tons of gold in the state every year. In contrast, Australia's largest gold mine produced 23.4 tons last year. Known as the Super-Pit, the Barrick-Newmont joint venture's waste pile overshadows parts of Kalgoorlie. The open pit reaches 2,000 feet below ground.
Aspiring gold moguls have numerous local role models. Mark Creasy, a veteran prospector who now employs 10 geologists and staff, made at least A$130 million when he sold his Bronzewing and Jundee discoveries north of Kalgoorlie in 1994.
Both were sold to Newmont and are still producing gold. Jundee brought up US$400 million of gold last year alone, while Bronzewing, now owned by Navigator Resources Ltd., is targeting 100,000 ounces of annual production.
Just north of Kalgoorlie, Royce William Allen assembled mining tenements in the early 2000s that were spun into family-dominated Nex Metals Explorations Ltd. Nex made an initial public offering on the Australian Securities Exchange in 2007 and has a market value of A$20 million.
A century ago, gold prospectors panned streams for gold. Now, hand-held metal detectors are essential equipment.
Last year, a solo prospector unearthed the Ausrox Nugget, a football-sized lump weighing 50 pounds, using a metal detector on a site east of Kalgoorlie. The nugget was recently sold to an American buyer for more than US$1 million. As is typical in this secretive business, the nugget's broker, Andy Comas, wouldn't divulge the exact price, buyer or prospector, and he wasn't told the precise location of the find.
Still, many prospectors remember the 1990s, when gold fell to as little as $250 an ounce, as halcyon days. For one thing, rising prices have stoked competition from rival prospectors and major companies.
"As more and more people go after the same bit of dirt, it becomes harder and harder to find these things," says Nigel Moffatt, manager of the Perth Mint, the state's only gold refinery.
The Mint has 20 or 30 people turn up every week to sell nuggets or rough, self-poured gold bars, says an employee of the refinery who didn't want to be named. "When the gold price spikes like the last few weeks, you do see a bit of a stronger flow" as prospectors take the opportunity of high prices to sell their finds, he says. "Last week, we had a car and caravan pull up covered in dust, right off the fields."
Sean Ashcroft, president of the Amalgamated Prospectors and Leaseholders Association, says a proliferation of red tape has also made prospecting harder in recent years. Everyone needs a basic miner's license, and those who treat prospecting as more than a hobby must also pay rates to the local council, an emergency-services levy, and often negotiate payments to landholders on Aboriginal-owned land.
"The thing is getting access to the ground," he says. "It can take years to get through these processes, which creates a pretty big bottleneck."
Mr. Hooper spent much of the 1990s refurbishing and running a small mine shaft with three other prospectors. Using hand-held rock drills and a mine cart, they separated their own dust and nuggets to make gold bars, trucking lower-grade material to a custom mill.
Such a full-time operation would be inconceivable now, he says. Mining companies offer salaries of about A$150,000 a year for unskilled work such as truck driving, while health and safety requirements have raised the liabilities facing small miners. Processing gold typically uses deadly chemicals such as mercury and sodium cyanide.
As a result, the majority of prospectors now split their time between salaried work for big miners and looking for gold on their own. "It was far simpler in the 1990s," says Mr. Hooper. "There were a lot of opportunities around, and you had the chance to talk to the old blokes that had worked the mines before us. Today, that generation's gone. The old-time self-supporting people are becoming extinct."
