I love the smell of fresh gravel in the morning

Yesterday was dirt day for the compound expansion I mentioned a few weeks ago.

Building in Western Alaska presents some unique challenges. The tundra is soft and spongy at best, and completely swampy at worst, so you can't just plop a building down on it if you want it to last.

And you can only dig for like a foot before hitting the permafrost - a living layer of ice - or flaky rock. So pouring a concrete foundation is a fool's errand.

The only thing (for regular folks) to do is to spread truckloads of gravel over the tundra and build your structures up off the ground on dunnage so you can easily level them as the ground heaves with the freeze and thaw.

So improving your property involves, first and foremost, endless pouring and expansion of your gravel pad. You put a base layer of big rock down and topped it off with a layer of "fines" - which is a lot like smearing icing on a cake.

Thanks to the gold mining business, Nome has no shortage of loose rock, heavy equipment, or skilled operators - so getting 200 yards of gravel and a D4 dozer is a simple phone call away.

The trucks started rolling in around 9:30 AM yesterday and didn't stop until the afternoon. Diver Mark operated the dozer and quickly turned out a nice level surface.

Besides directing dump trucks, hacking down bushes, and smoothing out the edges, I didn't have much to do. But moving rocks around is kind of like building a fire. It just speaks to something in men. I love watching the process even if I'm not running the equipment.

We expanded the pad on both sides of our house.

One side is for work - we're building more diver housing. We're building a 400 sq ft tiny house with two bedrooms, running water, shower, and, eventually, laundry. We're ready to commit the capital to it because having more guys up here this summer was such a success from both a gold production and qualilty-of-life standpoint. Next year we should be able to house up to 3 divers in their own space with all their own utilities, leaving our house for our family's exclusive use.

The other side of the pad is for family - we picked the sunny side with the view to build a nice playset for Evie, who's soon going to need a fun place to play with only light supervision, and a greenhouse for Emily, who claims that's the best way to turn Nome's 20-hour sunlight into real warmth.

As I wrap up my third full season running the dredge with Em (and second as a diver), I'm realizing that the infrastructure improvement is going to be more-or-less a constant feature of this business. I used to think I just wanted to do a "couple of projects" and the Eroica operation would be in a "good place" and we could stop spending. But the project list has only expanded. And these are high ROI projects, not vanity upgrades.

It makes me think a lot about the business model of gold mining since it's such a departure of the businesses I've worked in before.

My three major jobs (besides a stint at a boat building shop) in my 20s were in financial consulting, tech sales, and e-commerce advertising. All of those jobs are "capital light" - meaning you just needed some computers, phones, and people to make it happen. The scale is all in the staff. More people = more money.

Gold mining is different. It's capital-intensive, like farming. You "live poor to die rich."

Unlike those businesses, your investment in land, buildings, equipment, and technology over time is what creates your scale and advantage.

Using tv gold miners as an example, why do second generation miners like Shawn Pomrenke and Parker Schnabel seem to be the most successful? I think it's because you need someone learning the ropes and investing in infrastructure for 2-3 decades before you can really knock it out of the park. It's almost impossible for someone starting from scratch to crush it right away.

People seem to think these guys are either the hardest working geniuses around, or that they are guys born with silver spoons who sit on their thrones while underlings bring them ounces of gold.

The truth is somewhere in the middle. For that kind of success you need a bit of both. You don't stay in this game without working hard and being smart, but you also don't dig up millions of dollars of gold in a season in your teens, twenties, or likely even thirties without someone laying decades of foundation before you.

Coming back to the Eroica, I actually think a diver dredge is better compared to commercial fishing than inland mining. The crew size, scale, and business model much more closely resembles a salmon seiner in Prince William Sound or Bristol Bay gillnetter than anything you see on Gold Rush.

I used to think that, compared to commercial salmon fishing, gold dredging was a much cheaper way to generate a couple hundred thousand dollars in revenue in a summer. In order to get, say, a solid Prince William Sound seiner operation going, you probably have to finance $750,000 for the boat, permit, and nets.

An equivalent gold dredge - like the Eroica - might cost a third of that or less to build (with the big caveat that you actually have the knowledge and skills to do so). But that's just the vessel.

You need to factor in the operation infrastructure. A 4-man crew can live on the fishing boat, they can't live on a gold dredge. Every diver needs housing and transportation. You also need some kind of storage or shop space. The crew might take on that cost or the captain, but if you add up all the living expenses for 2, 3, or 4 guys in Western Alaska, you're probably looking at a similar asset base.

Without the financing options and playbook so widely available to commercial fishermen through the state of Alaska, it's kind of rare that a diver dredge overcomes that hump where they have an asset base to invest in significant dredge upgrades, crew housing and transportation season after season. I can probably count on one hand the guys who have done that.

And of that group of diver dredges (I'm not talking about the big guys - that's a different game), most are either second generation gold miners with a strong local support network, family roots in the community, and some combination of insider knowledge and financial assets passed down from the previous generation, or who were able to leverage reality tv careers to help "buy-in."

The only other diver dredge model that seems to work in any timeframe under a decade is the "minimalist" operation. One guy running a 1-or-2 diver 8" or 10" operation, with minimal investment each season. I don't know how much gold they're making, but I know some of them are good miners and come back season-after-season.

When I see guys trying to get into the diver dredge business after years of high inflation and the resource only getting harder to find, I'm more grateful than ever for the smart decisions Em has made over the years to spend wisely and make sure the Eroica is in good working order and on productive ground.

Bringing this all around to gravel - the reason for this diver housing is about one thing: attracting and retaining talented people.

If I've learned anything this summer it's that more is more in this business. A lot of people think in terms of more horsepower, but I've found the bigger lever for our team to pull right now is more bodies. More guys means more gold, more laughs, and more heads and hands to address problems.

Have a great weekend!

Alex