January 21, 2020 

From the Sixteen to One Archives


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 By fredmcain

04/03/2013  9:50AM


That was a good letter! Did you ever get any kind of a response from Mr. Dye?

I can relate a personal story of my own that is almost unbelievably stupid. I heat my house in the winter in northern Indiana with “hard” anthracite coal. I know a couple of people around where I live who run local coal yards. One of these guys was lamenting to me how he could no longer get what had been some of the highest grade anthracite in the world. What happened was that the mine in eastern Pennsylvania got "inspected" by the government. Numerous "violations" were found and the mine was ordered to immediately get everything up to "code".

Well, getting everything up to code would've cost this mine millions of dollars – millions that they did not have. So, what did they do? They closed the mine, of course.

I believe that miners should be able to expect to work in a safe environment. No one questions that. But are these miners actually "safer" now that they no longer have jobs? Is the family who owned the mine better off? And then there are consumers like me who have to pay higher prices for crummier coal on account of this. Yeah, this was a really great decision, huh?

I guess if the government really wants to make sure that no one will ever be killed in a mine accident again, then they should just ban all mining. Come to think of it, while they are at it they should ban automobiles, trucks, trains and airplanes too so that there will be no more accidents.

For better or worse, we all live in an unsafe world and people do need to be protected and their safety ensured but these rules and regulations are clearly over the top and out of hand.

Fred M. Cain
Topeka, Indiana
 By Michael Miller

02/19/2013  3:12PM

I was recently criticized for not doing enough reaching out to the public at large about the evilness of social wrongs that occur during my life as a hard rock gold miner in California. You (reader of this forum) are the public. Some of you keep up with the Forum entries. Some have even been around since its beginning. I forget content, so must you? If you are new to the Sixteen to One, please take a Forum topic and read it from the beginning forward. Much of the entries disclose stuff worth spreading to a broader audience, like the letter below that I just found in a discarded file. Minerals are vital and will be vital in even a primitive society let alone the social network of the 21st century. Wars are fought for natural resources even though oil is the one most talked about. Take a quick look around. All that you see has its basis in minerals. Even the wood or food would disappear if it were not for the mineral extraction industry. The raw materials of manufacturing are mined from somewhere. Prosperity will return to the countries and societies that recognize the value of sane natural production within their borders. The private and public institutions and small businesses will lead the financial recovery. Our governments must assist not impede prosperity.

The letter below is just as relevant today as it was almost eight years ago. Not much has changed, in fact I could site MSHA behaviors that are more damaging today than in 2005. This letter could be placed in the INTERSTATE COMMERCE AND SMALL MINES topic. What good is bitching without offering solutions? I do not have the resources to reach the public much beyond this web site. Please help.

David Dye, Assistant Secretary June 29, 2005
U.S. Department of Labor
1301 Airport Road
Beaver, West Virginia 25813-9426

Dear Mr. Dye,

Congratulations on your new appointment to head the federal workers safety program for America’s most precious resource, its miners. I am president of America’s oldest gold mining company and perhaps the only working hard rock, traditional, underground gold mine in continental United Stated. It is not something to brag about; it is something to mourn and investigate why there are so few. I also operate as an independent contractor for several projects and have been in the gold mining business since 1974. Your agency is partly responsible for the decline in the domestic natural resource industry. I am not sure that you are aware of the decline in the partnership between MSHA and operators to keep the miners safe. I write today to give you a recent example of how your agency is hurting the small operator.

On June 22, and 23, 2005, MSHA conducted a regular quarterly inspection. Accompanying the inspector was a young trainee. She had no experience working in an underground mine. She said that she had never been underground before. During the inspection she began lagging behind. It required a second employee of mine to stop and accompany her. She was unprepared for the inspection both physically and with her provisions. She put herself in danger, our crew in danger, compromised the agency’s credibility and endangered the operator and owner of the mine.
I request the following:
1. By what authority grants MSHA the right to bring trainees onto our property?
2. Is this practice occurring elsewhere?
3. Who at the Western field office approved her visit?
4. Please notify the Western office to cease bringing trainees on inspections or at least unqualified and unprepared ones. Please let me know their response.

I support the reasonable enforcement of the Act of 1977 as Congress intends it. The practical benefits for those of us in the trenches were lost almost a decade ago. Reasonableness no longer is a concept practiced in the field and offices. MSHA no longer is meeting the best interest of the American public. Maybe you will be able to enforce better training for those attending the National Mine Health and Safety Academy as a first step to improve operations of the mining industry in the United States. I hope so.

Where will there be mining jobs in the future? Not likely in this country if the misdirected regulatory agencies continue their trends. Why are federal tax dollars passing through MSHA to China to help them development mine safety teams? The International Mine Contests are held every two years and about fifty teams compete. Last year in Las Vegas, China participated for the first time and placed third. China will likely win the next contest, which is fine with me; however, public money is going to them while MSHA has introduced a policy of increasing revenue with citations and penalties against the operators in the United States. Poland gets as much money or maybe even more than China granted through MSHA. Why?

MSHA employees take frequent trips to China and elsewhere. I was told that someone goes to China at least every other month from MSHA headquarters. How is this expense justified as helping America’s most precious resource, its miners? China has invested heavily in Australian natural resources. None of this bodes well for America’s economic freedom. China has something like a trillion dollars foreign trade asset.

Last year there were forty deaths related to mining. Last year in China the government admitted to 10,000 mine related deaths. Last year 658 people died every day in automobile related accidents on our roadways. My point is the mining industry in America is a responsible industry. It should be treated that way by MSHA, which has not occurred in various operations in the west. Right now there is an insidious and specious effort to further impede the American operator by insisting that the category of “lead miner” reflects a management position within an operation. This is not true. Most within the mining industry both public and private know this is not true. Yet our small company has been forced to challenge this reckless assertion by MSHA agents and lawyers working for the Secretary to establish this position. The case is in the hands of the Ninth Circuit Court of Appeals. Your agency is driving this outrageous myth. How about getting involved and putting an end to this costly abuse of process?

Does America derive benefits from the money it spends to send agents onto private property under the authority of the ACT of 1977? The answer is “no”. Should America continue to fund an out-of-touch agency like MSHA? The answer is “yes” but changes are necessary. Good luck. I am at your service to improve the situation.

Sincerely yours,
Michael M. Miller, president Original
Sixteen to One Mine / owner Morning Glory Gold Mines
 By Michael Miller

01/30/2013  5:08PM

Sense in that Golden Nonsense
Published February 19, 1965

A Charles de Gaulle press conference is known around the State Department as his “semiannual anti-American lecture.” Last fortnight he used one to launch an assault on the dollar. The dollar, say De Gaulle, should be replaced as the international currency by something “which has a real value, which must be earned to be possessed.” And what is that? Gold.

“Yes, gold which does not change in nature… which has no nationality… the immutable and fiduciary value par excellence.” Behind De Gaulle’s words you could almost hear the stuff jingling in a million French mattresses, its hideout through the centuries. He wants gold restored to its throne because the Common Market countries now own almost as much gold as the U.S. and could own a lot more if they wanted to turn in their dollars for it.

Most money experts dismissed De Gaulle’s “vast reform” as dreamy nonsense. U.S. Treasury officials called it “a retreat to 1931”. Yet as always with De Gaulle’s pronouncements, this one has a shrewd aim and much prophetic content. The subject of gold is not nonsense when the dollars is in trouble.

Under the prevailing “gold exchange standard” of international payments, the dollar has been generally accepted as a substitute for gold because the U.S. stands ready to buy or sell gold at $35 dollars an ounce. For seven years we have been mostly selling and out stock of gold, once $24.5 billion is now scarcely $15 billion. Monetary experts have shown mounting uneasiness about this system. They question its ability to support an expanding world trade or to surmount another crisis like the run on the pound last autumn.

The currencies that finance most of the world’s trade are the pound and the dollars. Unfortunately, Britain and the U.S. are themselves in chronic deficit in their own balance of payments, and the pound and the dollar are losing the confidence of the other industrial countries for this reason. De Gaulle even charges that the U.S., as the only manufacturer of dollars, can and does create capital “by what must be called inflations” and thus “indebts itself abroad at no cost.” He is in effect summoning all the hard-money men of Europe to declare their independence of the dollar.

Although most German, Dutch, Belgian and even French money experts do no share De Gaulle’s anti-Americanism, they do not like the behavior of the dollar either. “Seven successive years of deficit,” warns Raymond Aron, “end up by shaking confidence in any money, even the dollar.” Washington has known for months that it must take sterner measures to end these deficits.

President Johnson made a couple of choices regarding de Gaulle’s expressions. The one with the most public impact was to reduce the duty exemption on tourist purchases abroad. Whoopee! The one with the most business impact was to tax U.S. bank loan abroad. Whoopee again! He also urged banks and corporations to limit their “not essential” exports of capital. But while Johnson’s words were determined (“the dollar is, and will remain, as good as gold”), the measures proposed more hortatory than muscular. Conspicuous by its absence was any use of the most powerful corrective of all, the Federal Reserve’s influence on the total flow of dollars by way of bank reserve requirements and interest rates.
Johnson’s reluctance to use monetary policy stemmed from fear of dampening a domestic boom. The increase in money and credit that fed this boom fed Nixon’s choices in the 1970’s. The longer avoidance of “classical medicine” of tighter credit, the more complex and irritating become Johnson’s substitute half measures to end the dollar outflow – and the less persuasive to the European central bankers, whose good opinion one of the dollar’s major supports.
A financial editorial during the de Gaulle rant opined: “On the collaboration of these foreign bankers we must depend, not only to keep the present international monetary systems stable, but to work out the needed improvements in it which De Gaulle’s cries of “gold!” have overdramatized. De Gaulle himself has not the power to undermine the dollar or to sever its links with Europe. But the U.S. can, by paltering with its own balance of payments deficits, gravely weaken the dollar’s voice in its own future.”

Now almost 48 years later can anyone opine what others will be reading 48 years from now about the dollar, gold and international monetary policy?
 By Michael Miller

08/27/2012  3:29PM

Been thinking about this 100 year old company, its future and my role as it voice, planner and day-to-day manager. What am I doing that is right? What am I doing that is not right? I want my phone to ring and the voice on the other end says,"I'm coming to see the mine and have a conversation about this company. I have all necessary to move your vision."

I know this web site has more information than any one person can assimilate, but this imaginary phone call I hope to answer clearly said, "to move your vision." Five years ago I was asked by a man who claimed the ability to move my vision but first I must write it down. So, I did and later posted it here. Only the spelling of one word changed today.

While the turf has changed over the past years for the Sixteen to One and the gold industry itself, the vision remains much in tact. The crew has improved the mine, our archives and knowledge. The price and interest in gold's future has improved. I'm told that technology towards building a better mouse trap, er, gold detector, has advanced considerably. Maybe I should post the vision again (developed five years ago) and see if the investment climate has changed:




The vision for Original Sixteen to One Mine, Inc. (the Company) includes America’s natural resources but focuses on the plentiful natural resources of California. While the vision may appear to be rather explicit or narrow, it includes gold and other mineral products, timber and water. It encompasses their exploitation, management, development and marketing for maximum yield. No other public reporting company incorporated in the United States shares this focus.

This vision includes the social aspects of natural resources and the desperate need to protect the cultural as well as the physical environment of our precious natural resources. The Company combines all social sciences as well as most physical sciences into an operational program. It is an enlightened business plan of operation. The Sixteen to One’s past reveals a necessary approach of maintaining long-term assets with the short term needs of producing revenue. Its present status is demonstrative proof that a small natural resource company can address the demands of natural resource exploitation in today’s overly aggressive pro environmental outlook.

The Company can become known as the model for future natural resource development in California and the United States. Its operations will challenge the erroneous myths and prejudices of well meaning activists who hinder the sensible exploitation of our natural wealth. These beliefs have turned the omnipresent demands for raw materials to natural resource production in other parts of the world, a dangerous reality.

A primary ingredient for our vision and subsequent model to expand is an infusion of working capital. There has been a noticeable lack of interest from Wall Street or private investors in forest and mineral production. The modest attention of the stock market towards America’s natural resource companies hurts future generations both in the United States and the world. Some patterns of investment are predictable. Investors’ interest in specific industries continues to move from one sector to another. The Gold Sector is abstruse, removed from the usual way of thinking and difficult to comprehend. The forest industry follows closely in its mystic.

A movement into natural resource ownership or participation is overdue. Unlike banking, savings and loan institutions, automobiles, real estate, airlines, pharmaceuticals, computers, utilities and practically every part of the complex mixture of America’s democratic capitalism, the natural resource companies are ignored. Perhaps one simple
answer is that resource companies believe they must stay under the radar to function in today’s hostile anti-mining/anti-logging mentality. Perhaps a more likely reason is the pure misunderstanding that potential investment capital has about these small but vital industries.

The Company’s dream foresees an awakening of Americans to the realization that we need and will benefit from a return to domestic natural resource productivity. For almost fifty years America has been bombarded with media blame for past degradation to the environment. Some of the blame is justified. Many extraction and harvesting methods, however, are no longer practiced and cannot be assumed as what to expect from future operators.

American industries have learned from the past and clearly are the most environmentally sensitive operators in the world. This is one reason to bridge the ignorance gap of the population and our leaders. The “not-in-my-back-yard” position is a short-sided myth! Vital and necessary minerals and other resource products come from countries without the sensible regulations that have evolved in the United States over the past hundred years. The consequences of this are global.

Even though population growth and physical development exploded during the twentieth century, the world-changing roll of the United States has taken a more dramatic turn. A counter cultural shift emerged. America was considered the can-do country. Democratic and capitalistic social ideologies opened the doors for an expanding middle class, especially from workers identified as “blue collar”. Our natural resources were developed and accessible. What changed?

Somewhat reluctantly America became a world power and responsible leader. The blue-collar worker of today is losing economic ground as our society turns more and more to the service industries. But the need for manufacturing contemporary products in America remains; and in order to produce, industry requires raw materials. America has them in abundance. America also needs the backbone of its labor resources to insure our freedoms.

The time has come to broadcast how to exploit our inherited resources in the 21st century. Original Sixteen to One Mine, Inc., a US corporation, has all the pieces to lead this renaissance except one. That missing ingredient is explained in its Executive Summary. The oldest American mining corporation operating needs a grubstake to turn its dream into a reality.

Leave them alone and they'll come home wagging their tales behind them.

July 25, 2007
 By Michael Miller

03/30/2012  12:02PM

The article below surprised me. Hope you find this bit of history interesting. Our Company purchased the Plumbago, which is a small Sixteen to One mine, not as many miles of working but an impressive production record. In 1937 three years had passed after the federal government took over the gold mining production industry. The long standing $20.67 price per ounce of gold increased to $35. The catch was that Americans were not allowed to own gold so the government bought the yellow metal. I was aware that the price increase also increased activity but a 50 man crew at the Plumbago is an admirable number.


Mine operated by Official of Hudson Motor Company

A gold strike of undetermined extent is reported, under good authority, to have been made recently at the Plumbago Mine in the Alleghany district. It is reported that the operators have been working on the present ore body for the last month. This property is one of the old producers of the district that is being reopened by the newly awakened interest in the industry and resultant influx of capital into Sierra County. A high official of the Hudson Motor Car Company is reported to be the active head of the financing structure behind the Plumbago operation. There is a 20-stamp mill and auxiliary equipment on the property but it is reported that only ten percent of the stamps are in service at the present. Nearly 50 men are reported to be employed at the Plumbago at the present time. During the past winter the mine employees were kept busy packing supplies in on their backs in order that the mine could continue to operate without interruption and in this management was successful, even during the worst of the severe weather.

The Mountain Messenger – Saturday, March 20, 1937
 By Michael Miller

11/21/2011  4:34PM

Archives are a great addition to any business. Thanks to Ray Wittkopp for sending me the letter below.

Some important distinctions in the following letter by Reno H. Sales are important distinctions that relate to the Sixteen to One mine today (67 years later). I will point some out for those of you craving a deeper look into one of the world’s great gold deposits, those who want to get to know the possibilities of our operation in Alleghany and everyone with an interest in mining throughout the world.

Mr. Sales earned the title of “Father of Mining Geology” as his systematic study of ore bodies became the standard practice for the industry. He was born in 1876 and died in 1969. Bill Fuller, company geologist from 1950’s to 2001, studied under Mr. Sales. Bill’s maps are priceless treasures that we continue to study.

Anaconda Copper Mining Co. June 27, 1944

Mr. R. S. Moehlman
29 E. First St., Rm. 216
Reno, Nevada

Dear Bob,
I am in receipt of a copy of your letter to Mr. Perry dated June 20, also a copy of your “on-the-run” Memorandum on the Nevada or Hogle Mine, situated in the Battle Mountain District, Nevada. That kind of report reminds me of “hit and run” Joralemon, and it is the very thing I am trying to get away from. The Hogle property is within a short distance of our Copper Canyon operation, and if there is one place in the United States where we need additional ore developments, it is in that area. We spent a lot of money on the Iron Canyon and on the Minnie in the hope that an additional property would bolster the Copper Canyon Project.

In addition to “too mush digging - - - in this mining profession on half-baked geology”, there is too much on the run type of geological examination work being put forth as a basis for starting the aforesaid digging.

You spent a long time in the Battle Mountain area, during which period you become acquainted with nearly every prospect in that region and you formed definite ideas on general geology. Jim Wilson is a relatively new man in examination work, and we should not put it up to him to decide for us whether the Hogle property has future promise.

When you are given the opportunity of examining a property in the Battle Mountain area, especially one that is closed most of the time, you should make that the occasion of a most careful and thorough study of its possibilities.

In your introduction you say, “The mineralization was not studied in detail, after it became apparent that possibilities were not likely to be large enough to interest the Anaconda Company.” Your course of action and reasoning is opposite the one I usually use. I study the mineralization and geology first and then decide whether or not it has possibilities of interest to the Anaconda Company.

Yours very truly,
Reno H. Sales

Reno Sales embraced utilizing the scientific approach as his foundation for exercising geological approaches for everything he did. No exceptions, no short cuts and especially no sifting data to support a conclusion. Just as Joe Friday said in Dragnet, “Just give me the facts, mam, nothing but the facts”.

The first distinction that relates to the Sixteen to One is describing ore examination as “on-the-run”. While inquiries continue about the worth of our property and participation in advancing the Sixteen to One’s operation, I knew that an influx of capital for sinking a new shaft or exploration was needed years ago. No one has done more than an “on-the- run” look. As Reno wrote, this is not the manner to approach a mineral property.

Reno also makes the distinction between “on-the-run” and “hit and run”. I got into the gold mining business in 1975. Over the past decades I’ve read about too many mining ventures that were actually funded on “half-baked geology”. What a shame!

Today there seems to be an aversion to risk by well-heeled investors to go get some of the yellow stuff that has continued to be a solid asset for centuries. Reno Sales’s spirit is howling over the sloppiness in the execution by professional geologists, mining engineers and mining operators that has taken place in North America since the governmental shackles place upon the gold mining industry were removed in 1975. I’m not in the grave yet and my spirit is howling in either disgust or despair over these abuses.

Reno hits the bull’s eye and does not mince his words in calling out Joralemon or Moehloman: “Your course of action and reasoning is opposite the one I usually use. I study the mineralization and geology first and then decide whether or not it has possibilities of interest.” Reno, I’m glad to know you.
 By Michael Miller

11/17/2011  3:18PM

Some say I’m a blatant pack-rat when it comes to gold mining history, especially Alleghany and the Sixteen to One. No comment; however yesterday as I was arranging important stuff I saw an old California Mining Journal and wondered why it was here. One look at the index revealed the answer and now you can read an article that I do not remember about an interesting piece of the mine’s history. I encourage you to do so and click on NEWS for the title, “Closing the Original Sixteen to One Mine, Inc.”
I learn something new about this company and mine every day. The closing sentence strikes truthful today only “misguided governmental treatment of regulations” could substitute for the word, “economics”.
“But the present operation has been continuous since 1911 and a little more than half a century later the economics of the country, which has swung to soft currency instead of hard money, has brought a steady reliable contractor to the economy of the country and the state, the nation too, to its knees.” The End
 By Michael Miller

07/20/2011  3:55PM

I bought a rare periodical (published in 1922) years ago with a fascinating cover and found the story below written by John Hammond. Hammond was born in San Francisco on March 31,1855. He benefited from an education and training in science, engineering, philosophy, mining and technology. In 1880 he was chosen by the United States Government as special expert for the geological Survey to examine the gold fields of California. His report on the gold resources of his native State, made after the most thorough investigation, was the most comprehensive ever prepared up to that time and is one of the recorded government authorities. Please enjoy his story. John Hammond’s biography is one of the most interesting I have read, a complete surprise set with historical importance.

The Story of Gold
By: John Hays Hammond

The preeminence of gold throughout all history, as a precious thing most desired by man, is not altogether easy of explanation. As a metal it is far less valuable to man than iron, coal, and a score of other substances of daily use. Yet its name had always stood for super-excellence. This high regard for gold is probably based, in part, upon a race memory of the time when it was the only metal known to mankind. Unlike other metal, which, as a rule, require some smelting or some other process of reduction to separate them from their ores, gold is abundantly found in an uncombined or “native” state, so that our ancestors found it lying free and may have made ornaments of it long before they discovered the use of fire. It was so soft as to be easily wrought while its beauty appeals even to the untutored savage.

Gold ornaments are found among the remains of the most ancient civilizations. Methods of producing gold are illustrated in Egyptian rock carvings as far back as 2500 B.C. Sheepskins used in the earliest times to catch particles of the precious metal wash from river sands probably gave rise to the story of Jason’s quest of the Golden Fleece.

Originally, gold and silver were weighed when serving the purpose of money, just as gold-dust is weighed today over the counter of the mining-camp trader, but gold coins were used some six or seven centuries before the beginning of the Christian era. In the Middle Ages, the superstitious reverence for gold assumed its most striking form in the fantastic doctrines of the alchemists.

Gold came to be regarded as the most perfect and “noble” of substances, and was mystically associated with the sun, as silver was with the moon. Comparatively little of the metal was produced by medieval miners, and it is estimated that the total stock of gold in the world at the end of the fifteenth century did not exceed a value of $225,000,000. Coming down to modern times, we find that gold plays a conspicuous role in human affairs, for reasons that can be clearly defined.

First of all, it is the best monetary standard thus far discovered, and organized society could hardly exist without money. Gold is suitable for use in making an immense variety of objects in which it is desired to combine beauty with utility, for the reason that it is extremely malleable and ductile, does not tarnish, and is not easily rusted or dissolved. Compounds of gold are used in photography and medicine.

Lastly, it was the lure of gold that opened up some of the richest agricultural and grazing lands of the world to settlement and development. The Pacific Coast of North America and the adjacent interior were believed to be almost devoid of valuable resources before the gold rush of 1849.

Speaking in the United States Senate a few years earlier, Daniel Webster said: “What do we want of that vast and worthless area – that region of savages, wild beasts, of deserts, of shifting sands and whirling winds, of dust, of cactus, and of prairie dogs? To what use could we ever hope to put these great desserts and those endless mountain ranges?”

Gold seekers populated the country and the transcontinental railways followed the trails that they had blazed. Today, California is one of the most productive agricultural regions of the earth, while the value of her manufactures is ten times the greatest value ever attained by her output of gold.

The story of gold in the United States began with the gold rush in 1849. California still leads all other States in the production of gold, though Nevada, celebrated for its Comstock Lode, is rich in silver as well as gold. Colorado, with its Cripple Creek and South Dakota, which possesses the most productive individual gold mine in the country, are close rivals.

An interesting fact in connection with the discovery of gold in California by Marshall in the year 1848, is that a discovery of it had been made three years before that date by Mexican miners in the San Fernando Canyon, not far from Los Angeles. These miners extracted from a “placer” there about $100,000 worth of gold before the deposit was exhausted. In 1880, while engaged in the examination of the gold miners of California, I met Marshall, who accompanied me to Coloma and pointed out the spot, as nearly as he could identify it, where he discovered his first nugget of gold. Out of some curiosity, I panned there and found a nugget weighing about fifty cents in value. This was the size of the first nugget Marshall had discovered.

No other metal is so ductile or so malleable as gold, an ounce of which can be drawn into a wire fifty miles long. It has been beaten into leaves 1/367,500 of an inch thick. Gold beating and various methods of gilding have made almost pure gold so commonplace a substance that we see it about us on all sides – on signs, picture frames, furniture, pottery, the binding and edges of books, and even spread over broad architectural surfaces such as the dome of the Library of Congress, in Washington.
 By Michael Miller

06/30/2011  1:25PM

Sacramento Business Journal writer, Mark Anderson, called today asking about a gold situation in California. He forwarded this article that appeared in the Journal almost seven years ago. It was interesting as I never saw it before. Check the spot price of gold back then.

Gold mine finds enough to dig itself out of hole
Drills out $600,000 worth
Sacramento Business Journal - by Celia Lamb, Staff Writer
Date: Sunday, August 1, 2004, 9:00pm PDT

A small, struggling mining company in Sierra County says it hit pay dirt last week.

The Original Sixteen to One Mine Inc. drilled out between $600,000 and $700,000 worth of gold in about one week from its mine in the town of Alleghany, said company president Michael Meister Miller.

The company had started working in that section of its mine about one year ago but hadn't turned up much. Miller said he was about to give up on that part of the mine and send workers out on another project when they hit the bonanza.
So far they have extracted 1,000 troy ounces of gold, and Miller thinks there's more to come.

It couldn't come too soon for the company, which has been bogged down in the last couple of years by regulatory and legal hurdles, high power costs, high workers' compensation costs, and legal problems that followed the death of a miner.

"We were down and out," Miller said. "We were practically down on our knees."

Sells to Alaskan tourists: Original Sixteen to One mine is a traditional underground hard-rock mine that has produced more than 1 million ounces since 1896. It's been about two years since the company found a bonanza as big as last week's, Miller said. Back then gold prices were lower, so it wasn't worth as much.

Gold was selling for $385 to $390 per ounce this week. That's down from this year's peak of $427.25 on April 1 but much higher than prices from 1997 to 2002.
The company principally sells jewelry-grade gold and gold-laced quartz, which has been selling for about $2,500 per ounce, Miller said. It's sold mostly to manufacturers who make jewelry for the tourist trade in Alaska, he said.
"The gold mining industry is certainly in decline in California, so it's good news if they've hit some gold," said state Department of Conservation spokesman Don Drysdale.

Death landed company in court: The last few years have been difficult for Original Sixteen to One. In 2000 the company brought in an annual profit for the first time since 1995, despite the bear market for gold. But the good financial news was overshadowed by the death of miner Mark Fussell, who hit his head on a protruding ore chute as he rode a locomotive.

The federal Mine Safety and Health Administration fined the company $19,000 following the accident, and the company has appealed the penalty to the 9th U.S. Circuit Court of Appeals. The company and Miller also faced criminal charges related to the death in 2002, but a Sierra County Superior Court judge dismissed the case last year.

"It was very, very damaging to the company," Miller said. "My hands were tied to raise money and it was very, very emotionally distressing."

The company has sued the prosecuting attorneys in Sierra County Superior Court for $24 million, charging malicious prosecution and disruption of business advantage.
Miners get 30 percent of what they find: The company once employed 14 miners, but now it hires workers only on contract working for a 30 percent share of what they produce. A crew of nine works the mine now. The three miners who uncovered the recent find have each received $40,000 so far, Miller said.

The company plans to use the proceeds to pay delinquent power and accounting bills and reduce its debt, which totals more than $400,000.

Because the company could not afford to pay an accountant for the past three years, its financial statements are unaudited and the company is in violation of Securities and Exchange Commission regulations, Miller said.
The company tracks sales of its stock on its Web site under the symbol OAU. The last recorded sale was 75 cents on July 22.

Miller defended the company's stock price, saying the firm is in business for the long haul.
"The plans of this organization are not to hype the stock, sell our shares for $5 or $6 and go to the Bahamas and sit on the beach," he said.
Eventually the company hopes to raise $6 million and drill a new shaft, Miller said.

Less than a penny per share: Original Sixteen to One earned $81,917 in the first quarter, which ended March 31, according to unaudited financial statements. That equaled less than 1 cent for each of the nearly 12.9 million shares outstanding, but it was up from a loss of $13,297 a year earlier.

First-quarter gold and jewelry sales of $246,285 were up 108 percent from the first quarter of 2003.
The company lost $80,000 on sales of $329,743 in 2003, compared to a loss of $280,085 on sales of $455,506 in 2002.

Original Sixteen to One is the closest productive underground hard rock gold mine to Sacramento.
 By Michael Miller

03/14/2011  1:19PM

Recently this letter found its way to our office bundled with other correspondences about selling the mine Our Company bought the Rainbow Mine on May 4, 1943, which has been on its wish list for exploration for decades. Our mining ancestors ran the 1500-foot level towards the rich vein in the 1950’s but never pushed the project to actually intersect the Rainbow workings. Now our efforts are northward, away from this old mine to the south. Maybe we should offer this proven and valuable gold mine for lease or joint venture and give someone else the opportunity to prosper in this bull gold market.
This is an important historical letter. A glossary of names will help the reader: Stewart M. Marshall director and president of Alleghany-Rainbow Mines Company (incorporated July 23,1937); Bennett (C.A. Bennett) was head management in Alleghany for many years; Mr. Maxfield was president; Duke owned the Gold Crown/Wonder mines, which we bought in 2005; C.C. Cushwa managed the Spring Hill mines in Grass Valley; Bortner was a miner living in Alleghany.

October 22, 1942 Mr.Stewart M. Marshall

San Francisco, Calif. Rainbow Claims and Equipment

Dear Sir:-

As you were advised that I intended, Briggs and I went to Alleghany yesterday and visited the Rainbow in a hasty attempt to cover all the matters mentioned in letter of October 17.

I talked at length with Bennett, of the 16 to 1 mine, about the land and about the equipment on the property. Bennett would be interested if he were not faced with the shutdown order, but he says he is not at all sure that the 16 to 1 will be able to weather the blast of shutdown and, like most people directly affected by the order, he doubts whether or not there will be an American left after the war is ended. I believe this last is an unduly pessimistic outlook, and that Bennett is not as much worried as he is irritated.

Bennett would have been decidedly interested a few weeks ago, and I believe there is a chance he can now be interested, on the basis of a deferred payment settlement, which may or may not interest you. I asked if he would object to our approaching Mr. Maxfield, which he denied, but he did state that it would probably be impossible to interest Maxfield without his (Bennett’s) approval.

I asked several men in Alleghany about Duke’s reputation, and find it very dubious. One man said that a charitable statement about Duke would be that he is crazy: Bennett advised against any dealings unless cash is paid on the nail: Bortner has worked for Duke, and has a bad report about the man’s misinterpretations. It seems that Duke has repeatedly involved you and the Rainbow Company in his own fanciful operations in the Alleghany district. He is entirely insolvent. Also, according to Bortner, he claims title to some land owned by the Rainbow Company.

Regarding the old house on the top of the hill, now occupied by an elderly woman, a pensioner on the State Relief rolls: this place is a cross between a garage and a barn, with the barn having the best of argument. The sole feature of the building which is of any value as salvage is a corrugated iron roof, worth about $25.00 at going prices for used corrugated roofing. It might conceivably be valuable as a storeroom so Alpha or some other merchant interested in futures, but right now, when there are 45 empty houses in town, its immediate value is pretty close to nothing. Mrs. Devon, the lady who inhabits the place, was not available during my visit, but she is reliably reported as drawing a state pension (Old Age), and was forced to move away from her son-in-law’s house in order to retain the pension, as the state threatened to withhold the $40.00 pension if she continued with her daughter. This is why you can now rent the house to her. The $7.50 rental is simple, and the place is not worth wrecking. Polglase, the storekeeper in Alleghany, asked for a minimum price, and said he would try to find a buyer. I also asked Dortner to develop a sale idea if possible.

The equipment at the mine, while in good order, is old-style machinery. The two compressors are about 12” bore by 12 inch stroke, single stage machines, no unloaders discoverable on either machine, and the valves on both are pro-plate-valve types. They are entirely serviceable of their kind, but are very heavy. They are driven by old motors, one of which, rated at 50 HP, a very old General Electric squirrel cage motor, weighs about two tons and will probably stand a 150 HP load for an indefinite period without undue temperature rise. The 75 HP motor, driving the Ingersoll-Rand compressor, is about the same size as modern motors of the same HP and RPM: the GE motor is 720 RPM, unless I made a mistake, while the Westinghouse motor is a 900 speed. The old sharpener is an IR 50, and is heavy and obsolete, and will not pay the cost of moving to the highway. The smaller motors, rock drills, steel, saw frame, pump, while not the newest types, are still serviceable equipment and may be worth hoisting to the highway. The rails are badly rusted, but there is a total of about 8000 linear feet of 12 pound rail, or say 15 tons; Pockmann says he can pay about $30.00 per long ton for this sort of rail, if straight and free from surface bends. Some of the rail is badly corroded that it will not be useful. However, after we get the rail to the highway, it will still cost about $8.00 per ton to haul it Sacramento. The mine cars can be forgotten as valueless. The pipe leading into the mine in 3” casing pipe, badly corroded or rusted, and is worthless. There is a large supply of iron and steel, but it is not worth taking out.

Aside from the motors, the control equipment is first class, although several years old, and is just as good as new for practical purposes. There are two small dry lighting transformers, of an old type and irregular make, but serviceable. The 3-year-old transformers in the substation are very heavy for 40 KVA units, each containing 100 gallons of transil oil for insulation, with fins for cooling same: they may be salable, as I have had an inquiry recently about 6600-440-220 transformers. Bortner said these were the property of the Rainbow Company; PG & E has recently installed some modern 10 KVA’s and disconnected the older large machines. These transformers are not listed in your statement of the Rainbow equipment, and may not be Rainbow property. I presume that the power line in the property of PG & E. The wires leading underground are worthless except as scrap copper.

Getting this material out of the canyon will be a costly slow job. Biggs estimates the cost at $400 to $500. It will be necessary to set up some kind of power for the hoist, as the old gas engine is worn out, and is probably too weak for raising materials out of the bottom. Bennett offered use of a 15 HP hoist which he is not using; we have here at Spring Hill the old winze hoist. I thought of using a tractor for the hoist, but there is no level space long enough for the run. The standing cable on the old towers is so badly rusted and burred that it looks like a porcupine; we can test it with a load of rails, or with a chain block, before using. Biggs thinks we shall have to string a new standing (carrier) cable on the towers; this would mean moving the 7/8” hoisting ropes (bought with the 700 winze hoist from the Empress mine) to Alleghany, setting same up, and then recovering it. The old winch used for lowering supplies to the bottom of the canyon looks pretty flimsy; is there one in your office or elsewhere who knows what was used to lower the heavy machines to the bottom? In order to supply electric power for the hoist, we should have to string a cable or wires from the Rainbow to the point where the hoist would be set.

It would obviously be far better to sell the machinery in place than to incur the heavy expense of salvaging the stuff, unless we have a market for the machines before we start. I fear that the cost will be higher than the $500.00 figure. Polglase offers the use of the tractor he has at the rate of $3.50 per hour, including operator; the machine is badly worn. If the tractor is idle for extended periods, the charge will be dropped off. However, we should have to pay the operator’s wages, although he could be available for other work. You realize that a tractor would be necessary to handle the equipment from the head of the tram to the road.

I have not yet had a chance to see the other persons I hoped to ask about the machinery or land, but shall try to do so during the week. Lashbaugh, who was formerly interested in the Seven Aces mine, came in this afternoon about a Cobalt property, and I asked him if the Seven Acres would be interested. Lashbaugh has lost his interest in the Seven Acre property, but said that one Brinker, in San Francisco, might be tried. This suggestion was also made by U. S. N. Johnson, owner of the local Bret Harte Dairy. Incidentally, Lashbaugh says he has an option on a cobalt deposit from which analyses running as high as 8% cobalt have been made by Smith-Emery on samples. It may be worthwhile to look up the office in the Bay district of the Seven Acres mine, if there is one.

It might be desirable, in case we do remove the machinery and are unable to sell it, to store the equipment in the house at the head of the trail. The small motors and lighter materials could be brought to Spring Hill, and the heavy machines left at Alleghany.

C.C. Cushwa
 By bluejay

09/19/2010  11:32AM

Just a reminder: if you have never listened to east Texas Mike voice his opinion it is well worth the experience.

Mike is interviewed each Sunday night on http://www.krld.com by Charley Jones at about 10.06 P.M. Pacific time.

Pod broadcasts of previous Sundays night conversations with Mike is available on demand.
 By Michael Miller

09/17/2010  5:09PM

Her is another, "I wonder if" about Rita Hosking. While refiling and organizing our Sixteen to One maps, I noticed (for the first time) the name Hosking Raise. It was in the early days in the upper workings and south of the Sixteen to One shaft. I was not familiar with the Hosking name (or a Hosking who worker as a miner) until Rita hit the KVMR FM radio.

Thinking of names in the past, does anyone know of an off spring of Tom Bradbury? Tom, the founder of the Sixteen to One vein in 1896, is buried in the Alleghany cemetery. I wish to honor his mining prowess with a large white quartz rock that was brought to our office from deep underground. Is it necessary to get approval from an ancestor before extending this honor to him?
 By Rae Bell

09/17/2010  12:39PM

Look under "news" for a recent article about Rita.
 By Rick

09/16/2010  7:30PM

Martin...are you linked into FaceBook? This is a great question for Rita on that forum. I know she comes from a mining background.
 By martin newkom

09/16/2010  1:58PM

I wonder if the Hosking fam.
mentioned had relatives in Yuba
and Sutter Counties?
 By Rick

09/08/2010  7:38PM

Well, good things happen to those of us who have faith and perseverence!

Facebook just announced Rita and Sean's release of the CD recorded live underground in the Original Sixteen to One Mine and they all instantly sold out.

Check Rita Hosking on FB. HUGE NEWS from both the creative front and the underground workings!!!
 By Michael Miller

08/03/2010  6:01PM

The following letters (exchanged 22 years ago) between Bill Fuller and me have as great or greater relevance today. Our efforts to complete the maintenance of the 1000 foot level into the Red Star are only months away. Mining here has been my primary gold target since 1975. I was able to study the maps and records from three different operators. It is a hot area!

History will record Bill Fuller as one of the most competent geologist in the Alleghany Mining District. His knowledge and experiences go way beyond his academic training. He was our company geologist as well as the geologist for the Oriental Mine. He transcends other great men who worked in Alleghany: Henry G. Ferguson, Roger W. Gannet and H.R. Cooke. (See “NEWS” 12-31-2009 on Forum for more).

I hope you gain some insight into Alleghany, the pursuit of gold and our operation. Study them if interested. When the crew’s drill spits out golden corn flakes, I plan to raise a glass in memory of Willard P. Fuller, Jr.

Willard P. Fuller, Jr.
Mining Geologist

San Andreas, CA. 95249
July 17, 1988
Dear Mike:

I feel that I should reply personally to your memorandum of July 14th to the Directors.

As to the Company’s goals and policies, I have been on the board only for a short time, and I am not all sure what they are, not having participated in most of the discussions to which to refer.

You state that “Our goal is to produce gold at a profit in order to pay a dividend”, and “Our policy is to protect and enhance the assets of the company…” I agree with the policy statement, but wonder just what the goals are.

I would think that one of our primary goals would be to reinstate dividends. This can only be done by achieving a net profit. So how do we do this?

You suggest that we should try to do this by gold mining on company account, and you project an average annual production of 10,000 ounces for some fifteen years or more. I would like to point out from flaws in your “scenario.” A level of 10,000 or better was consistently obtained by the old company for many years, and I assume that you are using this performance for the basis of projection. So did Royal Gold for the Kanaka lease! This rate of production was maintained in a smoothly operating mine with a highly experienced staff and crew, in a mine that was well developed and which contained no reserves, as such, but a number of blocks of ground with known “prospects” and the promise of production

The Red Star South Block still contains some possibilities of production, but I think that the total that might reasonably be expected above the 1500 level would be within the range of 1000 to 5000 ounces. I note that last January you were hopeful of achieving 500 ounces or more by mid-1989, which I agreed was quite reasonable. In my letter to you of 12-21-87, I asked if you knew what the old company’s production from Oct. 1 to Dec.9, 1965 from the Red Star. Could you find this figure from the old records? That part of the block below the 1500 level is entirely undeveloped, but based on what has been mined above, we might project something in the same range as above the level. That is, the Red Star South might contain a mineable total of 2000 to 10,000 ounces. To project a larger production seems to me to be very risky and unsupportable.

The Red Star North has probably had a production of about 4000 ounces. Certainly some more production can reasonably be expected there, but how do you make realistic projections? I generally use a factor of one times the past production. In view of the large amount of underdeveloped ground, we might increase this by a factor of two. Say 4000 to 8000 ounces.

So we have a total of 6000 to 18,000 ounces of possible production, under realistic expectations, in the combined Red Star block. The Red Star South production can’t be fully brought in until completion of the rehabilitation work and the extension of the Red Star winze to the 1500 level and below. We are now in a better position to estimate how much money will be needed for this. The Red Star North production is contingent upon a substantial amount of drifting, raising and winzing. So there is still a lot of “dead” or unproductive work to be done.

Getting back to your production of 10,000 ounces per year for some fifteen years or more, I don’t think you have any support for such a statement other than what I have outline above. I am not saying that there are no other possibilities of production in the Red Star, and I fully recognize that Forest and the present Kanaka lease, as well as the Red Star, contained “untapped” resources. But we have to very realistic in this business. I also call your attention to the fact that I have given you a “range”. The lower end of the range is just as realistic as the higher end, so please don’t quote me as saying just the higher projection.

As to my opinion of your own capabilities and those of your crew in running a mine, I am not so optimistic as you seem to be. In fact, when comparing these with the old Original’s organization, in would say that the present organization is very limited in capability, and I have serious questions as to its ability to effectively carry out the overall program you propose. However, I would like to reserve final judgment until after the present phase (PP budget) is completed. Up to now, I feel that the work has proceeded slower than it should have, even with the serious problems you have encountered. Remember, you have not yet operated a producing gold mine, and there is lots to be known about such an operation. Mining is a highly complicated business.

I am a little unhappy about your comments and suggestions about raising more money by selling stock (publicly or by private placement) based upon future projections such as you have used. I am afraid I will be of no help in that connection other than referring you to some of the mining companies active in gold.

Personally, I think the ultimate salvation of the Original Sixteen to One lies in letting other operators take the risk. Just take a good look at the Kanaka lease and the results being obtained. We, on the other hand, have a sure income while they are loosing money. We should keep our own company operation very small, and if we cannot achieve production with the present budget plus very limited company funds, we should close our operation down and consider leasing out the Red Star block.

If you wish to discuss any of the above in more detail, I will be most happy to do so. Just give me a call. See you on the 5th.

Best regards,


July 25th, 1988

Dear Bill,

Thank you for the prompt reply to my letter of July 14th. It was meant to stimulate a response from directors and to inform them about the degree of assistance each director could offer with our proposed second phase of funding.

I have always been reluctant to project any gold production in Alleghany. It is a very risky business. The Company settled on an annual production of 20,000+ ounces in past years. I have no way of knowing management’s desire; however production in the fourth quarter was usually higher than other quarters. I have been told that annual production was managed and reflected in the higher year-end figures to meet the desired amount.

In my last letter I separated projections and goals. Their uses are not interchangeable. The only projection I made was at the top of the page three regarding annual income from KCJV between $120-200,000. The citing of gold production, income and dividends are goals established to quantify the scale of operation envisioned. These figures, in turn, help me work capital needs forwards and backwards thereby arriving at a comfortable plan.

My goal is to return the Company to “a smoothly operating mine with a highly experienced staff and crew in a mine that was well developed” with blocks of ground that promise production. That is why we are bullish on extending Red Star North all the way to Forest. That is a goal.

Please do no continue to be unhappy about suggesting to raise money “based on future projections such as you have used” (Page 2 of your letter to me). I never contemplated selling any stock on these or any other projections because (1) Use of projections is not allowed in security regulations. (2) My discussion of production levels is tied into goals not projections. After fourteen years of active work in Alleghany I understand the limits of using gold productions in forecasting gold projections. Goals are different. Without goals the Company drifts.

Your final paragraphs indicate we have a policy difference. I know of a number of small companies (like Original Sixteen to One) with less promise who find themselves functioning as a lessor. We have moved into the arena of operator and primary gold producer. The interest in our Company has increased because of this. It is not because we have a “safe” passive income, but because we are advancing our operations that the Pacific Stock Exchange approved our listing. The Exchange Listing Committee reviewed Original Sixteen to One in depth before approving our application. We failed to meet any of the requirements and standards and failed by a large margin. Nevertheless, we were accepted. All of our shareholders have been aware of and support the goal of public trading. This opportunity would have been denied if we maintained or increased our position as mine lessor.

I have worked with lessors since 1976. While the quality has improved it remains a vulnerable relationship. Financially, the added risks of operator seem worth the greater potential rewards. Other mining companies such as Ranchers, Hecla, Norsemont, Alhambra, Transwestern and Brush Creek have failed to become producers in Western Sierra County. Countless mining men have spent money and failed individually. I have benefited from observing these operations.

As far as my capabilities and those of the crew, we are still in the embryonic stage of development. I am learning all the time on how to be a competent President. There is no doubt we are limited. We have an operation up and running for under half a million dollars. Nevertheless, what we have accomplished must be positive for all shareholders because the greatest business judge of all, the market place, has treated us well.

You offer a recommendation to close our operation down and consider leasing out the Red Star block if we cannot achieve production with the present budget. We never anticipated getting into production with the PPM money. We raised enough to advance our knowledge about the property with no cushion because the stock was undervalued at $1.30 per share (pre split price). Successfully completing the business plan of the PPM has nothing to do with gold production as a qualifier.

You prepared a range of production for the Red Star. Let’s use the lowest range or 6,000 ounces and a price of $450 per ounce … $2.7 million. If we can drift, raise and stope Red Star north and mine only above the 1500 level we may produce 5,000 ounces (I subtracted 1,000 ounces below the 1500 level). We can break up this ground for $900,000 creating a gross profit of $1,350,000 or about $.50 per share. The risk is we produce nothing. The carrot is we may produce 13,000 ounces at the same cost or about $5 million gross profit ($1.80 per share).

Old shareholders have supplied the company no money yet may receive a $.50 dividend. New shareholders (PPM at $1.30 per share) may get their entire investment back as a dividend. In either case, everyone will have a market place (Pacific Stock Exchange) to sell his stock. This scenario is not offered as a projection. All of the above depends upon funding and carrying out a $900,000 - $1.5 million Phase Two development program. I maintain that the risk of dilution to existing shareholders is worth the reward of profitability. We should immediately put in place a plan for raising money with the following goals:

1. The highest price per share possible
2. The shortest duration of time
3. The last possible moment before we must interrupt our current operation.

To achieve these goals I need the very best brainpower from not only our board but also businessmen and women in other fields. I want our meeting in August to focus on plans to accomplish our goals of producing gold at a profit in order to pay dividends outlined in my July 14, 1988 letter to the directors.

I will call you before the meeting so we can continue the discussion we have undertaken.

Sincerely yours,
Michael M. Miller
 By Michael Miller

05/26/2010  1:56PM

Many thanks for both your efforts. Dick, you got it right. Smithsgold, I wish Jerry had said this. He is familiar with Alleghany, but I’m not sure how he would express the benefits of mining in California. More on that later.

The governor’s message below was printed in the first issue of the California Mining Journal (VOL I NO. I). The cover of this great publication, printed in August 1931, has a picture of an old geyser with a mule and gold pan. It also features Nevada and Sierra County Mines.

The story, authored by Harry S. Tibbey, reads, “The Original Sixteen to One mine at Alleghany is undoubtedly the richest mine ever found in California, or anywhere else for that matter, and millions have been extracted in the comparatively short time it has been worked.” To my knowledge this affirmation still hold true seventy-nine years later.

Back to Governor Jerry Brown. During his time in office legislation was passed and signed that instructed the government to catalog all mineral property and potential mineral land in California. Its purpose was to insure that development did not threaten these valuable assets. Gold was decided to be of benefit to the people of the state of California. Thirty-four years later that benefit remains. Unfortunately, the government failed to exercise its duty to the people it represents.
 By Dick Davis

05/26/2010  11:55AM

James Rolph
27th Governor, Republican
 By smithsgold

05/26/2010  7:36AM

I say Governor( Moonbeam )Jerry Brown....

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PO Box 909
Alleghany, California 95910

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