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 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.

Sincerely,
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,
Bill


~xxXxx~


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
(1931-1934)
 By smithsgold

05/26/2010  7:36AM

I say Governor( Moonbeam )Jerry Brown....
 By Michael Miller

05/22/2010  5:57PM

The following is a message from California’s governor. Can you identify which governor or when it was published? What a great message!


“May I confess that, while I have never engaged in mining, that earliest and most picturesque of California industries has always had a strong appeal to my imagination. One of my urgent ambitions as governor is to accomplish something in the way of stimulating and reviving that languishing industry. I would like to see the entire mother lode and all the mining regions humming with activity. Legislation, of course, cannot put gold into the ground. But I shall be responsive to all sound suggestions for the benefit of the mining industry and the mountain counties.

The gold in California’s streambeds and mountains was responsible for her birth both economically and politically as a member of the family of states. California’s gold was an important factor in sustaining the federal finances and credit during the stress of the Civil War in the 1860’s; and in spite of recession in annual yield in recent years, this commonwealth is still one of the leading states in production of the yellow metal. The decreased production of new gold is due to the nation-wide and world-wide economic conditions over which the gold miner himself had no control; and because the price of his product is a basis of our (and other nations’) monetary system, the gold miner is entitled to special consideration at the hands of our law-making bodies both of the state and nation to the end that whatever statutory or taxation burdens are now hampering the flow of new gold from out of the ground may be either eliminated entirely or at least ameliorated to the maximum degree. California should be in the forefront of the movement to help. We need more gold. In the United States today we are consuming in the arts and industries more than twice as much gold as we are taking out of our mines each year. Unless something is done to help, it is conceivable that the foundation of the financial system with sooner of later be affected.

But gold is not California’s only bid for fame and attention. This state is prolific in available minerals of commercial value, and the diversity of her products is not approached by any other commonwealth. Mining in California marches alongside of and goes hand-in-hand with agriculture, as one of the great basic industries upon which our people depend. Our wealth in structural and other industrial mineral raw material is widespread throughout California and in great variety, and if properly fostered and adequately supported by governmental promotion, will continue to grow in importance and will continue to support an ever-increasing industrial population in this state.”
 By Dave I.

04/19/2010  6:25PM

This a very important agency of the past: the O.M.E and should be reinstated. It sounds like a government organization needed again for the development of strategic metals relative to our national security. We have a national reserve for oil, but gold is too needed to be expanded in a national reserve.
There has been some reports about how the Bullion reserves of Canada are being depleted. It makes me wonder our own Nations Reserve.
 By Michael Miller

04/16/2010  11:14PM

For you readers, something from the historical archives:

When the miners’ operation turned from gold production to survival at the Sixteen to One after the disruptive shaft fire, all management united to prolong the hunt for gold. For the underground crew and its surface support, the mine’s gold was their livelihood. For the owners and management preserving the mine became the highest priority.

This began late 1950’s. Gold could be found, that was not the problem. All concerns and hope for the future rested in its price per ounce. By now the 1934 freeze and federal takeover caused operations to cease throughout the world; but California felt the slow decline of its gold economy less than other states. Aerospace was booming and real estate development and new home construction intensified as the population crept towards that of the most populace state.

An obscure federal agency saw the merit in the United States as a gold producer. It was the OME (Office of Mineral Exploration. Money was available to match development and the sixteen to One was a taker. I became intimately familiar with the OME work, which ended in 1965. It was ten years after the fact, but its history was as valuable as it is important today. Original Sixteen to One Mine, Inc and the OME joined financially to continue exploration of the central Sixteen to One vein. It is referred to as Red Star and has been my target for gold since I first studied the maps in 1975.

Gold must be sold to the government buyers. There were two joint venture agreements between the mine and OME. The US treasury was locked in to $35 an ounce or the same price the company received thirty years past. However, the costs of mining increased as inflation surged through the economy. Gold smuggled into Mexico and other locations brought a lot more cash than what the government paid. Smuggling for the directors was not a choice so the miners were laid off. Some miners continued drilling and blasting but left the broken rock underground. And yes, Sixteen to One gold found its way into Mexico.

All the veins of Alleghany are siblings. They are related and just like brothers and sisters act differently under stress. The Red Star section of the bolder Sixteen to One is as close to virginal can be without being virgin. The people who invest time money or care resemble me. We are confident gold remains, untouched by human hands, and waits for the miners’ hand on his drill. The Sixteen to One vein is not exhausted. At $35 an ounce one jut could not stay operating.

Thanks to this small but mighty band that call up this forum from time to time. Stay tuned. Now is the time to help the California gold miners. It is not the economic past. The federal government will not succeed in gobbling all the gold next month. The price is not a concern. Have some fun with us. Mike
 By Rick

09/01/2009  9:56PM

My own personal archive:

Just before the CDAA assault, I'd been helping assess the highgrade potential within the mill-rock, so that the quality specimens wouldn't be crushed and would be preserved, as all high-grade rock brought to the surface was being assessed.

Somehow I'm writing an entry under "Archives".... while this super activity was ongoing at the mine, only a few years ago.

How far in the past is an archive? Relatively speaking, this was yesterday. The team was bringing major-big gold to the surface, and I was simply helping to identify a few missed ones.

The mine was so successful at this time in our "now"-past, that it boggles the mind...this was happening and then the crap shut it down.

Is an archive a "past" accounting of history? I know it's a "now" accounting of real potential....as the potential today as it was 150 years ago. I saw the gold in the rocks. Awesome.
 By Michael Miller

08/31/2009  5:30PM

When the Company decided to sell its own gold collection to raise much needed working capital last year, I wrote the following descriptions for some of the pieces for the producer of the catalog to use as he felt fit. He used none.

The collection did not gain the attention it deserved. As one shareholder said at the 2008 annual meeting, "Lets hope that someone realizes what this collection will mean twenty or fifty years from today. People will say thanks for preserving it."
I just stumbled across my comments about the collection and decided that maybe, just maybe some hearty soul's curiosity will be stirred into action to keep the carvings in tact.



Comments of collection:
March 2008

Imagine carving a block of glass only this glass is composed of different elements with different harnesses. This block is natural quartz, the geological home of lode gold. The carvers’ troubles continue because the material will crumble under the grinding wheel without warning, thereby undoing hours of planning and tooling. It does not help matters that his material, formed 135 million years ago, is layered, faulted and went through the miners’ drilling and blasting. “It’s like a car hitting bumps in the road or an ice skater hitting a patch of sand,” says carver Buddy Miller. Buddy created both the Sesquicentennial Series and Saturday Life of the Miner Series.

Francis Musser who was the first lapidary to carve the quartz and gold felt other initial concerns. He just was unable to put the quartz rock in his saw. Francis created the trilogy of The Bear, The Eagle and The Trout (or call it the Fish). “I had never carved quartz with gold and never had seen it carved before. Mike gave me this large rock that contained $60,000 of gold and said, “Go make a carving’. It took me weeks before I had the nerve to clamp it in the saw and make my first cut.”

Ron Martinez approaches his quartz and gold specimen in another way. Ron loves to work small. His carvings are of natural things, leaves, shells and freeform design. “I avoid the hard rock/soft metal problem by simply letting the gold dictate where I carve: anywhere except where there is gold!”

Martin Butler, the youngest of the carvers, is a metal smith by trade. His unconventional beliefs about artistic creation told him to make his own tools for the Dragon and Two Hearts carvings. He shunned all power tools, spending countless hours grinding his masterpieces by hand. The result is a very tactile experience when his carvings are dropped into your hands.





1. #005, 006, 007 are in the Sesquicentennial Series. It is called Discovery (1848).

2. #002, 003m 004 are in the Sesquicentennial Series. The two carvings are called “ the Rush” (1849).

3. #001 is in the Sesquicentennial Series. It is called Statehood (1850).

4. # 008, 009, 010, 013 are in the Saturday Life of the Miner Series. If he was lucky, he took a bath once a week or once a month. Details include the pile of cloths, his golden toe prominently displayed and the ore car. He still wears his beloved hard hat, probably lite with carbide gas.

5. # 014, 015, 016 and 017 are in the Saturday Life of the Miner Series. The rugged grizzly-faced miners are rejoicing around a mound of gold. Even without the stimulation of gold, the men would join together in song and dance. During the gold rush and beyond men outnumbered women by thousands to one. Yet the joy of a dance persisted. The dress and physical appearance, the detail and of course the ever present hard hat deserve close attention.

6 # 011 and 012. The Phoenix is a symbol of immortality: a grand example of the matchless beauty of nature’s birthplace of gold.

7. #018, 019, 020 and 021. “A Rare Beauty”. With only the respect and admiration for the sight of a woman, this gold miner approaches a woman resting deep in thought. He brings a bouquet of fresh roses, gently reaches out to touch her hair. She is unaware of his presence but accepts his honorable intentions towards her for she realized how lost and lonely most of the miners feel in the untamed west.

8. #022, 023, 024, and 025. “The Jug Band”. The music livens the campsite; but the two dogs hear only noise. One howls and the other lies down and covers its ears. Note the detail in this six piece series, including what the miners are sitting on. The Jug Band elicits smiles. You can almost hear their music.

9. #026, 027 and 028. “The Law”. Lawyers and mining history are recounted in the early years of the American Western gold rush. The weight of the law book crushes the miner, bending but not breaking his neck. The city hat and miner’s hard hat represent an ongoing struggle between the producer and the regulator, the blue collar and the white collar.

10. #029, 030 and 032. “one of the most strikingly colored trout in the world”
at both the state and federal level have attempted to protect and preserve this beautiful native fish various means including:
1. designating the California golden trout has the State Fish of California in 1947;
2. creating the 300,000 acre Golden Trout Wilderness in 1978;
3. including the California golden trout on the U.S. Fish and Wildlife Service’s Endangered Species List candidate list as a category 2 species in 1991; and, most recently, by
4. adding the California Golden Trout to the Forest Services Sensitive Species List.

11. #032, 033, 034,and 035. Found throughout the Northern Hemisphere, the Golden Eagle is common in western North America, but rare in the East. It is one of the largest birds of prey in North America; only the Bald Eagle and California Condor get larger.
The Golden Eagle is the national emblem of Mexico.

12. #036, 037, 038, and 039. Francis Musser’s first carving is the Bear. Every view and every angle of this remarkable creature is inspiring. Featured on the 1995 annual report, the Bear please young and old.
13. #040 and 041. The Dragon. It seems that every dragon has its own personality just as each of the earth’s elements has its own energy. Perhaps by its size or the richness of the polished gold, the Dragon seems to pulsate when it is dropped into your hands.
14. # 042 and 043. Fred, we called this Two Hearts or Hearts on a Foot or Two Hearts on a Foot. This is another really fun piece. I tell people to close their eyes and hold out their hand and tell me what they are holding. Men or women stutter because it feels like a couple of balls, the ones we have. Maybe this is too risqué for the catalog but on the other hand….
15, # 044. A hand carved precious box of ebony wood with a large cabochone of quartz and gold on the cover.

Fred, I’m stopping now. Don’t even know if any of this is appropriate but we are here to educate the rich and adventuresome. You said they want “bragging rights”, well this collection will give them a bunch. MMM
 By Michael Miller

12/05/2008  2:59PM

Yesterday, I sent the article (see 12/04/08 entry below) to some business friends and acquaintances. Four sent back comments. Here is my introduction to the Bonham release:
To: Director Scott Robertson
Scott: I'm sorry the collection will no longer be on display at the bank in Nevada City. It is short sighted of the trustees. MMM

Two people recognized the loss to the public from this sale, one suggested getting the Ghidottis to invest the proceeds in a plan to mine more gold from the Sixteen to One (both are deceased and the foundation will put the proceeds into education) and the other well wisher took a different meaning from my mentioning “shortsightedness of trustees”. I want to clear this up now and sent him the following:

Hi Dagwwod,
No,the trustee remark did not feel good nor is it a reason why I included it in the brief introduction I sent about the upcoming auction. The shortsighted remark is my reflection on the loss of history with this sale. It is directed to anyone who is aware of the current Sixteen to One collection on the chopping block with money or contacts with people or organizations that work towards the conservation of history. The Ghidotti collection is historically relevant in a minor way. Our collection is historically relevant in a miner way. The loss to our grandchildren is an awareness of how the great American West came into being. A collection is just that. A collection broken individual pieces is something else. That is the basis for my remark about shortsighted. After the first of the year I will be examining ways to break up our historic collection. It will not be a shortsighted decision because the money is needed for our survival as a gold producer not any other reason.

I appreciate your comment and continue looking to the date we set to show the mine to the investors you mentioned. Light a candle or better yet a torch under their bed. MMM
 By oakrockranch

12/05/2008  2:25PM

I looked at the offerings on lone and must say there are some real treasures to be had. I plan on attending and may bid on several of the specimens. I particularly admire the gold "slickenslide" example. All of you should check out this amazing collection being sold. Go to the link below for details, and then start viewing the individual lots at #1278: http://www.bonhams.com/cgi-bin/public.sh/pubweb/publicSite.rsContinent=USA&screen=catalogue&iSaleNo=16155

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