January 23, 2021 

From the Sixteen to One Archives


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 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....
 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
 By Michael Miller

12/04/2008  2:06PM

Bonhams & Butterfields is delighted to offer the distinguished William and Marian Ghidotti Foundation Gold Collection in its upcoming Natural History auction on December 7 & 8, 2008 in Los Angeles. Initially accumulated over a 50-year period by owners of the famous "Original Sixteen to One Mine, the collections legacy harkens back to the historic California Gold Rush of the 19th century. Additionally, it represents William Ghidottis legendary philanthropic vision as a Californian.

A renowned collector, William Ghidotti’s name is intimately linked to the history of Nevada County, California, where, among other philanthropic projects, he and his wife Marian Ghidotti devoted themselves to the improvement of education in the region. Mr. Ghidotti’s acquisition of the acclaimed gold collection followed his discovery of an advertisement in the classified section of a San Francisco newspaper in June of 1965. The ad read: “To be sold. 25 beautiful irreplaceable quartz and gold specimens suitable for museum or private display.” A simple announcement, but beneath the modest offer lay the heartbreaking story of the decline in the fortunes of one of California's most acclaimed gold mines, the "Original Sixteen to One Mine" of Alleghany. The mine was faced with such rapidly increasing operating costs in the mid-20th century that the owners were forced to sacrifice their collection of choice showpiece nuggets.

Interestingly, the gold mining company sold the collection of natural gold specimens for 400% more than if the gold and crystal had been crushed and sold as bullion, illustrating the profitability in collecting gold specimens of historical importance and aesthetic appeal. Offered publicly for the first time since 1965, more than 20-lots of gold specimens, weighing a total of approximately 230 troy ounces, come to auction in Los Angeles.

Top lots within the collection include a specimen weighing more than 36 troy ounces described as magnificent, displaying distinct perfect cubes (est. $125/150,000).

Another lot maintains a mass of large outstanding gold crystals, weighing more than 35-ounces, estimated at $100/125,000. Considered a rare find is a gold slickenside specimen. Slickenslide refers to a specimen displaying a vein of gold growing through quartz, the offered example weighs more than 36-ounces, with multiple veins and blue quartz seen beneath the layers of gold (est. $60/70,000).

This extraordinary private collection not only represents William Ghidotti’s deep and abiding passion for this distinctive precious metal, its sale will now become the means to continue the Ghidotti Foundations funding of college scholarships, reflecting the original collectors philanthropic spirit.

In addition to the William and Marian Ghidotti Foundation Gold Collection, a selection of gold in quartz cabochons and mounted rings from the famed Sixteen to One Mine will also be featured, one examples is a gentleman’s ring adorned with diamonds and gold in quartz, estimated to bring as much as $1,500.

According to Department Co- Director Thomas Lindgren, This is the largest section of gold Bonhams & Butterfields has offered in its Natural History sales since the 1994 auction of specimens from the Sixteen to One Mine. We are pleased to offer such a rare assortment to the public.
 By Michael Miller

09/18/2008  3:12PM

Please go to NEWS for an historical treat: the exact copy of a letter from Fred Searls, JR to the president of our Company (October 30, 1961). (Searls later founded Newmont Mining, now America’s largest gold producer) This along with a letter sent by and signed by Bernard M. Baruch are two of my favorite documents in our archives. According to Donald R. Dickey, owner of the Oriental Mine in Alleghany, Mr. Searls, known for his eccentricity and pompous arrogance cut his teeth for underground surveying at the Sixteen to One sometime around 1923

Mr. Searls goofed his survey and lost his way on the 250-level, which is why there is a sharp turn on the 250-level far north in Red Star ground. Fred admitted that this was his only mistake in his highly successful career. For any miner that line is hard to swallow.
Well, years later Searls and two friends took pity on the struggling Sixteen to One. Most gold mines had closed but the Sixteen knew that a good gold showing in the north would keep the mine operating. The trio put up some money and later forgave the debt. Oh, if Fred Searls were alive today. Could we have some fun!
 By cindi corbin

08/07/2008  5:29PM

Does anyone know anything about "Chain O'Mines, Inc."? I hold in my possesion many stock certificates for them and "Midwest Operators, Inc.". These certificates were issued in the early 1900's and are probably useless, but if someone could point me in the right direction, it will be much appreciated. Thank you
 By Michael Miller

08/07/2008  10:42AM

Is the Balfour Holdings, Inc report useful today (see following entry for more about Balfour and Doug Silver)? Was it an accurate forecaster as we look back into the Gold Sector?

Affirmative, I say. Big gold companies as well as cash rich American corporations (individuals also) continue to shy away from good junior gold mining companies, such as ours (#3 in report). Billions of dollars were lost in the high tech and dot com feeding frenzy. The Gold Sector has some shame as well but nothing like the ridiculous market cap ratios for public companies that had no sales or income. Our plans for the future are getting more attention from entities capable of meeting the financial risk. Two reoccurring reasons I hear for this interest are: the mine is permitted and operation;
the company produces gold and has income. These are major and significant reasons why the Sixteen to One stands apart from almost all junior gold companies seeking fresh capital to broaden its development.

This entry concludes excerpts from the 85 pages of the Balfour report that has been in my library since 1992. Hope you find it interesting.

Exploration or Extinction?
An Analysis of the Supply Crisis Facing the Gold-mining Industry
March 1992

11.5 Recommended Strategies for Success

A number of strategies can be implanted in today’s business climate to enhance the probability of corporate survival, while also minimizing both the cost and risk. The following list offers proven strategies and perceived approaches.

1.) Increased exploration efforts. Since most mining companies have severely restricted their exploration budgets and activities, now is the time to be counter-cyclical and invest in exploration activities. The competition is less and potential still exists. Insightful companies should consider rethinking exploration target concepts and attempt to develop new targets by testing variations on conventional model themes.

2.) Almost all of the currently known gold deposits in the U.S. reside in historic mining districts. Consolidating large land positions within historic mining districts could enhance the probability of discovery while also facilitating the use of centralized processing facilities. Successful examples of this approach have been seen at Nerco’s Cripple Creek, Colorado operations and within the Carlin trend in Nevada.

There is an old saying that “if you want to hunt for elephants, go to elephant country.” Never has this been more true than for U.S. gold exploration. Companies seeking virgin targets in unprospected areas face almost insurmountable odds against success. Given today’s lean budgets, this approach may not be appropriate.

3.) Investing in Junior exploration companies with superior projects. This approach has long been shunned by American companies, to the competitive delight of their Canadian counterparts. American companies tend to take the position that investing in Junior companies will not only create additional tax liabilities, but also make them appear as holding companies, a title which could result in lower P/E ratios or suppressed share prices. Additionally, American companies seem pre-occupied with being in absolute control of their investments at all times. The concept of being a minority partner or conducting a creeping takeover is seldom considered a viable path for growth.

Canadians have demonstrated that investing in smaller companies has no impact on their trading prices or P/E ratios and allows them to participate in many exploration plays at a fraction of their normal costs. The premise assumes that the Major company takes an initial minority position in the Junior, but requires the Junior to raise public funds to cover the cost of high-risk exploration. As success is achieved, the Junior’s shares increase in value, thereby offering the Major the opportunity to sell and realize profits. Alternatively, if the Junior’s project is scientifically advancing towards the developmental stage, they will eventually require additional infusions of funds. This permits the Major to increase its ownership in the Junior through future private placements. When the project advances to the point of requiring capital project financing, the Major, now a significant, if not controlling, shareholder either absorbs the Junior or swaps its position for direct equity in the project. Companies such as Teck Corporation, Corona Corporation, Placer Dome, and Noranda have partially built their empires from the successful application of this technique.

4.) Grubstake proven ore finders. Successful ore finders often decide that there is more profit in finding ores for themselves rather than for an employer. Consequently, it is not uncommon for these people to be independent. Companies seeking success should identify and grubstake these people as an alternative to expanding their acquisition and/or exploration teams. Offering an ore finder a small overriding royalty makes commercial sense as it provides important incentives while not dramatically effecting the economic of the project. Grubstaking ore finders also escapes the need to spend precious corporate funds on training, health benefits, pension plans, and severance packages, etc.

Companies should also consider grubstaking individuals with proven track records in acquisitions. These individuals tend to be extremely well-versed in the intricacies of the mining industry, have widespread networks, and the ability to find or generate opportunities before the asset is put on the auction block.

5.) Searching internationally. The exodus of traditional American companies to Latin America has been the most predominant trend in the past twelve months. Companies are sending teams across the southern hemisphere in search of opportunities. Partially drawn by the emergence of pro-mining business in the U.S., these companies hope to replace their resources by tapping into the enormous potential of underdeveloped countries. Unfortunately, Latin America is not a panacea, and its problems and pitfalls are often overlooks, underestimated, or viewed as subordinate to those already known in the Unites States.

It appears that some companies are heading south of the border because of the mentality that the “grass is greener on the other side of the fence”, rather than because the United States is exhausted of quality opportunities. There companies should beware the costs of investigating foreign investments, including multiple trips by various corporate teams, relocation of corporate personnel, legal, political, environmental reviews, and cultural and lingual differences as well as accounting for opportunities lost at home, can prove to be quite expensive.
 By Michael Miller

08/06/2008  8:57AM

I am a junkie for mining data and history, which is why this topic is on the FORUM. The successful pursuit of mining gold, investors and hobbyists is greatest for those with an historical perspective. There will always be charlatans, soothsayers, self proclaimed brilliant analysts, quacks and outright frauds in any sector of our society, including the Gold Sector. There are brilliant professionals and some scholars, advisors or writers who are just ignorant of aspects of their trade. That is okay. That is one reason to study. Most everyone but the severely arrogant has been in an ignorant situation before.

The following excerpt comes from a very high-end report published in March 1992 and prepared by Balfour Holding, Inc. Its author, Douglas B Silver, still operated his company from Colorado (www.dugag.com). We met as a result of his research, which circulated among the highflying gold people and remains a valuable tool for us.

Exploration or Extinction?
An Analysis of the Supply Crisis Facing the Gold-mining Industry
March 1992

1.0 Executive Summery and Conclusions

The past decade of gold exploration and mining activity in the United States has witnessed one of the steepest growth rates in history. National gold production levels have increased by ten-fold, with more than 130 new gold mines having been commissioned. Companies have also grown with this additional capacity, with several now producing in excess of one million ounces of gold per year. This growth was made possible due to a combination of factors during the 1980s, including:

1.) The favorable investment markets for shares of public companies and the high price to earnings ratios enjoyed by the gold mining industry.

2.) The abundant project and corporate financing available through equity offerings, conventional debt, and well as by gold loans.

3.) The successful discovery of epithermal gold deposits in the Great Basin region.

4.) The liberation of gold prices from a fixed standard.

Collectively, these four aspects created a strong demand for gold shares and allowed companies to build with unrestrained growth.

Today, the world’s financial structure has changed dramatically from the “golden days” of the 1980s. Precipitated by the Stock Market Crash of 1987, companies are becoming hard pressed to service their high annual production levels because:

1.) The equity market for gold shares has evaporated. Lackluster gold prices continue to hurt corporate earnings, many companies do not deliver on their promises, and the industry’s anti-dividend attitudes inspires investors to support or maintain their interests relative to other investments.

2.) Efforts to reduce costs have several impacted exploration spending. Consequently, fewer discoveries are being made, even though there is no evidence that there is lack of opportunities or that the U.S. is “picked over”.

3.) Business development teams are finding fewer opportunities worth pursuing because the low gold price adversely affects project economics, even before consideration for acquisition costs. The difficulty of financing acquisitions in today’s markets is highlighted by the fact that the number of transactions completed in 1991 involving U.S. gold resources is half the number seen in 1988 (and occurs in levels comparable to 1985). The paucity of new discoveries is causing the acquisition pipeline to dry up, as acquisition opportunities are recycled without significant changes in their technical advancement status.

4.) The largest mines are depleting their finite resources faster than they can replace them.

5.) The attitude by corporate management that they must continue to increase their annual gold production levels in order to attract investor interest and remain on mining analysts’ coveted research lists. This is forcing corporate decisions to mine large ore bodies at a rate that exceeds the size of deposits offered by Nature for replacement.

Collectively, these attitudes indicate that the largest, pure-gold producing companies must take steps to attract investor attention, but on a basis other than sustained growth in production. Possible survival strategies include diversification to other commodities, overseas expansion, transforming companies into holding companies and redirecting analyst’s attentions from production levels to other, more appropriate investment criteria.

The future and fate of the U.S. gold mining industry rests solely on the shoulder of the companies involved in the exploration, development, and production of gold. No government subsidies are currently being considered and public support for the environmental movement may prove too powerful and ultimately eliminate mining in the Unites States. However, this race is neither rigged nor over, and many constructive options are available to innovative or foresighted strategists. Hopefully, this study will provide quantitative information upon which successful strategies can be built while also dispelling common misconceptions.
 By martin newkom

08/05/2008  2:27PM

Thanks, Mr. Pres. By the way,
does anyone know the geological
composition of the Bellvue
Tunnel in the Laporte mining
district? In my younger days
I went to boy scout camp near
 By Michael Miller

08/04/2008  4:19PM

Hi Martin. I took geology twice at UCSB and still find much of the Sierra Nevada and particularly the Sixteen to One vein system a mystery. So here is the third (see below) excerpt from the Jack Havard report of 1980. Have fun with the host of gold, quartz.

Quartz Veins

The quartz veins of the Sixteen to One Mine are typical of the Alleghany district and have been the most productive of gold in the district. The Sixteen to One vein is the dominant feature at the mine, but it is joined by several other veins originally considered independent: the Twenty-One, the Ophir, the Tightner, and others.

The Sixteen to One vein occupies an east-dipping reverse fault, with several hundred feet of displacement, which is part of the en echelon east-dipping reverse fault system of the district. The veins, here as elsewhere, are dominated by structure and ignore the county rock except for its mechanical properties. The country rocks are mostly the schists of the upper Tightner, the Kanaka conglomerate and some significant serpentine bodies. Most of the rock is hard and brittle, the exception being serpentine, which behave in a plastic manner.

The vein strikes about N 21 W and has been mined over 4000 feet on its strike. It dips at an average of 38 to the east and has been mined to 3000 feet on the slope.

The relationship of the vein system to events of the Sierra Nevada orogeny are not pertinent to the report, but the sequence of mineralization is interesting in the consideration of gold occurrence. H. R. Cooke, Jr. made a thorough study of the Sixteen to One vein (H. R. Cooke, Jr. The Original Sixteen to One Gold Quartz Vein, Alleghany, California, Economic Geology, Vol 42, No. 3, 1947).

Concerning the ore minerals, he writes:

Occurrence – Ore minerals form less then 2% of the volume of the vein, and are about equally common in massive quartz and in fractures, inclusions, or ribbons. They generally are clustered around large grains of pyrite, sphalerite, or tetrahedrite, but arsenopyrite, gold, and galena often occur alone or in combination. The only ore minerals in appreciable amounts in wall rock are fine-grained pyrite, arsenopyrite, and pyrrhotite. All ore minerals are hypogene except for traces of covellite and possibly a little chalcopyrite or bornite. The only evidence of zoning is unusually abundant pyrite in the schist of several lower levels, accompanied by a slight tendency for gold to be more evenly disseminated through the vein.

Five factors seem outstanding in localizing ore minerals:

1.) Fractures: the main channel-ways for the flow of ore solutions.

2.) Carbonate: the mineral probably most replaced by ore minerals.

3.) Quartz: controlling deposition of ore minerals by its resistance to replacement.

4.) Early ore minerals: tending to be replaced by later ore minerals.

5.) Graphitic gouge: tending to restrain ore solutions from invading wall rock.

Gold – Gold was the last ore mineral to be deposited and displays marked inability to replace quartz and earlier ore minerals. Gold generally occurs alone in quartz on grain boundaries or in fractures, and in very rich specimens of flood quartz, where it probably replaced carbonate inclusions; occurs with galena, often partly surrounds and fills fractures in arsenopyrite.

The average grade of the whole vein is too low for profitable mining, which means that more high-grade must be found than in random mining of the vein, The Sixteen to One high-grade is richer than any other for with I have seen comparable data. Scattered in a vein otherwise assaying about 0.04 oz., several hundred shoots have been mined, producing up to 78,000 oz. Each and running from 2,000—6,000 + oz., or on the order of 100,000 times richer than adjoining vein areas.

Dr. Cooke points out that 608,012 plus tons had been mined from the vein through 1942, yielding 749,179 plus ounces of gold. The hand-sorted high-grade, weighing only about 164 tons and constituting only 0.027% of the tonnage mined, produced 548,759 plus ounces of gold or almost three-fourths (73.25%) of the gold yielded.

In summery, when pockets are found the mine is rich; when pockets are not found the mine is destitute. This is the history of the Sixteen to One, and many of its smaller neighbors.
 By martin newkom

08/04/2008  3:24PM

It would have been easier for
me to understand things had I
taken geology in my college
days but I didn't.

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