October 25, 2021 
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Forum
Topic:
How to Approach Thin Veins & Cost

       

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 By Hans Kummerow

01/13/2015  2:07AM

It has been a customary approach by economists in the past to look at the true value of a state's GNP as a function of the true value of it's fully transferable currency.

The same approach is customary if the true market-value of any publicly traded company is expressed as the CAP, the number of shares outstanding multiplied by the current share price.

As far as the pros and cons of a listing at an established stock exchange like NYSE are concerned it seems to me that the discussion about having OSTO stock listed, should be terminated for good. The reason being, as a veritable gold producer, OSTO stock could be backed by real gold.

It would be up to the Board to prepare an Amendment of the Articles of Association for the 2015 shareholder's meeting. For instance by adding a clause, that 10% of all gold produced will be directly set aside for the "joint shareholder's metal account".

By establishing such a dividend policy, the bottom line of the Sixteen to One Balance sheet would be unique, because shareholder's equity would not only be expressed in fiat terms, but also in onces of gold.

Such a change would achieve several important goals at very little cost:

The shares could always be sold at the actual gold value of a share certificate and we would not need a market place like a stock exchange

Shareholders would be attracted who are interested in a long term hard asset investment

We would get a lot of press coverage and additional interest in our company

The shareholder's joint metal account would not be taxed until any metal is actually sold for cash.

Could the Board kindly check, whether such action could be legally pursued in the State of California?
 By fredmcain

01/12/2015  9:25AM

Michael Miller & Group,

I’ve got a good one for you. I have learned that if you have an account with a stock transfer agent and there has been no “activity” on your account for three years, the state can regard your account as “abandoned” and seize your funds as “unclaimed property” AFTER THREE YEARS ! Can you believe this?

I was shocked to say the least. This was reported last month in “DRIP Investor”, a financial newsletter that I subscribe to. I sent an e-mail to the editor this morning about this (and I will copy and paste that below) but a big question I have is whether or not the state can still do this if you hold a physical certificate. I doubt it. This whole thing about getting away from certificates “for our own protection” is beginning to make sense now.
The broker at Penn Trade told me over the telephone that the big push to do away with certificates is coming from the GOVERNMENT *NOT* from the brokers!

This whole thing is starting to look very, very suspicious to me. Does the government want to phase out certs to make it more expedient to seize people’s assets? Hey, I don’t want to go getting paranoid but you really have to wonder.

I wrote this to DRIP Investor:
Dear Chuck,
I read with horror in the January issue of DRIP Investor about the way that it is possible for the State to seize someone’s assets on the grounds that they are abandoned or unclaimed property.
I, too, received a letter like that from one of my transfer agents that manages my CSX Drip account. The contact on the phone told me that the state can consider them “unclaimed property” after as little as three years. Huh? Say what?
Here we have had it hammered into us for years that the safest way to invest in stocks is for the long term. “Put your money in there and forget it”. “Tune out the noise”. But now the state can seize your assets after as little as three years of “no activity”?
I strongly believe that the constitutionality of this is very shaky at best. Someone – anyone – who has their assets seized like that should file suit on the grounds of an unconstitutional “government taking” of private property.
I have a couple of very serious questions about this. Number one, how can the state consider an account to be “abandoned” when the owner has been dutifully paying taxes on the dividend distributions year after year after year? Than make no sense whatsoever.
A second question I have, what about a case where the owner actually physically holds the stock certificate? Can the state seize those assets too? Or, are certificates more difficult for them to seize? If so, maybe it’s high time to take a second look at certificates.
Somebody somewhere really needs to speak out about this issue. If the state can seize assets after three years, what the hell? Why not make it one year? Six months? Is anybody safe?
Sometimes I can’t help but wonder if we Americans are really so far behind Vladimir Putin’s Russia. This unclaimed property law is beyond belief.
What is happening to us?
His response:
Hi Fred . . . thanks for the note. You raise some interesting questions (especially the one about stock certificates) which I quite frankly don’t know the answer to. It seems if you have stock certificates, you have ownership that can’t be taken away, but I suppose I don’t know that for certain. Let me see if I can get some answers for you on this.
Chuck Carlson, CFA
 By Hans Kummerow

01/09/2015  6:08PM

Mike,

would such exploration drilling inside the mine be feasible or would it create unacceptable safety hazards?

Hans Kummerow
 By Hans Kummerow

01/09/2015  2:03PM

Fred,

schön von Dir zu hören! Und schön auch zu hören, dass Du Dich in die Sixteen to One eingekauft hast! I have never seen a more interesting orebody than the hydrothermal quartz veins above the Melones fault.

The questions I have asked Mike are related to an exploration strategy that we have discussed in this forum several years ago. My suggestion was to use a horizontal drill to create bore holes that are wide enough to run metal detection antennas through them.

If this can be achieved in a technically feasible and cost effective manner we could explore a much wider radius around the existing workings than that accesible from the workings themselves. And we avoid all the "true falses" that are associated with ground radar detection and ranging.

If we are able to create a convincing plan on how to explore und verify the targets and then point the headings toward them in the shortest way possible, we might either find a large high grade pocket with our limited budget or be able to raise money for a challenging production plan in the financial markets.

And I fully subscribe to Mike's statement that he has never seen a better time to move ahead with a challenging development plan for the Sixteen to One.
 By fredmcain

01/09/2015  9:29AM

Hans,

Believe it or not, ich kann auch etwas Deutsch aber nicht sehr gut!

I, too have wondered about what you seem to be asking here.

During the last couple of years, I have bought shares in the Original Sixteen To One Mine but I have wondered if that was the best use of those funds. After all, Michael doesn't have the money I parted with - someone else has it who wanted to get out of the business completely or partially.

So, is there a better way to fund expansion? How? Any ideas anyone?

Regards,
Fred M. Cain
 By Hans Kummerow

01/09/2015  12:23AM

Mike,

does the Sixteen to One still have a longer range horizontal drilling rig of say - 100 feet horizontal drill range?

If you still have it, could that rig be operated 360 degrees within the regular working spaces inside the workings?

I have made some progress on metal detectors with very small antennas and I plan to go to Australia this year to test my equipment on alluvial sands in a known fossicking area. It is much easier to rule out a true-false signal in an alluvial Australian sand rather than in a hard rock mine like the Sixteen to One.

If you could share your current plans for the furure development of the mine with me I would be most interested. A lot of many inside Germany is currently invested into overpriced real-estate. Some of that money might also become available for undervalued mining operations in California.
 By Michael Miller

01/08/2015  1:31PM

Hans,
I will continue to search for a file prepared showing gold production for the mines in Alleghany. The Sixteen to One held the highest value. It was calculated in a manner that I consider today when evaluating a target for mining: ounces per foot of mining in dollars. Up to 1934 the price per ounce was $20.67. The Sixteen came to $208 per foot. This sounds like a wild number but it was prepared by USGS respectable geologists familiar with the Alleghany Mining District.

So today this would be about $12,000 per foot. I can live with that as an historical perspective on working this mine. Following in a report written almost thirty years ago by a leading edge geologist on the subject. He was hired by our lessee in 1983 to evaluate the Sixteen to One. I just finished reading it and thought you would enjoy another professional opinion.


Exploration Proposal for the Sixteen to One Mine
Objectives and Philosophy
The object of exploration at the Sixteen to One Mine is to determine the quantity and location of gold within the vein system. In order to successfully conduct exploration in the vein system it is necessary to understand the ore controls.
Ore controls within a vein are the physical-chemical geological processes by which the vein and its ore minerals were formed. . Vein minerals are deposited in faults or other open spaces in the host rock from hydrothermal solutions that circulate though the fault zone and cracks in the surrounding country rock. Local heat sources, such as a cooling body of molten intrusive rock, are responsible for the circulations of the hydrothermal solutions.
Faults are usually relatively planar features with some irregularities in shape due to variations in the tectonic forces which create the fault and the variations in the host rock cut by the faults. Therefore, movement on the faults results in the development of open spaces where vein materials are deposited. Each episode of fault movement, of which there are usually many, results in new areas of open space and a new phase of vein mineralization.
The chemical conditions for the deposition of a particular mineral depend upon temperature, pressure, and chemical species concentration in the hydrothermal solutions. Quarts and pyrite, for example, are deposited over a wide range of physical-chemical conditions. Gold, on the other hand, is deposited in a relatively restricted range of physical-chemical conditions.
Therefore, the locations and quantity of gold within a vein are the result of geological controls, in turn reflected in observable characteristics of the vein and its wall rock, which may be measured by mapping and sampling a vein. Vein characteristics may be classified as either structural or mineralogical. The structural characteristics include strike, dip, thickness, and slickenslide orientation, which can be readily mapped along with the visible mineralogy. In additions, the elemental abundances can be determined by atomic absorption analysis and the sequence of mineralization can be determined by the electron microscope.
Analysis and Interpretation – Optimization of Explorations and Exploitation of the Sixteen to One Vein
A computer-resident model of the geological features and mineralization of the Sixteen to One vein should be initiated and continually refined to assist in defining exploration and mining strategy. Initially large amounts of old and new explorations and past productions data should be placed into a computer for storage, analysis and display. These data will then be used to build a model of the vein which can qualitatively and quantitatively predict area most deserving of early exploration, pointed towards locations of minable reserves. Use the computer model will bring discipline and a partial optimization of these ends.
A basic underlying assumption is that the economic gold mineralization is not randomly located within the veins. As in any mineral deposit, physical-chemical geological controls will have operated to determine the gold distribution; our problem is to recognize and measure these controls, and to then use these measurements to make predictions of areas in the vein with the greatest probability of further gold occurrences.
Truly random gold occurrence would be remarkable – but there are clearly observable preliminary indications that we are not dealing with in such a case. Visually, a map of the known gold occurrences shows several strong trends. Further, from measurements of these occurrences, both as to their size and spatial locations, a well-formed geostatistical variogram can be obtains, with a range from 400 to 600 feet. If further confirmation of non-randomness is desired, a test for a 2-dimensional Poisson distribution can be applied.

Philosophy of Exploration for the Sixteen to One Mine
R.A. Bideaux
January, 1986
“The race may not always to be the swift, nor the battle to the strong; but that’s the way to bet.”
Damon Runyan, Guys and Dolls.
Historical exploration of the 16 to 1 mine quartz veins, searching for gold ore shoots, seemingly has been carried out largely on the assumption that gold occurrences are at random. Here the word random is used to mean “by chance” or “without method”. It represents one end of the spectrum, where the other end would be “systematic” or “entirely predictable”. All gradations might occur, so we could have statistical regularity or predictability of the gold occurrences only to some degree.
Obviously any degree of predictability should be considered helpful for exploitation of gold reserves, so as to keep exploration and mining costs relatively low compared to the value of gold recovered. This is true so long as the cost of obtaining the data on which such predictions are based is lower than the additional cost of simply going ahead and mining out the entire vein, which likely would not be economic.
Ferguson states that it is best if operations are confined to the profitable portions of the vein, a nice sentiment, but perhaps a bit difficult to do in practice. Cooke indicates that is possible to locate the gold ore shoots within the barren veins material, and offers as evidence that the miner has been operated profitably to that time. This of course has no bearing on whether the gold ore shoots have in facts been systematically located and mined out more efficiently than compared to random encounters.
Suppose that the gold ore shoots are in fact random in occurrences, both in size and locations. The best way in which to search for them would be by making a grid of workings, parallel to the strike and dip of the veins. The maximum spacing would be proportional to the maximum size of target expected to be found; then the grid squares would be filled in with more workings, finally spaces to a closeness control by economics, such that the value of the smallest target would exceed the cost of finding it, on average. The details of shape and construction of such an exploration grid of workings would be dependent also on whether the ore shoots, while random in size and locations, had any observable preferred orientation, as well as mining considerations, such as gravity flow or rock versus mucking.
For truly random occurrences, but with some parameters known, such exploration grids can be optimally constructed. Over the last 20 years, a considerable body of literature has been developed on this subject, mostly concerned with the finding of blind deposits. With all other considerations equal, every increment of vein should be explored or mined out to the same degree.
What objective evidence do we have that ore shoots at the 16 to 1 are perhaps no random in occurrence, and can in fact be found with a frequency greater than by chance encounter, or selectively mined? A subtle indication is that the ore grade after the Second World War is higher than before, while the tonnage is greater than before. This is the effect to be expected if selective mining is in fact taking place, lower tonnage but higher grade.
More exactly, shoots containing large amounts of gold tend to occur in the near vicinity of other pockets also containing large amounts of gold; and shoots with smaller amounts of gold tend to occur in the vicinity of shoots of likewise lesser amounts of gold, etc. From an ore reserve point of view, this variogram is taken to mean that reserves can be estimated to some degree of precision, with block of vein perhaps 100-200 feet on a side assigned estimates of number of ounces contained. These estimates may have a very large estimation variance, that is the estimate of ounces may have a very large uncertainty, but the existence of the variogram indicates that blocks with relatively larger amounts of gold so indicated should in fact have such larger amount, compared to blocks with estimated lesser amounts.
Note here that randomness is a function of scale, both the size of objects being observed, and the scale of observational resolution. The gold ore shoots can be thought of as being random in occurrence, if the observer is only aware of the scale of Cooke’s indicators, some tens of feet, but it seems that their occurrence is not entirely random when observed at a scale of around 500 feet.
It is likely that their occurrence is controlled by some geological process which has a scale of this same magnitude. Only structural features of the fault can be candidates, related to the amount and direction of displacement, and possibly the rock types which in turn partially controlled these. If a positive correlation can be established with the causes of gold occurrence shoots, and these causes can in turn be projected into unknown ground, or used to reassess areas already mined, it should be possible to bias mining operations to the most potentially profitable areas of the vein.


You have asked me to think of several things concerning exploration of the 16 to 1 mine: as, what I think of the current staff’s ideas on the subject, what I think should be done, and what I might do myself.
For the mine to someday go into full-scale production, to produce 20,000+ oz./year, there must be some large areas of the vein which have a good chance of producing substantial amounts of gold. Defining the probably existence of such areas is a principle objective of the first two phases. My assumption here is that the occurrence of gold in the veins in not a random phenomenon, but has been controlled by observable maple variable which can be used to project favorable (and unfavorable) areas of the veins.
Current thinking of all the mine staff seems to tend toward the random occurrence theory: that ore controls are local at best, and that the amount of gold to be found will be a function of the amount of quartz broken in search of it, almost regardless of where the quartz is mined. It would seem that the mine has been operating in largely on this philosophy, pretty much successfully, too, but I would hope we could improve even on these results.
I have looked through the notes I made from the literature, almost a year ago now; revised copies of these are attached, better printed. They should replace the copies I formerly distributed, and are well worth reading at this time.
Every study on the 16 to 1 and related deposits indicates that the occurrence of gold is almost entirely controlled by mechanical and structural features, as distinct from chemical controls. Here we are talking of features to be observed at a fairly large scale, on the order of some hundreds of feet. As of this time such data simply has not been gathered nor adequately displayed for us to collectively judge to what degree such ore controls will be in fact useful.
I cannot predict what may come out of such displays. Usually I can make a formal proposal for data processing, since the techniques to be applied are well-known. In this case, I do not know of any really similar computer system, to assist underground exploration, so it is necessary (and I think desirable) to experiment a bit in building such a device.
The hardware is largely available to me right now, and most of the computer programs. Any additional programs will purposefully be kept quiet simple, to keep the overall cost low while allow enough experimentation with the 16 to 1 data to let us know is this approach will be useful.
 By Hans Kummerow

01/08/2015  8:50AM

Thank you Mike for your comments.

I remember a statement from a very old geologist on the vein systems above the Malone fault. He once wrote to me:

Historically, production numbers have always corresponded to the footage of new workings that have been cleared.

So I wonder, Mike, whether you could dive into your archives and sort out the numbers of onces produced as a function of the footage of new workings that have been added in that year.

And in a second step, give me a number for the 2015 cost of adding 1000 feet of workings in the good old drill-blast-muck sequence and hauling the ores on the existing rail-system to the most convenient ore-mill.

Could you do that Mike?

To answer your question on the financial industry in Germany: Since we Germans had three major reorganisations of our national currency during the last three generations the public perception of fiat money is - coloured ink on small slips of paper. That attitude prevails throughout the German financial industry and explains our focus on hard assets, like production plants rather the financial services.
 By Michael Miller

01/07/2015  3:46PM

No worry about the Sixteen to One workings remaining as a rail driven haulage system. Diesel doesn't work efficiently in our deposit.

I have developed a mine plan that will require much luck (uncovering another 10,000 ounce pocket) or the financial participation of a grand person or group. There is no doubt among the informed that this 100 year old operating gold mining company owns one special gold deposit. Management is uncomfortable risking time for production on luck alone. Sure, we will take it but those green old paper dollars will increase our odds of success and greatly reduce the time it takes for the eventuality to happen.

Those with an interest in hard assets will reach a conclusion that I reached forty years ago: California holds much gold in its Sierra Nevada Mountain deposit, and the Northern Mines of Alleghany top the most favorable location to extract it.

How all parties meet and unite is the mystery or unknown. My point is that the most favorable time I have seen in four decades since gold price shackles put on the industry in 1934 were lifted has begun.
 By fredmcain

01/07/2015  5:33AM

Michael wrote that "We will have a different look but what look remains unknown by 2016."

Uh-oh. Whatever you do, I sure hope you decide to keep the rail system!

Regards,
Fred M. Cain
 By Michael Miller

01/05/2015  3:11PM

Yes, Hans, much has happened the last year and the last five years as well. This 2015 year has the likelihood of historical importance for our 103 year old company. We will have a different look but what look remains unknown by 2016. The international gold market is of no concern to me. How is the money industry holding out in Germany? I laugh no snarl when I read about the depressed price of gold and how it is predicted to change. Who are these writers and what id their background? I doubt many are gold mining producers. A twelve hundred dollar exchange for one ounce of gold makes me wonder. The wonderment is not that it isn’t higher or lower. My wonderment is why does California have only one commercially operating gold mine in one of the world’s most spectacular and proven gold deposit?

We all know that the international banker’s crash in 2008 set the character for the following years. Does anyone recognize the start of basic economic activities that will end this speculative boom and bust? I have some ideas and it isn’t the record number of the DOW.

One of my good friends and mutual shareholder of this great little undervalued company figured a process to mathematically find “key neutral” positions. Bets can be placed (either up or down, for or against or other quirky opposites) minimizing risk once the key neutral point is reckoned. I remember our discussions that took place many years ago on this process of contemplating a risk/reward endeavor. We may come to the same conclusions but the factors used to reach those conclusions can differ greatly. This becomes somewhat personal. This is a good thing for many. Finding your key neutral position is a start.

Well, Hans, I am so pleased to see your input back on our FORUM. I also cut back my participation last year but continue to check it daily. You will see more from me in 2015 than last year.
 By Hans Kummerow

01/04/2015  12:05PM

Happy New Year from Germany to you all, dear California gold-seekers. Has anything of importance happened at good old Origsix during the last five years?
 By gerald

11/10/2014  4:19AM

i recently sold shares at $0.50 at a well known broker..
 By fredmcain

10/27/2014  5:04AM

Michael,

I think I might know why. One guess is that who ever sold their shares for 42 cents needed to raise some cash very badly and was either unable or unwilling to wait and see if the share price rebounds further. As to why someone would buy them at that price, they didn't get such a bad deal, either.

I bought my last "grey" shares for around 20 cents, I think it was, but I am going to get absolutely "soaked" on the certificate so it's probably a "wash".

I realize that these share prices must seem pretty paltry to some who have owned Sixteen To One for many years. But, compared with what some of these other small mining companiies are currently trading for, we're actually not doing all that bad. Sutter Gold? North Bay Resources? Emgold? Western Pacific Resources? SHEESH ! The list gets longer.

So, I guess I'm optimistic right now and growing more so all the time.

Of course, the Water Board might end up throwing a monkey wrench in the machinery but I'm hoping and praying not.

Regards,
Fred M. Cain
 By Michael Miller

10/24/2014  4:39PM

If you check the STOCK topic on the FORUM, 10,000 shares traded at $.42 yesterday. As to a question of why, I don't know because I don't know why anyone would sell shares at the prices we have seen over the past years.

I'll have time next week to flesh out the water tentative discharge order.
 By fredmcain

10/24/2014  9:45AM

Yesterday our so-called "grey" shares closed at 42 cents and appear to have even briefly traded at around 55 cents.

This is the highest they've been in about a year. I like to think this is a sign that something's going right.

Regards,
Fred M. Cain
 By Michael Miller

10/22/2014  8:53AM

What is the promotional history of all those “penny gold stocks”? How did they manage to generate stock interest in the past? Is that game over? Are they dead?

The past four years or more were gloomy for gold mining stock players. The public basically fled the market. The sizzle, the predictions of economic gloom and doom or war moved no one. The promotion game is not over. It flows and ebbs. Lately it is showing signs of excitement. Hold your breath about some of the news entering publications.
Stock promotion companies hire a press firm, standard operating procedure. The pattern of press releases is predictable. Companies that have no revenue from production have significant expenses on their income statements under public relations. It is big and important. (as an aside we abstain).
What is happening inside the gold mining company for the promoter’s news? Yesterday, there was an important news release about a company with a property in Peru. It got a second ball mill and it just arrived. It would be ‘commissioned’, whatever that means, in several months. Production is right around the corner. Look how great we are.

Today, another company I had some news. A press release and lengthy announcement from the Investor Relations “department hit the publication networks: “the company announced that it has authorized three new studies to enhance the value of its 100% owned gold project” in eastern Oregon. The release goes on for 6 paragraphs. Wow!

For anyone following the gold corporate market place, the small cap gold mining and natural resource public companies need and want your scrutiny. This industry is under financed with some justification regarding its creditability. I have much information in my files about public companies that came to the Alleghany Mining district and screwed their investors. That taste does not leave those speculators. Others right now sit on the side with a thought that taking a risk in a small cap gold mine may be worth considering. Sadly or maybe fortunately these news operating, corporate predators play their game in other sectors as well: the medical electronic, technical industries. For reasons I cannot explain, people give them a pass. Gold is different. I’m not sure why but if you have some ideas, enlighten us. I offer one explanation. Gold mining has too many unfamiliar nuances. It is not a quick study. Each mine and each operator runs with the wolves. Its language can be confusing and distorted.
 By fredmcain

10/13/2014  4:26AM

C.W. WROTE:

"Noticed another block trade go through the other day, at $0.20 - that is two in the last month or so..."


Huh !!! Imagine that ! Someone's buying OSTO.

Regards,
Fred M. Cain
 By cw3343

10/10/2014  4:44PM

I would take dividends in gold, if given a choice. It would generate some wide interest, I think, as no other companies are doing that.

Noticed another block trade go through the other day, at $0.20 - that is two in the last month or so...
 By Michael Miller

10/07/2014  3:24PM

Well, well, well. It is not 6:21am in Alleghany right now. It is 3:23pm. With the problems we were experiencing with our internet server, we are now on Eastern time, as in New York. We just noticed this and will seek a repair. Thanks.

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