July 5, 2022 

Risk Management Strategies


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 By bluejay

12/26/2020  10:39PM

Sounds like an idea well worth pursuing.
 By David I

12/26/2020  12:17AM

I recommend that you merge with the Ruby mine. You have direct access. The ruby is for sale last time i checked for 2 million dollars.
 By Michael Miller

12/04/2020  2:17PM

History supports inflation is the proven remedy governments use to decrease debt. History recognizes ways to fight yours and my future asset losses. History works with gold, which I plan to write down a factual event with Sixteen to One mine.

Twenty three years ago our miners drilled, blasted, mucked and packed our safe with 2500 ounces of gold in one shift. Gold spot was $400 an ounce, so we called it “The Million Dollar Day”. The date was December 17, 1993. The location was the 1330 stope. Today December 17th those sacks of gold equal $4,575,000.00. To duplicate the crew and associated expenses today, I estimate expenses that same day are less than double.

Financials in the 1993 Annual Report show total revenues doubled from 1992 and net income tripled. Spot price was $332 an ounce. My geologist friends tell me they know of no deposit like ours. They point out that more of the vein was mined than remains. I agree. It only takes 540 ounces in a shift to make another million dollar day.

I agree with Bluejay and David and others with the nemesis to society of inflation with several caveats. How about you?
 By Michael Miller

12/24/2019  8:27AM

The following unedited article was written 108 years ago, two months before our company was incorporated in San Francisco. Red Star (our most northern underground workings) is my favorite target; however it yielding to the million plus dollar development of the most southern workings in the late 1990’s. The crew deepened a winze to cut through a fault proving that gold exists below the fault. Well, spot price took a dump and we discontinued developing this southern ore body.

Question: what goes into your Risk Management for investments? Do you have any assets in gold? If so, why? If not, why? An article will be coming out next year in the International Mining Journal. The writer asked me for advice to give readers interested in mining for gold. Hmmm. Do real hard core research.

Aug. 20, 1911

Recent developments prove richness of vein. J.M. O’Brien has taken over the Tightner and the Red Star and has already installed new machinery and equipment in order to push the work.

George Scarfe jr. superintendent of the Middle Yuba Hydro Electric Company, at Alleghany, Sierra County, on a visit to San Francisco to contract for electric motors to operate air compressors and other modern machinery now being installed in the Omega mine in that district. For which his company is to furnish power, reported having been shown some unusually large specimens of high-grade ore or “jewelry” rock similar to that of the Tightner, which was taken out this week from the lower works of the Red Star. Which was recently taken over by J.M. O’Brien of San Francisco. He has installed and has in operation a modern plant on the Tightner and has added the Red Star group to his holdings, which gives 5500 feet along the lode.

As the mine are now being developed with air drills driven by electric power, it is proposed to continue the lower tunnel through the Tightner ground, which has opened up the same shoot as shown in the upper workings and has practically demonstrated that the ore body is continuous, or is a true fissure. And as the values in the Red Star have been proven within the past few weeks to be the same fissure, it is conceded by authorities that this should prove one of the large mines on the lode, as the lower tunnel will tap the Red Star at approximately 900 feet under its present workings. The site for the mill is completed and the building material is being erected. The machinery is being shipped in by the Nevada City Miner’s Foundry as fast as completed

This, which has been one of the richest gold producing sections in California, has been neglected for some years on account of the lack of power, and the Middle Yuba Electric Company is now one of the most valuable utilities in Southern Sierra. Without which deep and extensive mining was impossible, and there was no question in the minds of those who know the geological formation of the district, that a fabulous shoot of ore which has been encountered in the Tightner, Red Star and other mines goes down with the veins, which are unquestionably of the true fissure varieties.
 By Hans Kummerow

03/04/2019  4:16AM

I am currently in Toronto at the PDAC Convention - the annual meeting of the 6000 prospectors and developers associated in Canada. A wealth of risk management experience assembled in one single location for four days every year. And the biggest marketplace for mining equity worldwide. Here projects get funded that have much less to offer than ORIGSIX.
 By Michael Miller

12/13/2018  12:13PM

“I currently find snippets in articles about investments that bring back memories of the fourth global American gold rush and the only one during my lifetime. The first great gold rush (1849) to the newly discovered California wilderness united our vast continent under one rule, language and currency. Historians claim it was the largest human non-warring migration (figures as high as 200,000).

Alaska was the site of America’s second major gold rush (1986-1899). What a struggle it must have been.

President FDR drove the politically initiated third American gold rush (1934). Writers always report that was when the fixed price of gold rose from $20.67 to $34.00 per ounce. Output production records rather than a mass movement to “discover” fresh gold deposits for exploitation best defines the rush. WWII killed the gold mining industry and post war inflation smothered its return to pre war conditions. What no one remembers and what I never learned in school also happened with the 1934 legislation. Americans were prohibited to own gold other than gold in coinages. Even as an Economics major at UCSB, that tasty item of western free market capitalism was ignored.

The fourth American gold rush was based on the politically driven decisions of 1934. President Nixon did not arbitrarily increase the “value” of an ounce of gold; the government cut the shackles of restrictive ownership by our citizens. In other words gold was set free to reach an exchange value with dollars and it quickly surged to new heights.

Bingo! Our local papers, the Downieville Mountain Messenger and the Grass Valley Union featured the spot price of gold on its front pages…with every edition. It was big news because this is gold country. Grass Valley is the location of California’s largest gold producer, the Empire Mine. Sierra County is the home of the Alleghany Mining District with the oldest gold Company and longest producing mines. Everywhere people gathered the biggest topic of conversation was gold. The year was 1975 and the rush lasted through the early 1980’s. Manic investors, miners and con men tromped north and south along the 200 mile California gold belt in the Sierra Nevada Mountain range. It was exciting.

One of my favorite recollections that depicts a prevailing attitude during America’s awakening to the value of gold happened in Alleghany. The Sixteen to One was looking for working capital. A Sacramento bank president drove up to see the mine. During our conversation the price of gold came up. He wanted to know my opinion. Will it go up or down? I don’t know the answer to that question. He said something about the all time high in 1980. “Those in gold production thought it was an anomaly, an over zealous feeding frenzy”, was my reply. I vocally wondered who were the buyers during the January spike. Well, he told me that he was one and bought gold at its high. He waited for months, hearing about gold, watching it steadily increase in price and jumped in at the top. Was he an anomaly or does he represent the bankers and other cautious investors?

The stage is set for another rush. Think about it. What will it take for serious people to test their mettle with gold? Maybe it is mining the stuff or speculating on its present/future price. Maybe it will be viewed as a safe haven for previously acquired wealth. Some will just gamble, an act that neither others nor I who deal in gold production practice. Risk takers and gamblers are different.

The latest reason an investment guru says for putting ten to twelve percent of your investment into gold was this. Gold does not return interest. Banks and government investments now earn low interest. Jean-Marie Eveillard told Bloomberg news today why his fund is about 10% invested in gold and gold mining securities. “It’s insurance to protect against the fact that current policies by American government and the FED are potentially wildly inflationary.” (Nothing new and exciting here.) His novel idea is gold pays no interest and banks pay nearly no interest. You can print money but you cannot print gold. So, you don’t lose because of gold’s non-interest bearing condition. I’m not saying this will launch gold into a buying frenzy but somewhere the president of some bank is watching gold, waiting on the sideline before he jumps in…at the top.”

GOLD RUSH FILE: written June 9, 2009. How does this read, nine and one half years later?
 By Michael Miller

01/10/2018  4:06PM

David I,hope you are still checking the FORUM. I was inundated with paperwork in December, which has continued and took a break from the FORUM. Thanks for your participation. I plan to get back on a schedule to keep shareholders, gold minded people and curious others up to date on how 2018, looks for Sixteen to One.

My major concern regarding a dollar backed currency with gold is who will be fixing the ratio of dollars to ounces of gold. Most of the deep gold minded people believe that the “price” of gold continues manipulated. It could be those who want a lower spot price (buyers) or those who want a higher price (sellers) or those who want equity balance. I prefer the market to set prices; however an ounce of gold becomes out of reach for most of us at $10,000 an ounce. What will be our choices?

In 1974, my choice was to find the gold and participate in my expected price increase that way. My economics and business beliefs are simple: supply and demand; law of diminishing returns; dynamics of scale; and for gold ownership as close to the metal as possible. I dredged. I mined some. I took over one of the finest companies with honest gold in the ground. Here we are.

What I see after forty three years is a very exciting future with the only concern is the dynamics of scale. The odds, as Sixteen to One sits today, foretell a struggle (as if we haven’t had twenty plus years of struggle)are not-in-our-favor. To eliminate the struggle (too small an operation) is achievable in multiple ways. My job is to find others who want to join our struggle to overcome this issue. I will.

Paper work, via ridiculous wrongful regulatory behaviors, is reduced to one source. Soon I can tell you about which agency seems better and which agency continues to break the law. Any guesses? Gold business which is out of my influence or control (spot price) is fun to think about but whatever I can influence to improve gold mining in the United States of America and especially with our Company, I will pursue vigorously. Anyone want to join us?
 By David I

01/06/2018  1:42AM

Happy new year. There is some consideration being thought about by the Trump administration about returning America to a partial gold standard with the price of gold set at $10,000 per ounce. This would be a boon for your industry. Also a very important legal consideration is being viewed by the US supreme Court regarding a Mr. Brandon Rinehart's case against the California Supreme Court to reverse the decision of the California indicating that the mining right of the 1872 Mining Act is limited to holding a claim, and not the right to mine the claim. This case was submitted to the US Supreme Court 01/05/ 2018 for review by the US Supreme Court to here the Case.
 By Michael Miller

01/05/2018  10:24AM

The following report caught my interest. While Americans are buying Bitcoins, Germans recently brought 53,780 gold bars to their home country. Nice move! Story follows.

Deutsche Boerse says Germans continue to invest heavily in gold, with holdings of its gold-backed security reaching a new all-time high in 2017. The German marketplace exchange organizer reported (January 3) that the holdings of Xetra-Gold reached an all-time high of 175.04 tons of gold at the end of 2017, up significantly from 117.59 tons at the end of 2016.

Out of all commodities traded on the Xetra Stock Exchange, Xetra-Gold was the highest-performing security with order book turnover around 2.86 billion euros in 2017. Xetra-Gold has been around for a decade, having first been introduced in 2007, and last year the gold price ended up about 13 percent. “The increase is mainly due to the high demand from institutional investors” said Deutsche Boerse Managing Director Michael König. “However, more and more asset managers, family offices and private investors are showing interest in gold as an asset class.” For each unit certificate, 1 gram of gold is deposited in the central safe deposit for German securities in Frankfurt.

The World Gold Council (WGC) notes that Germany’s gold investment market has “boomed” in the last 10 years. The WGC explains that concerned investors turned to gold to protect their wealth in the face of “successive financial crisis and loose monetary policy.” German investors bought more gold per person in 2016 than investors in China and India, two other countries known for being gold powerhouses. Reasons given by purchasers were investment and retirement.

Germany’s central bank completed the transfer of US$27.9 billion worth of gold bars held by France’s central bank and the Federal Reserve in New York. The 53,780 bars were brought back to Frankfurt three years ahead of schedule in a move intended to build public “trust and confidence.”
 By Hans Kummerow

11/24/2017  2:07PM

Hi Mike,

to answer your question in Director Erdahl´s words: The price of gold will either go up or down.

But the truth at the bottom is more complicated than that, if you look not only at the price of gold in US-Dollars.

For instance, looking at the price of gold in Swiss Francs during the last 40 years - it has not changed much at all.

But for a gold-mining company in California, where all expense is paid in US-Dollars, the price in sfr does not matter much.

And for an investor who is invested either in gold or Swiss Francs, the dwindling purchasing power of the US-Dollar does not matter much either.

 By Michael Miller

11/14/2017  1:25PM

Hi Hans,
Yes to your question, is the world running out of new goldfields. Remember the nuances for understanding the known unknowns and the unknown unknowns? Think about gold (and other natural resources) with both considerations. The known goldfields are becoming more expensive to mine as the ore changes and the access becomes more involved. “New” as a 20th and 21st century new gold deposit described discoveries which were really deposits that got a second or fresh look. Homestake mining, an old California gold corporation that was swallowed by Barrick, turned this trick in Yolo, Napa and Sonoma counties with its McLaughlen open pit mine. Was it new or rediscovered? It has happened globally.
Exploration has moved into regions that are awful to develop. This has also been ongoing for years. Gold is sought today in the high Andes Mountains, the frigid north Asia and elsewhere. What does this mean? Think supply and demand and come to your own conclusions. My conclusion is that gold will continue to be in demand, the supply is questionable and the cost of getting the stuff will increase.

Thanks about asking about Origsix. Our leadership has acquire good mines since 1911. We shareholders now own gold deposits with over two million ounces of production, maybe even three million. At spot price the dollar range for gold produced is between 2.550 billion and 3,825 billion ($2,550,000,000 and $3,825,000,000). Currently, I am sitting above the apex and very close to the center of our gold deposit.

What about the remaining useful economic life-span? Geologists have told me, written about and talked about 80% of this golden anomaly in a well-defined quartz vein system remains for the taking. Even though our federal government froze the price of gold at $35 an ounce from 1934 to 1975, Origsix remained a useful economic asset for its owners. It is more so today. It is the most undervalued American public company, which is why I continue to buy shares and defer personal compensation.

Where do you think the future price to buy an ounce of gold is headed?
 By Hans Kummerow

11/12/2017  3:01AM

An important risk in precious metal mining is the risk of depletion of known deposits.
If you look at global production numbers during the last two decades it seems that gold output has declined everywhere in the world except in China and Russia.
And if you look at the numbers for new goldfield discoveries in the 5000+ metric ton bracket the sad news is that there seem to be no really big new finds except one in China.
Is the world running out of new goldfield discoveries?
What about the remaining useful economic life-span of the Origsix orebody at todays prices?
 By Michael Miller

09/27/2017  1:42PM

New mining regulations in Tanzania have put gold companies under pressure and slowed investment in the country. This behavior is more than a trend. It is classic!

Tanzania’s reforms were introduced in July, and among other things, they allow the government to renegotiate or revoke existing mining and energy contracts. They also give the state the right to own at least a 16-percent interest in mining projects, and increase royalties from 4 to 6 percent.

“Minerals may not be mobile but the capital that funds the mines is,” said Ben Gargett, head of PwC’s Australia-Africa practice. “Investors are saying, ‘On our risk radar, Tanzania has just gone a lot further down on the list.’”

Why is this relevant to Sixteen to One? When gold resource capital be it investment, speculation or just a fun gamble looks for a safe harbor, Sixteen to One is the light house on solid rock.
 By Michael Miller

01/12/2017  12:48AM

How about the mine?

During the 1980’s and 90’s a fundamental yet unique corporate policy was established by a world class board of directors: Charles Irving Brown, Leland H. Erdahl, Willard P. Fuller, Sandor Holly, Scott K. Robertson Richard Clarke Sorlien, Brian R. Van Camp. It remains today. The mine and mining its bountiful gold is our greatest responsibility to guide management and lead our Company to prosperity. So, what’s going on in the mine?

We are working three active headings. All headings are north of Tightner Shaft: Compromise Raise area above the 800 level; 1076 stope (far north) twenty feet above the 1000 level; 1500 level south of the 1064 winze. All three have produced gold for us. The 1500 level now holds the greatest potential as we blasted the face last Thursday for the first time, producing a small amount of gold. The signals leading to this target are not in an old stope or pillar. It is a significant block of virgin quartz about 300 feet wide and continuing 300 or more feet up dip. Handling the muck is not an issue. Traveling to the heading is the greatest obstacle both for the miners and supplies. Unless the geology (or detectors) tells something different, the crew will mine this quartz the old fashion way: run a raise and wing off in two directions. Three miners work this heading.

Gold is presence in the shot ore on the ground in the 1076 stope. We have been here off and on for five months. Three miners work this heading, running detectors to locate and sack gold. Some jewelry chunks are in the pile, but most rock will continue to be ore for the high-grade mill (six to 12 ounces per ton).

The crew continues to dewater the lower workings. The next milestone will be walking on the 1700 level. We are surprised how good the 25 horse power pump is moving the water. At some point is will just quit the lift. Three choices face us but one must be taken to continue lowering the water: add another pump to the 49 winze, move the pumping systems (plus another pump) to the Tightner Shaft or to the present location. This is an ambitious plan!

We made a significant investment in two heading currently on hold: the ZERO Level and the Compromise Raise area. They are on hold for conservation of capital to hire more miners. This is a tough call for me and could be too conservative (cautious). I’m sleeping on this decision every day. I will feel more comfortable adding miners after completing the 1076 stope and working the 1500 level for a month or so. Maybe the gold inventory will increase enough to make it an easy decision.

Maintenance is ongoing. The track always needs attention, ground support is checked regularly and our phone lines and utilities need ongoing attention. The current MSHA inspector is a real pain and has caused us unnecessary work to satisfy his opinions of safety. He has never been a miner in an underground mine, something now ongoing with MSHA inspectors.

I’m working with Hans, a German gold admirer, to develop a European jewelry market for quartz/gold. Our bank has about $75,000 of slab available for export. Hans has created a style of jewelry that has a new look for the world.

The financial goal is: no more debt and eliminate our existing debt. Sure, I want to mine our way to reach this goal; however if the right people learn that one of the greatest gold mines in the world wants to expand, we will work out a deal to make it happen. Our finances improved recently but it is still under pressure. I will explore ways to become debt free and sassy.

My gold mining business sense leads me to a belief that the future for a gold producing company (us) is getting more promising. I will always remember what Lee Erdahl told me when asked about the price of gold. His answer was, “Well, one thing I’m sure of is it will either go up or go down.” Thanks, Lee. Spot price is an external. Our internal picture is improving weekly.

This report is for all of you who continue reading the FORUM. Stick along for the ride in 2017. I am.
December, 2016
 By Michael Miller

06/30/2016  9:46PM

Yesterday I was told about the labor issue at Hecla. Seems that the Company proposed reducing some benefits. The union took issue with this. I asked about the job/employment situation and was told that miners worth a lick had jobs, good jobs. The unemployed “miners“, well their story can be told around any mining camp.

Don’t know the workers compensation tax in Idaho, Montana or Nevada but in California the base rate is $84.65 for each $100 in wages. A problem in California is the small number on underground miners working. A primary reason why there are so few underground miners is the high cost of workers comp. Are we chasing our tails? California has the most proven gold deposit with the fewest underground miners working to get the stuff into circulation. The time for change is now.

I’ll look for more news about a labor strike and post it unless someone else has fresh news.
 By cw3343

06/30/2016  9:03PM

That is very impressive! Good for Hecla. But I thought the miners for Hecla were on strike? Maybe this means that they were able to resolve or mediate the issues with the Union.
 By Michael Miller

06/30/2016  5:04PM

Early this month an exciting and bold headline came out of Mullan, Idaho, home of the Silver Valley mining district: “Sinking of the Deepest Shaft in the USA Completed”. Congratulations to all the miners, independent contractors, executives and financiers for carrying forth this super human task!

With a finished diameter of 18 feet, the Lucky Friday #4 Shaft was sunk to a final depth of 9,587 feet below the surface. Completion of this shaft is a major milestone for the historic Lucky Friday Mine which has been in operation for over 74 years. The shaft provides access to lower mining levels which increase operational flexibility and extends the life of the mine by 23 years. May this risk reap a grand and justified reward!

The Lucky Friday #4 Shaft is a vertical shaft that begins underground, which makes it a Winze in mining terminology. A Winze is an internal shaft which requires the equivalent of a shaft head-frame and hoisting system. Again congratulations to the Hecla/Cementation Project Team for undertaking and completing another proud moment of mining history.

Thanks to The Mining Record of Denver Colorado for keeping mining industry news available to the public’s eye.
 By Hans Kummerow

02/29/2016  8:48AM

congratulations on the turn-around! Good to hear that 2015 was a profitable year.
Managing the marketing risks for your product is important as you ramp up production. Here is what I could do at my end over here to support you:

I have a relative who is a professional German goldsmith. If you send me a standard shipment of gold-laced quartz slabs, we could work on a marketing strategy for Europe and build a few samples that we could show to potential resellers.

Please send me an E-Mail with details on available volumes and prices.
 By Michael Miller

02/22/2016  5:54PM

The mine gave us more quartz and gold than our major buyer can handle. Most of our gold is sold in jewelry in Alaska. Over one million people take the Alaska cruse. There are no dealers or jewelers in Europe marketing Sixteen to One mine precious gem stones. A representative claiming to be familiar in Germany met with the owner of our major wholesaler at the annual Tuscon Show this month. He is unknown to me.

Do you think that Germans may have an appetite for the rarest precious gemstone once again on the market? If so, write me on our public website of email. We have a good inventory and a European market is long overdue.

I don't know how to proceed with our idea of uniting some Germans with more dollars or euros and our very real gold mining operations in California. I know that the opportunity to significantly expand our operations with investors is also long overdue.

An agreement seems unlike which means this old gold producer, once again, is left to mine its way back to great gains for its owners. We are profitable for year 2015 yet I know I am under achieving, which no German wants to realize, especially a Californian living and working in California's gold country.
 By Hans Kummerow

01/31/2016  12:44AM

Risk management strategies need to be reviewed from time to time.

When looking back on the past six years of risk management at Origsix it seems to me: The strategies worked well!

Legal risks were settled or minimized.

Technical risks have been under control and no accidents happened. However there have been recent complaints by mine supervisors that will need to be adressed in due time in order to avoid more legal trouble in the future.

Economic risks seem to have decreased to some small degree but remain challenging.

In Mike's words: We are on our own.

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