April 23, 2017 
 Sunday 
 
 

Forum
Topic:
Risk Management Strategies

       

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 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.
MMM
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

Mike,
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

Hans,
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.
 By fredmcain

08/28/2014  4:39AM

The August 25th edition of the Wall Street Journal (WSJ) ran an article that caught my attention entitled “Business Thrives in Abandoned Mines”. The article reported on how exploring abandoned mines looking for traces of gold in South Africa has become a popular (and very illegal) trade among hundreds if not thousands of people.

Compared to the U.S., the nation of South Africa is a relatively poor country and people with their backs to the wall are willing to risk life and limb in search of $50 a week in gold in abandoned mines.

The professional mining industry in South Africa has undergone a painful downturn that has resulted in the laying off of thousands of miners. The WSJ blamed this in part on cheaper gold mined in China.

South Africa, it seems, has a staggering number of abandoned gold mines. The WSJ put the figure at an unbelievable 4,400 abandoned gold mines in South Africa alone! They are almost impossible to patrol and have become fair game for impoverished, out-of-work miners looking for gold.

Many of the abandoned mines have been “permanently” sealed with concrete slabs at their adit portals or shaft collars. This has not been much of a deterrent. The illegal miners simply blast the plugs open again and descend. Some miners have been known to descend up to 3,000 feet or as far as they can before they hit water. Obviously, with the mines closed, the pumps have been silenced and the mines are no longer kept dewatered.

In addition to the ever present threat of cave-ins, the illegals also encounter a lot of violence with rival gangs of miners looking for gold. Life, it would seem, sounds like it’s cheap over there.

The whole article left me with an impression – or a reminder – over just how much we have to be thankful for here in America! Sadly, just what kind of a direction are we headed in? Could it be that with all our over-the-top regulations, mining might one day become no longer profitable for anybody? If that point is ever reached here in the U.S., could it one day pay more to simply abandon all of what’s left of our mines and “go illegal”? An illegal miner, as long as he or she doesn’t get killed, has to pay no insurance, pay for no permits or taxes, etc, etc. You have to wonder about this.

And here I am getting back to the Original Sixteen to One Mine. I think it is almost criminal on the part of our government to impose regulation after regulation after regulation on an operation like this. For its part, the Sixteen to One is bending over backwards to comply. But when we do the government comes back with, well, now we have to add new regulations “to keep everybody safe” and “protect the environment”.

Well, the liberal ideology pushing some of this stuff might end up with something one day that they never intended or figured on. Illegal mining would be far less safe and there would be no “environmental protection” observed by Illegal miners. To quote an old, worn-out cliché, “The pathway to hell is paved with good intentions.


-Fred M. Cain
 By Michael Miller

07/22/2014  10:38AM

Wow! I just finished reading this four year old topic. The best way is to start at the first entry and scroll up to the next entry chronologically. For recent viewers to the FORUM with an interest in learning about this one-of-a-kind gold deposit, I highly recommend taking a few minutes to review this remarkable exchange of dialog between serious parties.

Upon completion I had to smile and snort a laugh out loud. Four years later the questions, opinions and insights of the participants ring as true then as they do today. Time may be running away from me and my crew from mining another super pocket of gold; however, all familiar with the Sixteen to One know that it remains hidden from our drills and explosives.

Enjoy a look into the recent past but verified from over 100 years of experiences. We have a saying when someone asks, how’s it going at the mine? No gold right now but it could be in the next round.
 By Michael Miller

07/17/2012  10:56AM

The guys below offer worthy advice but my analysis yesterday (below) was offered for its historical perspective. Expect to see and hear gold mining promoters (most of whom are far from actual gold miners) tout exploration programs to attract people with little background in gold. The pace will increase over the next two or three years, maybe even four. The hucksters want a market for their accumulation, be it gold, gold futures or gold related stocks. The hysteria will be short lived and once distribution is accomplished, the decline will be swift.

The “toutsters” will repeat and raise many of the reasons for acquisition as they did before with questionable vigor: inflation, security, insecurity, and the expectation that their exploration protect will be bought out by a “major”. They will not report how long it will take to permit a mine and bring a prospect into production. They will broadcast meaningless drill results to suggest production at a profit. Beware!!!

Over hyping a gold mine in theory is no different than the hypes in high-technology, medicine, real estate, energy and health care. The players may be different but the marks have similar tendencies towards finances and investments. The upcoming gold drama will take different paths from the drama leading up to $850 per ounce years ago.
 By bluejay

07/16/2012  9:35PM

It's apparent the best time to acquire more shares or to begin new purchases is the lull between discoveries.
 By Rick

07/16/2012  5:30PM

I always urge everyone to read below first...

Considering the total drift and raise square footage already mined vs. quartz deposite worthy of gold, this is a live horse.
 By Michael Miller

07/16/2012  4:12PM

California’s largest high-grade gold pockets were mined in the Alleghany Mining District according to the State Geology Bulletin 193. Eleven of the top 25 were mined on Sixteen to One patented mining claims. The spot price received today for those eleven pockets would be over four billion dollars ($4,114,950,000). The current spot price of the largest pocket, which was mined in the 1920’s, would increase our bank account by $154,814,400 or $11.55 per each outstanding share of Original Sixteen to One Mine, Inc.

There are no arguments against the fact that the Sixteen to One quartz and gold sells for a premium over spot. Twenty years of sales records are proof! If only 50% of that largest pocket qualified as jewelry slabs or specimens, revenue from that single pocket would be $222,546,500 or $16.61 per share.

Most geologists, historians and men that have actually worked in our mines reckon that the biggest pocket deposited within our mining claims remains to be found. To find and mine this pocket is our mission. (NOTE: the 10,000 ounce pocket we mined in mid-1990 would become number eleven if the State of California updated the list.)

Many times people have asked me why I stick to this dead horse of a mine, industry or occupation. The above mathematics is a partial reason. I believe we will find that pocket. Do you?
 By Hans Kummerow

12/27/2010  4:14AM

Mike, is it correct, that the two high grade pockets on the 1915 progress map, that you have written on in May last year - see below - would be worth 60 million US $ at todays prices?

Could you take a picture of that part of the map and send it to me or post it on the website?
 By Lone Wolf Geologist

12/15/2010  6:21PM

I have worked in the Alleghany district for over 35 years. Less than half the gold on the 16:1 Mine property has been mined.
 By Michael Miller

12/15/2010  5:46PM

One-way to send article to others: print article, scan it, transfer to desktop or my documents, and attach to e-mail.

Someone else chime in with an easier way. There must be a better way, Lone Wolf Geologist. Hope someone else shows the way. Is there any gold left in the Sixteen to One or have the "old-timers" mined it all?
 By Lone Wolf Geologist

12/15/2010  3:26PM

How can you e-mail this article to friends?
 By Michael Miller

12/15/2010  12:44PM

Please go to NEWS on this web site for an interesting newspaper article published on December 13, 2010 in The Union.

It was a surprise to see this article in the semi local newspaper (Grass Valley). I’ve talked with the publisher/editor, Jeff, over the years. When he was typing on his computer while in his office, he must have been writing down my words. Hmm, I’d better be careful what all I say about gold mining to him in future conversations. To his credit, he got my sentiments right. Hope you enjoy his article.
 By Hans Kummerow

11/08/2010  1:51PM

Robert Zoellick's recent remarks on a possible revival of the gold standard as an international benchmark to measure inflation-rates or currency-fluctuations are good news for Origsix-Supporters. After all, Origsix was created in times, when an official gold standard was strictly observed inside the USA.

The risk-management strategists of the World Bank have obviously rediscovered the value of precious metals whose supply is limited by scientific facts that cannot be tampered with. Better times for Origsix may be just around the corner.
 By Rick

09/16/2010  7:38PM

As a canvas painter, I sometimes refer to it as the "rubber-band effect"....the harder the pull, the bigger the snap.

There are times when I paint, and curiously times when I never paint, building the momentum for when brush hits the canvas (this is never intentional, it just happens this way)...usually the result is an explosion of something entirely new, and good.

The underground is waiting. The political and regulatory caltrops have been thrown down in front of this mine's main focus for a very long time (pulling the rubber-band), and the obstacles have never stopped the next pocket.

This is the time!

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