October 20, 2017 
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Forum
Topic:
Risk Management Strategies

       

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 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!
 By martin newkom

09/16/2010  2:08PM

I heard on CNBC yesterday that
Gold is becoming the "other"
currency "world-wide"; not only
in places like Sierra, Trinity
Counties. Each pocket found in
the Origsix is like a "Jackpot"
waiting to happen.
 By Hans Kummerow

09/15/2010  10:21PM

The gold seizure, that has happened in 1933, may happen agein if things become bad enough.

In 1933 it was smart to have gold jewelry rather than coins, bullion or certificates.

To read the orginal wording of President Roosevelt's gold seizure order go to: http://en.wikipedia.org/wiki/Executive_Order_6102
 By Dave I.

08/26/2010  4:51AM

The securities market is the back bone of the derivative market. Which is why it got in trouble with mortgages being held as securities.
There has been some written news about another type of security which is electric power plants. there is a plan for the government to guarantee loans for development of new electric power plants. once these plants are built they then become security for the power plants them selves as well security for other development such as new housing, or other higher risk ventures. Mining would fall into higher risk ventures.
In the past a hydro electric power was discussed in this forum. I am wondering if it is windy on your hill top?
 By Michael Miller

05/18/2010  11:48AM

One of several hidden asserts of this mighty little gold company is its map collection. We don’t write about it much but the information contained therein is priceless. Here is what it means to me. The maps cover over one hundred years of development. One grouping is titled “Progress Maps”. They are usually depicting annual work and the months are colored individually. My mind turns to the appropriate dates of these progress maps. I transform into that miner, geologist, engineer or mining executive while studying the monthly (yearly also) progression of development and gold production. Why did they go here? Why did the go there? Why is this block of ground untouched?

The answers are speculative but, come on, all mining is speculative as are most investments. The ‘whys’ of the Sixteen to One are great topics for discussion. These maps affirm a fact: this deposit involves risk with hope of large profits. Also we have years of data beyond the times the maps were drafted.

Work to reorganize the map collection is underway. Years ago an old building was renovated to house the maps and have space to spread them out. Other needs preempted the reorganization…no longer so. The thirst for knowledge of the past now preempts other needs. I am thrilled to return to study of the work of yesterday’s miners. With each map comes the opportunity to learn.

I had an epiphany this morning after unrolling a 1915 map of the Tightner Mine Company. The map details the early working which are near bedrock elevations above the 250 level. The gold values are recorded in dollars when gold sold for $20 an ounce. One stope is breath taking…$700,000. Not far away is a $350,000 stope and there are many values at five figures. Times these numbers by 60 for gold today. Breathe taking!

Back to the epiphany. Are there no risk takers today for investing in this gold deposit? Apparently the answer is yes. Why? No one has taken the time and effort to understand this gold deposit, how it became successful and whether our plans will reap large profits. It is as simple as this…we are on our own.

Mining legends like Fuller, Searles, Foote, Kallenberger, HR Cook, Alling, Ferguson, Bennett and Taylor left their imprint in Alleghany. I have my answer to understand the risk/reward of mining for gold here, which is strengthened with these maps and thoughts of these great men. Thank you..
 By Hans Kummerow

05/06/2010  4:27AM

It is good to see in the News-Column that a portable, underground rock-screening device has delivered promising first results.

This is exactly the type of low-cost exploration activity that seems indispensable before money can be raised to start drilling and blasting again.

Manage and minimize exploration risk. Manage and minimize production risk. Good luck!
 By Hans Kummerow

03/14/2010  1:05AM

There is a lot of talk in Europe right now about hedging the credit risks that weaker Euro-Members like Greece, Spain, Portugal and Italy cause for the Euro-Currency via creating a new European Monetary Fund similar to the IMF.

And guess what the German Department of Finance has proposed to back up that fund? Plain old gold. Is that a new approach to manage paper credit risks? Nope. It is a very old and very conservative approach.

But right now the biggest risks for Origsix seem to be legal risks. Maybe you'll have to do something extraordinary - like converting the mine temporarily into a "gemstone quarry" to get it off the hook.

Maybe in a not too distant future a new California Administration will be happy to see some folks re-converting "gemstone quarries" into real gold mines again.

Anyway, I wish you luck.
 By Dave I.

03/02/2010  10:11PM

After seeing "How The Earth Was Made". I stand corrected as for the gold deposit in the quartz vain. It is a very good program, and the interior of the Original sixteen to One looks very promising for much more gold value. I like that ribbon quartz.
 By Observing one

02/28/2010  11:31PM

Dave & Hans,

There was a guy named "Gold Master" who suggested this very thing 5 years ago on this forum, I think he said they should drill holes as a patern down through the tunnels at some degree of angle aiming both up and down of the structure of the vien! (45 degrees & 225 degrees) with the vien running 45 degrees of verticle and bore into the face of each tunnel. This opens up and defines pockets with out actually stoping or blowing and mucking the face! I think this guy said you can run a metal detector up the bore hole to detect gold 3 or 4 feet around the bore hole. It's a lot cheaper testing than actually mining a dry hole.
 By Hans Kummerow

02/28/2010  3:51AM

I feel that Dave I.'s proposal has a lot of merit for future, underground exploration projects.

If we could use the existing horizontal bore-drill at the mine to drill - may-be 5 inch bore-holes - several hundred feet(?) towards the prospective pay-zones, collect and examine the drill spoils and then run micro-detector-coils through a set of bore-holes about 20 ft apart from each other, Ray and Mike should be able to make very precise decisions on how to point the future headings.

That would be exactly what I mean, by "establishing proven reserves" within the Origsix. And if the crew is just a bit luckier than during the past few years, the bore-drill might hit a "high-grade-pocket-home-run" during the exploration stage.

If you need additional information on bore-drills for pointed bore-holes in hard-rock that can be operated in a very limited underground work-space, let me know. I have collected such information already over here in Germany.
 By Dave I.

02/26/2010  11:27PM

Exploration needs to the required development. Metal detecting is probably lowest depth indication from the existing walls of the mine. What is the next highest exploration method to determine the depth of the next gold bearing ore body. I think that drilling holes normally for explosives, rather for exploration to depth of 6 to 10 feet in the walls of highest probability form indicators would be away to locate another gold source.
Collect the drill spoils from the drilled hole and check for gold content.
I have also noticed that the major gold ore came from the upper quartz deposits of the mine.
The 16 to One lode ore body was originally found chasing an under ground ancient river bed. Is it possible when the intrusion of the igneous host rock went around a previous river channel of quartz cobbles causing the metamorphic melting of the cobbles and gold into pockets of the molten quartz. There has been previous quartz mines that the gold was less at depth.
 By Raymond Wittkopp

02/26/2010  1:52PM

Blue Jay:
Many physical and geochemical features are associated with high-grade in the 16:1 mine. The more indicators in a given area, the better the target. These indicators have been discussed in many publications including some of my own. Unfortunately, the Alleghany district is known for having many very good targets that turn out to be "false positives" with no gold.
At the time I seriously started working with the 16:1 Mine, I noted a direct correlation between the amount of material mined, (rock broken) and the production of gold. Historically, the years when the largest amount of rock was mined were the years when the largest amount of gold was produced.
Therefore, if you explore two targets a year, production will probably be very low as it has been. But, if you explore five targets a month, production will probably be very much higher. The 16:1 mine is full of good exploration targets. Each target contains several good indicators. These targets are waiting to be explored. Therefore, the problem is not geological or the geologist, but production.
Also, Rob McEwen hit a grand slam with Gold Corp. His new company is US Gold. With this company he is behind in the 9th inning with two outs and two strikes and no one on base.
 By Michael Miller

02/26/2010  11:47AM

I appreciate the depth of these comments and look forward to responses from geologists or others or Ray. My comment is only directed to the second paragraph of Bluejay’s entry:
“To make matters worse, our past lucrative halo of pockets between the 49 Winze and the Tightner shaft, basically above the 1000-foot level, appear to be a one-time event within a very small section of the Alleghany Mining District.”

Consider that the past halo of pockets between the 49 winze and Tightner as well as those document throughout the mine are like gold spread on the ocean floor from sunken ships. Deep ocean underwater miners use this to discover even greater booty. It works at the Sixteen to One for the underground miners as well. Nature played a role in both events. These gold deposits, whether from activity 135 million years ago or the 1800’s are proven methods for mining gold.

Yes, the gold deposit in Alleghany was a one-time event; however the event spread gold along the strike of the quartz vein and its dip for miles in both directions. The Sixteen to One mine workings stretch over six miles along the strike and down dip about a half a mile. Our production records are ‘proven valuable data ’in guiding development over the past one hundred years.

The best part and why anyone with dead money in storage should come knocking on our office door is the following. The amount of virgin quartz veins owned by Original Sixteen to One Mine, Inc associated with past production is vast and located in California
 By Nose 4 Gold

02/26/2010  10:56AM

Hans: you don't seem to get the message. When your ore runs an ounce of gold to the pound of quartz you will never have reserves
 By Hans Kummerow

02/25/2010  10:44PM

Thank you, Mike, Dave I and Bluejay, for your comments.

Since English is not my native tongue, it is sommetimes difficult for me to get my ideas across in English language. Let me try once more from a different point of view.

Wherever the funding of mining activities is discussed, the "proven reserves" are one of key points that are of interest to the prospective investors. Right?

And in case of the Origsix, there are no proven reserves yet. Right?

So all I am saying is:

Let us proceed in two seperate steps that are seperately organised and seperately funded.

First, let us establish "proven reserves", that are double-checked and triple-checked beyond reasonable doubt within the Origsix orebody via a "cutting edge" and low cost exploration program into prospective pay-zones.

Then, in a second step, let us get the funding to go blasting into those "proven reserves" and see for good whether they are just another bunch of "true falses" or real high-grade.
 By bluejay

02/23/2010  9:40PM

The subject of getting the men back at work and the production of gold starting once again has been as perplexing for me as witnessing all the cheap shots that are being constantly lodged against us by a bankrupt State of California in the past seeking political gain and currently, seeking much needed added revenue flow with requests for bogus fines and penalties to be paid along with the Federal government demeaning gold through all of their agents of masquerade in proping up a dying fiat currency.

To make matters worse, our past lucrative halo of pockets between the 49 Winze and the Tightner shaft, basically above the 1000 foot level, appears to be a one time event within a very small section of the Alleghany Mining District.

Although we have a competent local geologist with many years experience in the District, it would never hurt to expose the Mine's geology plus mining records to other experienced minds for their assessment. Some years ago Rob McEwen did this in the form of a contest with stated rewards asking where the great probability of gold deposits actually were in the Red Lake Mine of GoldCorp's at Red Lake, Ontario. I believe the winner was from Australia, possibly a firm of geologists. Following the direction of the winner's recommendations, massive high-grade gold deposits were located in the mine.

Although our geologist, Ray Wittkopp, has concluded his study with recommendations, it would greatly benefit the Company to have a second opinion describing where the big pockets of gold are, augmenting his research and experience and adding creditability to our property from two professional perspectives to prospective investors.

My interpretation of the Ferguson and Gannett Report is that there remains 3,000,000 ounces of gold awaiting to be mined in the District. The currect value of supposed precious metal in the ground is worth $3,316,500,000 at current prices.

Now, this figure only represents gold for the refiners. Most probably, a great extent will be sold as specimens to jewelers commanding a high premium value to the prevailing gold prices. Could the ultimate value of the supposed remaining in-ground deposits be worth $10 billion? No, they will be much higher in the years ahead as our money becomes worth less and less and the dollar amount of gold is pushed higher. Another significant reason pushing gold higher is the general increasing mistrust of governments that is currently in a strong uptrend with no distant top seen on the horizon.

Yes the risk of ownership in the Company is great at the moment but what happens if there is a technological breakthrough in a device that can lead us directly to the gold avoiding needless blasting and mucking?

If this happens the mine could easily have gold sales of $50,000,000 a year. With about 12,000,000 shares outstanding, you figure out what someone with a financial mind would be willing to pay for a share of the company including dividends which surely will be paid out.

Taking on risk is the harbinger to great financial gain.
 By Dave I.

02/21/2010  6:49AM

My buddy Bob and I were on one of our historical tours to Nevada to visit some old Ghost towns an kick a few rocks around in a pan if the desire should occur. We figured that with the rise in price of gold, Nevada should be booming.
A few places were. And there are claim markers all over the land scape. There is big plans for development this year which is the general run of the rumors we herd form the locals in Lovelock, Winnemucca, and Austin.
The subject was women working in mines. While in Winnemucca and enjoying dinner at the Bass Hotel, an exccelent place to eat, it is a family style service where patrons sit together on long tables. While Bob and I were enjoying our meal also discussing mining history at the time, this Pretty lady walks in, was led and seated at our table. She expressed that she was famished and just got off of a 12 hour shift at the Berrick Mine, up the road, near Battle Mountain.
This quirked our interest, being the snoopy guys we are. we introduced our selves, as she did her self. we come to find out she operates a boomer or jumbo under ground. we visited about mining until her meal was served, it was so interesting about what the mines were doing, that she even forgot to start eating her meal and so we excused or selves to be kind to her so she could have her supper. Yes women do work in mines.
 By Michael Miller

02/20/2010  12:43PM

Hans, no one bit with your constructive ideas that started this topic. I’ll give it a shot this mid winter afternoon before the topic moves to Miscellaneous.

The “feast of famine” concept is deceiving when used to calculate a very high-grade gold deposit such as the Sixteen to One. Many important factors must be used to evaluate the Sixteen to One mine. Over the last couple of years management favored giving up future profit for speed or timing. We sought working capital. The company would benefit from some outside capital. I wrote, listened to or spoke with numerous people, men actually. Women seem totally out of gold as a means to increase or protect their wealth. It’s too bad. Women would find underground hard rock gold mining at the Sixteen profitable and stimulating. I would like to see women move into the gold mining industries. The men have screwed it up for the past twenty plus years. That is why so many gold deposits in the world lay idle. The industry lacks credibility even though many more investors have lost fortunes in high tech and the dot-com segment of investments.

Greed, lying just to make a buck, going after the quick dollar and indolence are not well suited to mining operations that place production (profitable production) as the primary goal. Too many past investments in gold mining failed. The stock play has been a dominant goal not gold mining. Frankly, failure is much greater than success. The next time some “want-to-be” gold player or gold critic brings up Bree X as a reason to stay away from gold, I’ll just mutter Enron or Lehman Brothers and politely walk away. My point: don’t put all of us in the gold mining industry in the same basket.

You get the point: all gold mines, all gold deposits and all gold mining plans are different. But students of the past gain a great edge in ferreting out the best from the good and the good from the bad. Gold mining, however, remains mysterious, more than drilling for oil, making new drugs for sale or the hottest investments known as “intellectual technology”.

Over the years my engineers, geologists and other staff and crew have figured costs down to a nat’s ass. What changes are the prices, but it is easy to plug in current figures. We co0ntinue to practice the art and science of mining, much like doctors and lawyers are always practicing medicine or law. When will they get it right and quit the practicing and start doing.

The metal detector has changes many areas in our mining operation, all for the better. More improvements wait. Much of what we have learned and incorporated into future operations is not for general discussion. It would be considered proprietary. A banker in Silicon Valley called my business “trailing edge technology”. After he got up off the floor, he explained that it was not the “leading edge” his investors thought so great. Yes, I took some offense to his characterization of our mining because few really know how much progress we have made over the past eighteen years in developing our “leading edge” technology.

The mine and company’s glorious past may not provide the assurances needed to attract some investors. Nevertheless, historic data are serious factors to judge. In 1974, it was that historical data, observations on the ground and analysis for the future direction of gold that convinced me to move here from Santa Barbara. The present and the outlook for the future provide the assurances for investment. The proposed limited partnership for investors that you saw removed much of the risk. Anything speculative has risk. Compared to all gold ventures I know about, the potential rewards exceed justification for the potential risks. That is one reason I continue my interest in our mines. All mining carries risk; however mining the Sixteen to One today has risks but the risk should not be considered “high”. Reaching that comfort level require a type of due diligence that few have taken. I along with a couple of dozen others took those steps and made a meaningful commitment. Hundreds of others have made a serious commitment but not necessarily with serious capital.

Influxes of money on acceptable terms to the Company shorten the time for developing the Red Star shaft. It will happen but sooner rather than later is my goal. The study or analysis or due diligence you proposed adds nothing new to the gut reality of the Sixteen to One operation. While it may be an exercise that nudges a cautious gold speculator into our camp, it adds nothing to the moves we are taking and have planned. My conclusions are that no one will get involved financial with our operation; we must figure this out on our own because the global fear of uncertainty has masked the unbelievable situation our company finds itself. Broke isn’t fun. Being aggressively attacked by some ill informed bureaucrats out of Sacramento isn’t fun. Under achieving a grand opportunity isn’t fun. Not taking a salary isn’t fun. BUT, the stars have aligned for this 100-year-old company. What it cannot control is positive with a favorable future. What is has before it underground is proven. Of the three M’s necessary for success in a gold mine (men-money and minerals) only money is in short supply. If I had a choice of which of the three to be short, it would be money.

I wish I could play into your concerns, but I cannot. Gold is not for everyone and neither is the Sixteen to One. I do wish that someone would knock at the office door with the only missing ingredient for blasting into that 100,000-ounce pocket of gold; however, the lack of money will not prohibit it from happening. It may just take longer.
 By Hans Kummerow

01/01/2010  9:41PM

The often described "feast or famine" experience throughout 100 years of mining within the Origsix-Orebody is a very strong argument to qualify any investment into OSTO-Stock as a "high risk investment".

By looking into the details of any high risk investment, it has proven helpful to seperate technical risks from financial risks because the risk management strateties for both risks are quite different too.

The simple fact, that Origsix still exists, is indisputable evidence that the management of the company has been able to manage technical and financial risks successfully in the past.

However, even the most glorious past is no assurance at all that todays challenges will be mastered equally successfully as well.

With a gold-price of well above US-$ 1.000,00 for several weeks now, chances are high, that high risk investors can be attracted to OSTO-Stock if any investment offer is properly termed.

In todays capital markets there are dozens of offers that target risk embracing investors. And there are serious offers that promise to yield 20% p.a. with a lesser risk than an investment into OSTO-Stock. To compete for the funds of high risk investors, any offer must match market conditions. Otherwise it will be discarded as "not worth the risk".

For 2010 I would like to recommend to all friends of Origsix to support Mike in establishing a convincing uptodate risk managment strategy for the typical risks of hard rock gold mining in the Alleghany Mining District.

My recommendation would be to minimize the cost of the traditional Drill-Blast-Muck sequence by combining an underground drill program into prospected pay-zones with an underground sensor-based exporation scheme before you ask anybody to fund actual mining activities.

Seperate underground exploration risk from actual mining risk and make a financing offer that is consistent with todays market's expectations. And 2010 may become a very successful year for OSTO-Stock.

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