March 19, 2018 

Risk Management Strategies


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 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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