June 22, 2018 
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Forum
Topic:
Correspondence from the President of OAU

       

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 By Michael Miller

11/12/2007  5:30PM

Dear Andy,

It was a long and enjoyable conversation we had today about gold and the opportunities at the Sixteen to One mine. I just wrote the following historical perspective that fits nicely into our shared beliefs.

Californians will occasionally read a newspaper story about all the abandoned mines throughout the State. Are these mines really abandoned? Likely nine out of ten people not directly involved in mining, when the subject of gold mining comes up, respond automatically with something like, “Oh yeah, there are a lot of abandoned mines out there.” There is very little awareness on the part of the general public or no awareness of the facts that contributed to this historical ignorance.

The spot price of gold was frozen at $35.00 an ounce in 1934 by U.S. legislation. Nothing else in the country was frozen. Nothing else that human beings buy and sell was frozen, only gold. The spot price of everything else went up either due to inflation or the economic principles of supply and demand. This is what caused most of the mines to close. There is no awareness that those “abandoned” mines were not abandoned, they were forced to close by $35 gold. The next knock out punch was the federal war limiting order of 1942 by Presidential Order to force miners into essential war industry by significantly cutting back supplies available to the mine operators. After the war was over everything else except gold went up in price. There was no point in opening or reopening a gold mine. Those that did survive like the Empire in Grass Valley, California (closed in 1956) and the Homestake in Lead, South Dakota (closed a few years ago) eventually got caught in spot price manipulation.

The gold and anti-gold bugs have persisted for generations. One of the casualties of the $35 spot price fix was that an entire generation of men who would ordinarily have gone into mining did not do so. One consequence was felt in the modern gold rush that occurred after the price fixing of spot at $35 was lifted by legislation in 1974. Gold mining had blossomed with large open pit metallurgy. The footprint of mining changed. The generations of underground gold miners were in short supply. Skills were lost.

Fortunately, for the Sixteen to One mine in Alleghany, California, gold mining in this high-grade district defied the $35 spot price. It and others were operated by their owners and continued to be mined by aged miners. In 1975, when investment capital appeared, eager to strike it rich, few young men could be found with the skills to get the gold. Unproven and untested men responded to the new liberation of gold. It is all about price not source. Unfortunately, most operations suffered from the generational loss of experienced men to teach their skills as underground gold mining craftsmen. Many mistakes were made and much money was lost and again most of the mines fell silent, a condition that exists today.

Limitations, fixations, interventions, inflation and regulations about wiped the underground gold miners from the “abandoned” mines. But that was not enough to complete the job. In addition to the $35 route of ’34 (no longer a factor) a new idea was implemented to beat back the appeal or opportunity of gold. It was called the IMF GOLD AUCTION.

The IMF (International Monetary Fund) played a major role in gold prices during the exciting years after gold was de-regulated. In 1977 its last monthly gold auction on December 7 awarded 524,800 ounces of fine gold. Awards to successful bidders were made at a common price of $160.03 an ounce. Prices submitted ranged from the common price to $165.00 an ounce. Bids were received for a total of 1,133,600 ounces. Various market sources expressed their disappointment at the results of the December auction and pointed to it as the reason for the sluggish action of gold in recent weeks. (Gold was unable to rally even though the dollar’s weakness was quite pronounced.) It turns out there was a “leak” by somebody at GSA or U.S. Treasury that the Treasury was printing forms for its own auction to be held soon. Professional traders began shorting the yellow metal and to a certain extent so did the public. Months later the Treasury announced it had not printed invitation forms for an impending gold auction. Some who were short for the February delivery in New York or the March delivery in Chicago were in for a rude awakening.

Something I noticed years ago and is currently true today is the privacy of gold buyers. Gold is a storage of value with characteristics like no other asset. I was surprised to discover a list of the December 7, 1977 buyers of the IMF auction. It included: Union Bank of Switzerland, Zurich, N.M. Rothschild & Sons Ltd., London, U.K., Republic National Bank of New York, New York, U.S.A., Homestake Mining Co., San Francisco, California, U.S.A., J.Aron & Co. Inc.,New York, U.S.A. and three banks from Germany. In total there were nineteen buyers of the 524,800 ounces.

You are right. People with no gold mining background or experience in gold or mining may find our plans difficult to understand. Thanks for you help in developing working capital. Original Sixteen to One Mine, Inc (yes, I know you are a shareholder and know this) never was nor ever will become an “abandoned” mine. Its owners know its resources value.

Regards,
MMM
 By Michael Miller

08/14/2007  12:56PM

Brief Analysis
August 14, 2007

One big obstacle blocking this business opportunity is reaching consensus of the ultimate objective. Shall the Company be a conduit for making more money so the players can then do it again with another venture? Can it become an end in itself rather than another means to an end? Few people know our vision. Why? Probably because management is unable or unwilling to discuss the vision and end product. Only a few people have expressed an interest and also have some ability to advance the vision. If I cannot find them, they must find me. The public vision is readily found throughout company documents.
We discussed diversification. I agree with the concept. There are two immediate areas of great future growth that nobody is cracking: forest improvement and water treatment for stream bed mercury. There is a worrisome collapse of the lumber milling industry in California. There are mine sites (20,000) in California with alleged “toxic” water discharge. We have the knowledge to meet these needs. Imagine miners wearing white hazard suits cleaning the mercury from the streams and getting paid to do so. What do you think will be attached to the mercury? That’s right…. gold. The fear of regulations has sparked property owners with “toxic” discharge to offer their land to the Company at reduced or no cost.
Signs are appearing in print that the environmental movement has reached acceptable lunacy. My logging friends and I discuss solutions to the problems now cited in newspapers: fire dangers (too much understory) and excessive imports. There are no better businesses in the world than the ones where competition is minimal and demand exceeds production.
Water is a California resource of expanding interest. Our next phase of water development is generating power and redefined consumption. The Company has water rights to enter both these lucrative fields. Our water should become a great hit because of its minerals. The world suffers a shortage of minerals in all areas of food and beverage (World Health Organization). The “waste” from our operation has positive soil amendment minerals and is a great gardening product.
The Company owns large land positions in two very appealing rural locations in northern California. Both locations could be successfully developed for recreation and tourism.
The Company is not just another gold mine. It operates a precious gemstone mine. Currently, only one commercial operation produces quartz and gold in the world. Ours is noted as the best in color pattern and hardness.
Original Sixteen to One Mine, Inc is more than a one-dimensional opportunity. It can dominate the natural industries of high-grade mining and forestry husbandry.
 By Michael Miller

07/12/2007  1:19PM

For those of you new to this web site and the Sixteen to One mine, some confusion make arise about the hoopla-taking place in the courtroom. Dig deeply under NEWS and the FORUM for an historical presentation. Do not be misled about our corporate goals, our past accomplishments and our visions for the future. We find and mine gold for our existence. That is my main interest.

Original Sixteen to One Mine, Inc is the last and oldest traditional underground, high-grade gold producer in the United States. Gold mined from the well proven quartz vein system can be documented by reading various technical papers included herein as well as reading the newsletters and annual messages from the president. Even after 100 years of mining the people most familiar with the mine and company are excited about what’s ahead.

Noteworthy great strengths are the men and women who have and continue to participate in the ongoing affairs of business. I hope to expand those numbers as we proceed with developing our corporate assets. Gold, while not attractive to some has its own proven history and value for over 6,000 years.

Past board members can also be found here for your evaluation. With this introduction I submit a recent letter from a long time friend and confidant, Charlie Brown.


Supreme Court of California
350 McAllister Street
Sacramento, CA 94102-4797

July 4, 2007

RE: Court of Appeal CO516696
Supreme Court Case S153654

Ladies and Gentlemen:
My name is Charles I. Brown. I was a Director of the Original Sixteen to One Mine, Inc. from 1990 to 2002. I am very familiar with the circumstances surrounding the
death of Mark R. Fussell on November 6, 2000, and have diligently followed the developments since that time.
In my opinion, the indictments for manslaughter were totally unjustified and without merit, as determined by the Superior Court which dismissed the case. Also, the dismissal and/or favorable resolution of all fines by MSHA and Cal-OSHA are powerful evidence that the death was accidental and the indictments unwarranted. It is therefore my opinion that the indictments were politically motivated.
All the courts that have ruled on this case have also agreed that the prosecution of this case was illegal. The District Attorney of Sierra County never legally appointed the CDAA attorneys, and the attorneys did not conduct themselves in accordance with the California law that governed their activities.
The decision by the Court of Appeal to grant the CDAA attorneys immunity under the anti-SLAPP statute is totally illogical, and fails to follow the facts and the law. It is apparent that the Court of Appeal reached its decision independent of the facts and the law, and then had to bootstrap an illogical justification for their decision. Under the circumstances of the earlier decisions in favor of the company and Mr. Miller, the award of attorney fees to the CDAA attorneys is incomprehensible.
I urge you to review this case inasmuch as the decision by the Court of Appeal could have significant and widespread effect on the rights of citizens to challenge the authority of a defendant to exercise powers reserved exclusively to the government. Additionally, the case deserves review solely on the basis of the award of attorney fees.
I know that both Mr. Miller and the Original sixteen to One Mine, Inc. were severely damaged by these illegal indictments. It is impossible for a company to arrange financing or otherwise conduct its business when its CEO is or has been under indictment for manslaughter.
Thank you very much.
Respectfully submitted,

Charles I. Brown
 By Michael Miller

05/07/2007  4:46PM

Short crew this Monday. Still 1000 level advanced five feet and two rounds in secondary headings. Also a new mechanic on board to fix our rolling stock (two loaders and one flat bed truck.

This sounds like something SCOOP would write about, which is not my purpose. I received a letter today from an investor wishing to take a good position in the Company. He found trades on the pink sheets for a penny or over the years for a dime and became confused about the private placement price. Don't fault him. For more information on this subject check Stock Exchange Listing on FORUM. Here is my reply.

Dear X,

Good to hear from you. I also would be feeling uncomfortable with the information you have at your keyboard regarding two markets. This topic has been discussed on the FORUM over the years. It has been called the gray market, which some brokers have used the pink sheets for grounding (stealing is a better word).

A former director sat on the Pacific Stock Exchange (PSE) in SF for many years. When the PSE closed OAU (the exchange symbol) lost its public market. I let it go to conserve money. Plus gold was in a heavy bear market, so stock interest was low. The exchange on our web site is the fairest market for buyers and sellers. The price represents knowledgeable and willing buyers and sellers. A shareholder selling via the pink sheets has a broker or lawyer who is either lazy, dumb or a white-collar crook. Take your pick.

There is no bid or ask on the Pink Sheets. The transfer agent gets some transfer notices but does not know the buyer or seller. It is usually a clearinghouse. All shareholders of record receive an annual report with a meeting date and voting proxy each year. Therefore shareholders know about the market place on the web site. Why would anyone sell their stock for a penny or even twenty pennies when a buyer has an offer above that price? The Pink Sheets list a phony market. I will once again contact US regulators about the situation but once again nothing will change.

The company places a value on its treasury stock greater than either market price. Until the fools have liquidated their stock or have been cheated out of it, this pink sheet fraud will continue. When I pulled up pinksheets.com, I noticed very little volume. This will correct itself when we hit our next pocket or when I have successfully borrowed some working capital to implement our mining and business plans. I am confident that the problem you see will disappear rather quickly. As a major shareholder I value my shares well over $1.00


With this situation I understand you may not want to proceed. I am glad you wrote back and will continue to blast the pink sheet boys for screwing with our shares. I do not care for the American public market situation and have written that we will entertain listing on some other country’s market if a good one can be found. Gold is looking very strong and there are not many opportunities like ours around. Please stay in touch.

Sincerely,
Michael
 By Rick

04/02/2007  10:04PM

Please read below first! Scroll down to Michael Miller's recent entry first to get a perspective.....

My inference in the more-recent Forum entry just now, the one to a "shy-lock scheme" is bourn from a love of Elmore Leonard's books and yet there is an applicable reality check here: not a caviat, just an explanation of how there is absolutely no way I was referring to the Sixteen to One Mine as the shy...instead, the other way around.

The real deal is always the real deal. After all, "It's not lying when it's true."

Now, anyone that wishes to meet me in person and find out for themselves who I am, I plan on being at the hearing, this April 18 in Sacramento, to witness the CDAA's misguided pitch, and if called upon, offer my own. I'll be the guy guy who looks just like you, except I may have recently gotten a hair-cut...just because it's been tickling my ears, not my brain.
 By Rick

04/02/2007  9:52PM

Considering the asset, the stock is worth upwards of $2.00 per share traded in an open forum. Sub-penny purchases in a sly trading venue substantiates value upward of $5.00 per share, being a shy-lock scheme.

No, I don't owe anyone money, and do own some legitimate shares in OAu.
 By Michael Miller

04/02/2007  4:59PM

Here is an issue of concern for the Company.

From time to time sales of stock are reported to us. Someone has been buying stock between $0.001 and $0.195 for several years (Bloomberg account). The current bid on the market is $0.01. Shareholders aware of this have written the SEC complaining and asking me to investigate. One shareholder placed a bid with his broker for 10,000 at $0.10 when he heard stock was selling for $0.01. Even though he placed a higher bid, it remained at $0.01. A shareholder wrote that the pinks and OTC Bulletin Board were the source for the penny quote. I contacted Carl at pinksheets.com, who said OSTO is not on either pink sheets or OTC Bulletin Board. I later received a communication from a New York broker that Hill Thompson was a market maker on the Gray Market, so I called Hill Thompson and talked to George on the trading floor. The following summarizes our conversation and was sent to him.

April 2, 2007
Dear George,

I am somewhat smarter after our conversation today but still do not know how to treat the trading abuse of Original Sixteen to One Mine, Inc stocks (OSTO). I asked about the Gray Market. You called it the “non published price” market, which is how OSTO is trading. You said that upon receiving a sell order, you find a market maker to buy; however apparently there are no market makers except Hill Thompson. If there is a market maker, how can I identify him? If there are no market makers, how do we get one or what happens to the stock shares that are sold?

My responsibility is to protect shareholders from unfair stock market trades for both the seller and buyer. Also, it serves the Company no useful purpose for stock accumulation at a penny or other price below the current prices that can be found on the Company’s web site (OAU X-Mart).

You asked about our transfer agent. Our transfer agent is a meticulous record keeper. He transfers all the sales on OAU X-Mart. We may not know about sales/transfers by shareholders in street name, especially if they object to the release of information to the companies they own. Also this is a very old company. Many shareholders are third or fourth generation descendants from the first shareholders. They may be out of contact with the company and have an old share certificate. This is important because there have been two stock splits and one old share now equals thirty shares.

Some shareholders are willing to increase the penny bid but have had no success with their brokers. Is there a better way to handle this issue? We need a quick or short-term solution. Our goal is to bring our financials into SEC compliance (needs auditing), find an appropriate market place and the problem will go away. Until then, your ideas will be appreciated.

Sincerely,
Michael M. Miller, president
 By Michael Miller

03/22/2007  2:55PM

I received an interesting letter from a shareholder, Mr. X, last week. I answered him with the following letter, and he returned an answer today. Whether Mr. X is a prophet in his analysis of the future remains to be seen. I wondered about Fort Knox thirty years ago when gold became a free traded commodity. Questions like Mr. X were rampant with the “gold bugs” with much speculation that the vaults were empty. Most people’s attitude is, “Who cares!”



Dear X,

Your last email to me was very refreshing to read. I'm so glad you recognized and acknowledged that we Sixteen to One shareholders have gold on our properties and its value rises as the gold market shakes itself. I know there are many concentrations of high-grade gold that exist and will not move. In other words, as we mine we will find them. If we do not mine, they will still be there. The upper elevations north in Red Star ground look very positive, which is why I want to sink a new shaft.
Measuring our "value" with the stock price means little. You and I and all shareholders are in the gold game. We have a stake and a good one. You may not agree with this but I feel much more in the game as a shareholder of OAU than I do as a shareholder of Newmont. Barrick as well, but I own no Barrick shares. I am becoming impatient after 30 years for the pieces to all fall together. The only piece missing now is working capital. I am trying to hold our very real assets together and find money via a secured first TD or some other way. I have several back up plans, which you as well as anyone who knows me should surmise. I was impressed with your thought process.

Let me know. MMM



Hi Mike

Concerning your impatience, I think you ought to applaud your persistence more than anything. A great percentage of people would have folded the tent by now and hit the road.

The major end game for investors in the world of gold is in sight as far as I am concerned. Eventually in time, the major gold producing properties will be in the hands of governments and their central bankers just to save their asses with all the debt that they
have created. During the time period up to this event the lower and middle class will get killed. I mean their last remnants of wealth will be completely wiped out.

Barrick Gold is the representative of the central bankers that are in trouble. I mean the ones that have lent out their gold and have no immediate hope of ever getting it back. The central bank of Germany is a prime example of this. Why won't our government allow a federal auditor inside Fort Knox? Somewhere in time Barrick will go private and be exchanged for fiat currencies. What will be left are the smaller deposits around the world and there certainly will be a gigantic rush towards them by the public when all this becomes clear.

The timetable for this has been recently stepped up as Barrick covered most of Placer's hedge book in the 540 to 580 area of gold. The floor on gold is now at 612. Barrick is stepping up its acquisitions with the last being European Goldfields. Barrick is interested in a few gold belts in and near Romania. There used to be a year or two between acquisitions. Now it is months. Does this tell you something?

In twenty years or so the world gold production will be significantly lower. I mean off like 60% or so. In the case of silver, production figures should continue to grow for a while longer. Peak gold has definitely been reached.

I believe, although we need gold for the payroll and some minor exploring, we should be exercising one of your plans for the acquisitions of more properties in the area. We should tie up the whole District and brag about it. The main problem here is financing. So, this might not be an easy task.

The game has begun to tie up natural resources. People are exchanging depreciating currencies for these resources in a big way led by China and it is becoming quite a competitive and serious pursuit.

Soon, the small gold related companies would be valued more for their mineral property holdings as opposed to production figures as the game gets played out on an international scale.

Mike, you were clever to acquire properties in the past. Don't forget we are: Asset Rich and Cash Poor. I think we need to expound on the Gannett report versus what potential gold investors want to hear.
Governments tell lies and they are believed. Why can't we concentrate on 20% mined, 80% left by telling the truth?

I believe we have been news dormant too long and the current environment supports our becoming proactive.

We are listed for trading in the OTC Pink Sheets as so many other companies are. We need to get that market in line with ours. Sure these guys are crooks but we are also out of money. Currently there is just one market maker. He doesn't care or know about us. We need to change his or her mind with news and encourage other market markets to join in with the current one and put up markets. The last price is 1 cent and that is how Wall Street views our company. We need to do some serious PR work.

The X-Mart does not rate with Wall Street. We need to get the word out and we need to put gold in our name and we need to put exploration in our name, too.

Mike, we are not young. We can't afford to sit and wait while others get all this money from private investors and the funds.

Best of luck,
Mr. X
 By Michael Miller

03/07/2007  10:14PM

March 5, 2007

Dear Directors,

Just a brief update on the underground progress. Monday (3/05/07) I headed into the mine at 7:30 am. One miner absent. Ian on the hoist and three miners working on pulling the 58 hp pump from the 1500-foot level. It quit Friday morning. This is the same pump we paid almost $6,000 to rebuild the electrical parts a couple of months ago. It should last two or more years, especially since much of the surface water has been collected on the 800-foot level and flows out by gravity. Very disappointing. Britt will check everything to determine the problem. Once we have an idea and if it is not our fault, I plan to talk it over with the electrical shop about its responsibility for the failure.

I went down to the 1000-foot level, north to the active face. Not happy with the progress. It has been slow because of many reasons: track needed repair, tight drift so mucking machine cannot throw bucket and must reverse direction to load ore car, semi rotten old timber lying in drift, dump is getting farther away from face as we advance and more.

Next, examined the two headings south of the Tightner shaft below the 1000-foot level. These spots were selected for a quick look that could yield gold with each round. Several spots exist. We have mined in two with piss poor results…gold but amount did not cover labor costs.

Met Ian about 11 am at the 1000/Tightnert station. We went back through the 1000-foot level and made some important changes to the mine plan. As you know we are betting the mine on the success of clearing the 1000 level to the 1064 winze. Not only will we have a good highway but also we are installing 2-inch air and 2- inch water lines as we advance. We have some very interesting gold in three areas above the level and will need utilities to set up and drill around the gold in order to get it in large pieces. Ian and I believe that we could have similar gold production as we had when we opened the southern part of the mine in 1993-94.

The first decision was to reemphasize that moving the muck must not stop, which means providing all the support to extend utilities, timber where necessary, repair and maintain the level. The mucking machine, no matter who is running it, must be advancing all day long. We then decided to shut down the short tern headings after this week and move the men. We found gold along the 1000-foot level. After one surface blast, we decided to pursue it later. Working in the drift could slow down tramming the waste rock to the dumpsite and I want nothing to slow moving the muck. Well, we hashed it over and developed a plan in which we will accomplish both goals: finding gold and reaching the 1064 winze. We are starting a new drift on the level in a hanging wall vein, which was recently discovered. It has never been mined. Vein junctions are favorable structural occurrences for gold deposition. Breaking virgin ground along the strike of the vein instead of raising up dip theoretically improves our chances of locating a pay shoot. The concern we share is twofold: we may not find gold or it may take 100 plus feet to gain a statistical average for success; and our gold inventory is shrinking.



Next, Ian and I walked up the Tightner and took off to the north on the 800-foot level. We’ve been here many times and have discussed mining options over the years. This is an interesting part of the mine. Because all of our attention is not only north of the Tightner shaft but ultimately continuing north into Red Star country, we are becoming familiar with the subtleties of the old workings and the exposed quartz, mariposite and serpentine. What it is telling us is that while it has been rumored for decades that this part of the mine was unproductive, it is quite possible that from 100 to 200 feet beyond the end of the 800-foot level, we will find the continuation of a known rich pay shoot. The geological explanation involves negatives about dome structures and very thick quartz veins. Again this heading will not provide us with immediate inventory we need to finance operations in the near future. We are looking at a two to three month project, which under normal circumstances would not be a concern. I authorized Ian to prepare a plan and time projection to undertake this heading. I will work with him so we will not break a rule I learned from our failed attempt to dewater the Tightner to the 3000-foot level.
 By martin newkom

02/24/2007  6:50AM

I don't think I would be inclined to do any banking or
loan business in Nevada Co.
there are too many adverse
factors there.
 By martin newkom

02/23/2007  9:36AM

Mike, have you tried Plumas
Bank in Quincy?
 By bluejay

02/22/2007  8:35PM

Mike

Sorry to learn of the Company's request for a line of credit being turned down by the Citizens Bank of Northern California.

One good reason for not receiving the line of credit from this particular bank might be that lending institutions all over the country are reducing their loan exposures for a good reason.

A real growing problem for banks is that their real estate loan divisions are starting to get whacked with an increase in loan delinquencies and defaults.

The following excerpts are from a February 22, 2007 dated report from Bloomberg.com by Jody Shenn and Elizabeth Hester.

"At least 20 subprime lenders have shut down, scaled back or sold themselves to larger companies in the past five months."

"Subprime lenders typically charge rates that are at least 2 percentage points or 3 percentage points above safer prime loans. They are given to people with poor or limited credit records or high debt."

"The level of delinguencies for subprime mortgages made last year is the highest ever for such loans at a similiar age, according to New York based Bear Stearns Cos."

"Federal Reserve Governor Susan Bies said yesterday the subprime mortgage market is behaving in a "very problematic way," though the broader banking industry MAY avoid a crisis."

Susan Bies is saying also that the broader banking industry could have a crisis. This is a good enough of a reason for banks to curtain their current lending practices.

In regards to the problematic subprime loans, Scott Simon, managing director at Newport Beach, California based Pacific Investment Management Co. says, "Problems on subprime loans made last year will extend through 2008, when rates on many of these adjustable rate mortgages will reset. We're not near the end of this."

Mike, why don't you give John Embry at Sprott Asset Management a call. He loves to invest in special situation gold companies.
 By Michael Miller

02/22/2007  4:31PM

Why does the subject of GOLD cause such mistrust with some mainstream institutions and people? Bankers, investors and others threw money at nothing but an idea in “dot com” ventures a few years ago. People throw money at many high risk and speculative ventures all the time. But although mining makes many desirous to play, most will shrink away in fear of ridicule. In reading the history of gold, one will always find the names of successful businessmen who gave a good mine plan a go with their risk capital. Some would lose but some gained enormously. At least they had a good time and supported one of the toughest occupations in the world. I thought about this last rejection a couple of days later and decided to write the bank.


Judy Hess, President February 20, 2007
Citizens Bank of Northern California
305 Neal Street
Grass Valley, California 95945

Dear Judy,

Congratulations on the name change and the opening of a new branch in Auburn. These events indicate the success the bank is having under your leadership. I write to bring a concern I have with the bank. I really hope that with your growth and expansion plans the bank will retain its hometown feeling.

My company was recently rejected for a commercial line of credit, well secured by prime real estate. I presented the bank with an Executive Summary explaining the proposal. The rejection was oral and without an explanation, which left me somewhat puzzled. I ask that the request be further reviewed because I am confident that an approval is appropriate.

The applicant, Original Sixteen to One Mine, Inc., is the oldest US gold mining corporation and the longest operating gold mining organization in America. It operates in western Sierra County and uses the Nevada City/Grass Valley area as its commercial hub. It employs men and women from Nevada, Yuba and Sierra Counties. A few years ago it was the largest non-government employer in Sierra County.

There are about 1300 owners or shareholders. Many live in Nevada County and can trace their ownership back to grandparents or great grandparents. For many years the Company’s miners participated in mining events at the Nevada County fair. People continue to tell me how much they enjoyed the Sixteen to One exhibit and were sorry that the fair turned it away. Your Nevada City branch proudly displays an historic specimen collection of gold from the Sixteen to One mine. A photograph of the early Citizens Bank in Nevada City shows sacks of high-grade gold brought to the bank for safe keeping.

With a little more historical research you will find that both the Company and I established long relationships with your bank, Westamerica Bank and Gold Country Bank (an easily recognized trail of banks). I have followed your exceptional lady bankers wherever their careers took them. Also, the Company has financed several loans with the bank. I just completed a $2 million contract with California’s Department of Parks and Recreation and used a $200,000 line of credit for my working capital.

Because of this and more I ask you to reconsider the line of credit request. I realize that the perception of gold mining concerns some people. There have been many unscrupulous “mining men” over the centuries of gold mining. Several have exercised their white-collar criminal behavior in our area. These “mining men” should be easy to spot, especially in local operations. Neither the Company nor I fit the profile of questionable operators and should be treated as professional businessmen, not lumped into high-risk speculators. Most of the mining men I know and have interacted with are some of the most cautious and conservative professionals I have met.

With what has occurred in the gold industry over the past decade and what is taking place with gold prices, we should be eagerly sought out as a businesses being in the right place at the right time; however, this type of review most likely did not occur by your bankers, and the line of credit was rejected. I believe that whoever decided against us did so because of his unfamiliarity with the industry and the specifics of our operation.

The use of proceeds outlined in the Executive Summary will mostly be spent in our communities. The gold we mine and the increased gold we will mine resulting for implementing our business plans adds new wealth to our communities. It benefits other local businesses. Everybody wins, including the bank and its owners. The assets we will use to collateral the line of credit are worth many times more to its owners that the amount of the collateralized debt. There will be no foreclosures with this transaction! Forget about the mining assets. The value of the timber and land are enough to secure the line of credit. (Timber values should be well understood by the bank.)

My final thought of the recent rejection stems from thoughts about the President’s holiday America just celebrated. In FDR’s inaugural address on March 4, 1933, he said, “Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade.

“Yet our distress comes from no failure of substance. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men…

“Recognition of the falsity of material wealth as the standard of success goes hand in hand with the abandonment of false belief that public office and high political position are to be valued only by the standards of pride of place and personal profit; and there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live…”
In 1934 FDR adjusted the purchasing value of America’s dollar by increasing the value of gold from $20.67 an ounce to $35.

Sincerely yours,
Michael M. Miller, President
 By martin newkom

01/10/2007  11:54AM

A very appropriate eulogy on Tim, Michael. Thanks.
 By Michael Miller

01/10/2007  9:55AM

January 10, 2007
Alleghany, 7:20am

Ian just phoned to tell me that Tim Sapp died yesterday. Tim was one of the pioneers in the rebirth of gold mining in the 1970’s. He was loud, boisterous, made a lot of people laugh and was a disgusting blow hard to many others. As Ian said, "The flag will fly at half mast today at the Sixteen to One."

I met Tim by chance in October, 1974 on my second trip to Alleghany. Our interests were the same: we believed the Sixteen had a future. We started out working together to get the mine open for production. I have kept a diary from the start of this adventure. My first entry says: “Alleghany with Dwight (father) 10/22. Met Tim Sapp, Bill Fisher, Ira”. Tim was a logger from Grass Valley. He logged the Sixteen to One. His greatest accomplishments were rerouting the public right of way away from the old buildings and mine portals around 1973 and bull dozing a large flat bench to reestablish new surface facilities around 1981.

The 1970’s and early 1980’s were indeed wild times for high-grade gold miners in California. When I was presenting talks about gold later on, I summarized the times by saying, “It was a time when many of the players were inexperienced about gold mining. After all, gold was only recently allowed the freedoms from government control on December 31, 1974. Actually many of the gold players were white collar criminals, but in this industry they were called ‘colorful characters’.” Well, Tim was a ‘colorful character’ who fit well into the image of old west gold mining.

From my diary: November 9-Letters to Sapp, Jansen (Sixteen attorney in San Francisco), Connor, (Sixteen president). November 20-Alleghany. Met Tim and son. Dinner with Mrs. Sapp in Grass Valley. November 22-Met at mine for 3 hours. Tim wants money to start mining. Interested and offer to pony up the money but he has no agreement in writing from the corporation. (I was young and eager but not foolish: no written plans and agreement no money.) December 19- Tim phoned in pm. Upset about calls to S.F. December 26- Met Tim and Timmy at Sacramento Inn. They had meeting with Connor in Oakland. December 31-Met Tim and Timmy in Grass Valley. Pledge of money then Company will change agreement. Invited to join. January 3, 1975- Alleghany with Bill Fuller (long time company geologist). Reviewed geo maps. Tim angry; met him and Timmy in Grass Valley. Jan 4-Tim phoned and said S.F. agreed to changes in agreement. Jan 5-Drove to Alleghany from Sacramento. Toured property with Tim and Timmy. Took a D-8 to Chips Flat-snowy, long trip. Casey’s then steaks at Willow. Expenses: beer and wine $10.25; Lunch $4.48; Dinner for six $41.50; Long distance pay phone $.75. Jan 11-Tim phoned. Wants air compressor. February 26- phoned Tim. Negative on partnership and agreement. Told him won’t go forward without them. Phoned Jansen. He will write letter about permit. Acting as Tim’s attorney- conflict of interest? March 1- offer to purchase air compressor. Talk about one hour. Same stuff-nothing coming in writing. Changing direction. May 23-Saw Tim and Timmy for first time after quitting project Mad!

Tim went forward at the mine with other people. The corporation took a path that I did not like. I bought the Morning Glory mine and leased the Osceola mine .Tim was a colorful character. Although we parted, our paths crossed many times. He was on the hot seat and in the middle of turmoil between investors, promoters (he was one of the best advocates for the Sixteen’s gold future) and the “old corporation” as he referred to Original Sixteen to One Mine, Inc. His group formed a Nevada, Sixteen to One corporation. There was much confusion as to who was who. It turned out that Jansen, Connor and the rest of the “old corporation” sided with Tim’s group against me. They clearly were intent on transferring the mine to the Nevada Corporation, which would terminate Original Sixteen to One Mine, Inc. Tim really just wanted to go mine, tear up the land with his D-8 and have a good time. He supported his backers most of the time.

Tim enjoyed life and he passed enjoyment to those who surrounded him. The refrigerator at the mine was always full of beer. Food was plentiful. One night I was returning to Alleghany from Sacramento and stopped in at Petersons Corner for a beer. Tim was at the bar with some investors and invited me to stay for dinner. Money was no object for Tim because he could talk up the mine and get people to invest. I accepted the invitation. We all ate lobster and steaks, the most expensive item on the menu. Tim always extolled the virtues of the mine. His best pitch was “I will get the nothing gold out of the quartz”. He painted a good picture. He worked as hard as he played. He also got involved with some questionable partners.

One night I got a phone call at home in Alleghany from Tim. He was at the local bar with a lot of background noise. He starts talking and then says, “Don’t raise your voice to me young man.” I say, “Tim, what are you talking about? I’m just talking.” He says, “Now listen here. You calm down, blah, blah, blah.” I say, “Tim what are you doing?” and then realize that he is performing for the guys in the crowded bar. He is telling that Miller guy a thing or two. Well, I listened for a little longer. He said, “Now don’t you threaten me.” I said in a quiet voice, “Hey, Tim. Have fun. I’m going to go. I have things to do.” It was a great trick for him, one of many that he used to control the “locals”. He hated what I was doing (going after Jansen and Connor for mismanagement) but respected it just as I respected his position. We had good laughs later, when we recalled the tumultuous years.

Well, Tim. She is a great old girl, the mine. The gold was there and there is plenty more waiting for the miners to find. You were right in hitching your wagon to the Sixteen. I know you wish us success. Tap ‘er light. Your friend, Mike
 By Michael Miller

12/04/2006  5:05PM

Regarding the Johnny Yuma thought of dismissing the value of geologists, not so. Recording drill data or estimating reserves is a worthwhile adventure. As the geologist passes his data and interpretation forward, it often becomes a tool for promoters, stock pushers and business writers to manipulate. Definitions become meaningless when drill calculations are lumped together. The novice quite likely does not know the differences.

We treasure the work of art and science of many geologists and will continue to do so. It is a highly skilled trade to be an exploration geologist.
 By John Yuma

12/01/2006  8:39AM

Dear GFX, I take exception to your 2nd paragraph. If all you do is drill it, average it out and mine it, why have mining companies paid me well for almost 40 years to sit drill rigs for up to 12 hrs a day and prepare detailed drill logs and x sections after a good geologic map was prepared? Why are approx. 2,500 geologists working in Nevada? Game, speculation and guess are not geologic terms and should not be used to describe any mining situation.
 By gfxgold

11/30/2006  11:45PM

I did not see anything that would suggest that Mike does not have any regard for geologists or the science of geology. He may or may not but, I did not see that in his writings. I feel that whoever is promoting an ore deposit, may at times, inflate or wrongly conclude the results that a geologist or drilling team supplies. As for the nugget effect, The 16 to 1 is the mother of all nugget effects.
Mike has to be more a "Man of the Cloth" than a promoter. After all, what do you call someone who tries to convince you that there is a great reward waiting for you... You can't see it. You can do scientific tests for it but, they may not tell you anything. We can show you the paths of those who went before us and they got their reward. "Hallelujah Brother!"
So, if you have an ore body that has been core drilled. The cores are assayed. The results are averaged out. You mine the ore and come up with the final product, gold. How many ounces? Did the math prove to be right or wrong? To be right, it would have to be the exact number of ounces. If it's wrong well, isn't that a calculated or "Best Guess?" Some are just "Calculated" better than others (I guess).
 By John Yuma

11/30/2006  3:08PM

It is obivious from your comment concerning "the reserve game" "raw speculation or calculated guess", you have no regard for geologists or the science of geology. For my part, all my reserve calculations have been right on the money when mined out. Why is it deception to place a value on a deep drill hole if the intercept can be mined at a profit? Also, any good geologist knows to check for the nugget effect and if present how to compensate for it.
 By Michael Miller

11/28/2006  12:19PM

To those who take the time to understand our gold deposit;
To those of you who want to own a gold position;
To those who admire history and learn from its study;
To those who believe that riches await our miners’ discovery:

WHY WE CHOSE THE 1000-FOOT LEVEL NORTH OF THE TIGHTNER SHAFT AS A TARGET AND ARE BETTING ON SUCCESS.

Deciding where to send our crew is always a challenge at the Sixteen to One Mine. Unlike most of the gold producing companies in the world that bet on drill results (reserves) and gold prices, we do not follow this practice. It does not always work for others and certainly will not work for us. Reserve calculations fail and companies are forced to modify their mining plan or hope for increasing gold prices. Another flaw in the “reserve game” took place in a California gold mine owned and operated by Homestake. (I call the reserve analysis a game for several reasons: years ago reserves were defined as proven or probable; later inferred became a modifier for defining; now the term “resource” is used by mining companies to quantify assets and qualify dollar values.)

The reserve game requires either raw speculation or a calculated guess to determine the ore’s sphere of influence for each drill hole. Some are cautious and others are wildly aggressive in assigning a large sphere at the highest value. Another trick of deception is placing values on really deep drill holes. The ones to deceive are the stock promoter/analysts who then extrapolate a company's reserve reports into ounces of gold. Most stop there because history has proven that the investor or speculator will do the math of turning ounces into dollars via the spot price at the moment. Homestake had a different problem at its McLaughlan mine in northern California. It became known as “the nugget effect”. Every placer gold miner is aware of the nugget effect of a deposit. Gold will just appear and disappear. The original low grade, “no-see-um” gold miners were not significantly hampered by this mining truism. The nugget effect has an academic definition as well: anomalously high precious metal assays resulting from the analysis of samples that may not adequately represent the composition of the bulk material tested due to nonuniform distribution of high-grade nuggets in the material to be sampled. Homestake failed to meet its estimated gold ounces, so costs per ounce produced were higher than expected. The mine eventually closed and Homestake sold out and merged into a larger existing company. The nugget effect got them.

We have problems in Alleghany, although drilling for gold and reserves is not one of them. In our mining district’s history miners do use a drill for knowledge. Searching for hidden quartz is one reason to drill. Others are the creation of map projections and geology. In our historic files we have highly credible reports from noted geologists and use them today as if the reports were written yesterday. I admire God’s hand in Alleghany and fully embrace the evidence that what was laid down in nature some 150,000,000 years ago is still true. Gold mining is a competition with nature. As a miner becomes more comfortable with this, his chances of success should improve.

So, in selecting the 1000-foot level, we have relied on history and the nature of the area between the Tightner Shaft and the 1064 winze farther north and the ground between the 1500-foot level and the 600-foot level. We also took into consideration the condition of the 1000-foot level and our current mine plan of operation. (A winze is a vertical opening driven downward connecting two levels in a mine.) Technically, when one is standing at the top of the 1064, the opening is called a winze. When one is standing at the bottom, the opening is a raise or rise. The 1064 winze connects the 1000-foot level with the 1500-foot level. It is one heck of a good ore pass and manway. It hasn’t been used since 1965 and will require some “dead work” in the future. As an aside, in 1995-96 we rehabilitated the 1500 foot-level. Just north of the 1064 raise we found gold in the down-dip footwall/vein contact. We ran a decline along the strike of the vein about fifty feet and recovered over $120,000. The gold continued but we chose to mine somewhere else, leaving this target for another day. One reason was the distance to the active 49 winze delayed productivity. This long abandoned but not forgotten target becomes interesting once the 1000-foot level is open.

The Company has good gold showing in more than a dozen locations underground…known or proven gold “reserves” of unknown quantity. These targets also have strong “backs”. Backs mean the height of ore available above a given working level. Available backs are another factor in selecting a new target for mining. We do not choose targets that require months of preparation that do not have big upside gold potential. Our mine has yielded many 5,000 and 10,000-ounce pockets in a short span of mining. It also has the largest single pocket reported in California, which is one of our stated goals to beat. The area we chose should give up several 5,000 to 10,000-ounce pockets and has the potential to beat the record. It must be remembered that there are over a dozen places with great reasons to mine; working capital is the single factor that will override the likelihood of gold production.

Original Sixteen to One Mine, Inc announced its plan to sink a new shaft called “Red Star”. It is north of the 1064 winze. The work we do from this moment on compliments our plan in many ways. If our expectations fall short, the infrastructure of the mine will be greatly improved. This and more revelations must wait for another day to explain.

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