December 17, 2017 
 Sunday 
 
 

Forum
Topic:
Let's back physical shares with physical gold

       

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 By Michael Miller

01/26/2015  3:22PM

With this topic and discussions, an idea for whacking the Sierra Nevada gold deposit via its only commercial active mine is growing. If you are a new reader, a plethora of information exists on our web site. You will gain an understanding of how and why our Company is the last one standing in California’s Sierra Nevada gold fields. You may even agree with most that it is one hell-of-gold mine-gold-mine. In the likely need for us to obtain funds from other, not from gold production, this topic is evolving. Eight points are becoming clear in my mind:

First: knowledge and beliefs exist the Sixteen to One will become a producing asset with value beyond the present;

Second: capitalized with Thirty Million shares authorized and 13,399,505 shares outstanding, it is positioned for expansion;
Third: by design, it ignores its public market value due to the priority of operating its properties first, which results in an unbelievable market cap value based on minimal stock transactions and no stock manipulations.

Fourth: An influx of working capital will likely reverse the economic dynamic of scale formula in effect for the past decade; however the method of encouraging risk capital to obtain the investment is elusive.

Fifth: the issuance of a preferred stock will both interest investors by narrowing risk and be true to shareholders as anti-dilutive to their beliefs.

Sixth: a yet to be percent of gold bullion will be impounded in kind for a pro rata distribution to common shareholders by director decree.

Seventh: preferred stock will secure the working capital investment with three covenants. These covenants are: (a) upon any liquidation of the company, proceeds will be applied first to a buyback of preferred stock; (b) a yet-to–be-determined preferential percent of gold bullion will be allotted to the preferred stock holders to recover its purchase. It could be set at X amount below spot price; (c) a formula to convert preferred shares to common shares will be offered.

Eighth: time is truly of the essence. Gold mining can be a lengthy process from concept to production and profit. No reasons exist for Sixteen to One to re-invent the process. It has a realistic pattern for success. One must decide what “success” means. For our Company it means rewarding its owners with another 100 years of gold.


Well, Hans, and anyone else following the course of this mining adventure, ideas and people with a financial interest please continue this discussion or contact me. Time is important because gathering miners, management, supplies, equipment and more plus some of the necessary dead work to get gold targets in sight takes an effort to do it right.

Additions beyond the above eight points are welcomed. It has taken me a many years to put this package together. It is ready now for the last ingredient. Help is needed to get this underway.
 By Hans Kummerow

01/24/2015  8:01PM

Michaels remarks reflect the finest virtues in corporate responsibility: Thoughtful consideration of a proposed major change in policy, based on several decades of experience in the trade.

Nevertheless I would like to argue my case in one more detail.

Having studied the Fiscal Report for 2013 and assuming that there has been no significant change in 2014 it seems to me, that a near term influx of working capital will be more important in 2015 than during the years behind us.

To my knowledge there are many companies who are declaring dividend payments although they are carrying debt on their balance sheets. It is a game of adequate proportions - not a matter of conflicting principles.

In absolute numbers the debt figure on our balance sheet is low now. And it is owed to friendly parties. In my opinion management has been very successful in eliminating the much higher debt, that the company has carried in the past.

The time has come to attract additional investments into treasury stock at a reasonable price by introducing a dividend policy in real gold.

The resulting capital influx may resolve two issues at the same time. It may provide working capital and eliminate remaining debt. Therefore I would like to ask the board to look at the bottom line of the proposed policy change and not worry too much about priorities in the employment of funds.
 By Michael Miller

01/14/2015  12:01PM

The thoughts expressed below are intriguing. Allow me to go back to some history before I comment.
From its inception in 1911, Sixteen to One owners conducted a generous dividend payment to owners. All agreed and the documentation of this is well established. Two events upset this rhythm: USA fixing the price of gold and the economic turmoil after WWII. Nevertheless dividends continued during and after the war. Gold production made these payments possible. Inflated costs of supplies and labor during the 1950’s undermined the few remaining gold producers in the United States until only two commercial operations remained: Homestake in Lead, South Dakota and Sixteen to One in Alleghany, California. The Alleghany mine continues its corporate payroll until 1965, when it ceased. Employees took over the operation until the federal government liberated the buy/selling of gold on December 31, 1974. The Lead operation closed about a dozen years ago. The global giant Barrick bought Homestake and melted it into its company. Financial consequences were the cause of America losing its gold production capability. It was not the depletion of its gold deposits.

Jumping forward to August 7, 1995, when a dividend of $.05 per share was announced. It was paid September 10th on 3,362,491 shares. I had to convince our excellent directors to declare a dividend. Their reasoning was sound, rock solid. That money, put to use internally, would increase shareholders value more than the dividend. I also knew that this could be true; however my vision was long range. Returning the Company to its extraordinary record of dividends was my goal. I wanted to learn the dividend process. It would also defy all those phony exploration gold promoters. The Sixteen to One is something special. (All those companies are gone now and many small gold listed companies today don’t have a prayer to ever produce gold let alone pay a dividend.)

Before we can announce a dividend payment our company must be debt free. It was debt free for many years and I must say it is a joy to run a debt free gold mine. This is a goal. It will be achieved in one or all of three ways: production, gold detection improvements and an influx of working capital. A primary reason to regain an open share buy/sell market is to allow owners an exit and non-shareholders an entry. A secondary benefit is to allow the Company to consider its treasury stock to obtain working capital for exploration and development and acquisitions. Having said this, it is also my intentions to someday, when conditions warrant it, to resume dividends. My history affirms this. I want to do what Ranchers (a silver producer years ago run by a great visionary, Maxie Anderson) did. He gave his shareholders a dividend in silver. Ours will be in gold as it has additional good financial consequences for its recipients.

We can do what the entry below suggests, that is putting aside a specific amount of inventory that must be retained for distribution to shareholders. We just are not there yet.
 By Hans Kummerow

01/13/2015  2:07AM

It has been a customary approach by economists in the past to look at the true value of a state's GNP as a function of the true value of it's fully transferable currency.

The same approach is customary if the true market-value of any publicly traded company is expressed as the CAP, the number of shares outstanding multiplied by the current share price.

As far as the pros and cons of a listing at an established stock exchange like NYSE are concerned it seems to me that the discussion about having OSTO stock listed, should be terminated for good. The reason being, as a veritable gold producer, OSTO stock could be backed by real gold.

It would be up to the Board to prepare an Amendment of the Articles of Association for the 2015 shareholder's meeting. For instance by adding a clause, that 10% of all gold produced will be directly set aside for the "joint shareholder's metal account".

By establishing such a dividend policy, the bottom line of the Sixteen to One Balance sheet would be unique, because shareholder's equity would not only be expressed in fiat terms, but also in onces of gold.

Such a change would achieve several important goals at very little cost:

The shares could always be sold at the actual gold value of a share certificate and we would not need a market place like a stock exchange

Shareholders would be attracted who are interested in a long term hard asset investment

We would get a lot of press coverage and additional interest in our company

The shareholder's joint metal account would not be taxed until any metal is actually sold for cash.

Could the Board kindly check, whether such action could be legally pursued in the State of California?

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