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From the Sixteen to One Archives


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 By Michael Miller

04/13/2017  3:58PM


Draft received from a recent interview of Michael Miller that may appear in a yet to be identified publication. January 22, 2007. Part One

Q: More stories about gold are appearing as gold increased in value last year. Are we in another new American gold rush?

A: I wouldn’t call it a new rush but there is definitely an upturn in interest. The mother of all historical gold rushes took place in California between 1848 and 1852. In modern times the current interest is a continuation of “the rush” unleashed on December 31, 1974, when gold was economically freed from government suppression. Today the general public has yet to participate even though we see more references to gold than a few years ago.

Q: How do you follow the gold markets?

A: I keep up with gold and other natural resources thanks to magazines, newsletters and newspapers, web sites or articles on the Internet, friends or acquaintances in the various industries and other sources. I enjoy reviewing company reports and SEC filings. My interest goes beyond what should be required of a president in the natural resource industry. I’m curious. My macro- economic belief is that our natural resources contribute to the liberties and freedoms the entire world cherishes. There are potential global impacts, significance for Americans and important local consequences that touch many people.

Q: While it seems simple, the realm of gold has a complex history. What single advice pops into your head to offer someone outside the gold market wanting to get in?

A: The rules are the same whether its gold or technology: go into gold with an open mind and teach yourself through study. I started that way thirty-two years ago. My family background, formal education and life-long experiences make me a risk taker but a careful one. Emotion gets in the way sometimes. The counterpoint to risk is reward. The ability to evaluate these two components is crucial with today’s gold investment options. Whether it is an investment in time, energy or money, a formula may be constructed to analyze various choices and opportunities. There are unfamiliar terms in gold mining with unclear definitions to deal with. You want a quick single concept to embrace: ponder the downside risk and upside potential.

Q: Why have you devoted thirty years to the mines in Alleghany?

The relevance of mining, natural resources and gold to our present and future well-being makes me a Sixteen to One bull. I recognized the potential quickly back in 1974. Our experiences continue to confirm my early impressions. I don’t want to go into a lot of history now; however what has taken place in Alleghany and the Sierra Nevada Mountain range is awesome. It sometimes takes my breath away just to have an interest in keeping this culture alive. While economic growth (stock appreciation) is an important goal, so is acquiring physical gold as a personal possession. This opportunity really puts Original Sixteen to One Mine in a very special and small category of gold stocks. The little guy, like me and others, has a chance to participate in something exciting.

Q: In reading your history you seem to always have plans that require money but you rarely actually go outside to get it. Why?

A: We prefer to finance our growth and development by mining gold. The Company’s fortunes turn in a single shift, so as long as we are breaking rock, fortune may tap us on the shoulders. Other reasons are more pragmatic. In order to declare a gold dividend the division of ownership must be manageable. It is. The more shares outstanding, the more difficult to divide excess gold into a meaningful amount. I monitor our gold inventory, cash flow and daily underground mining progress to quantify the risk/reward scenario. In conversations with Ian Haley, the mine manager, and the crew I gain a sense of production and what is ahead of us. My actions are to push it, in other words “risk evaluation” is a constant part of the job. It changes almost daily. Last week on the 1000 foot-level, we found a gold showing in the down-dip side of the vein. We slabbed the rock. It revealed a very nice display of gold, more than first look. Now we have the choice of proceeding with the level rehabilitation or interrupting that heading and sink on the gold. Each has a risk and each has a reward. No one knows but right below us less than a week away could be enough gold to finance our Red Star project from this production.

Q: You mentioned unfamiliar mining terms earlier. Give us some common ones and some that may be unfamiliar or poorly defined.

A: I used the term “down-dip” in describing where we found gold on the 1000-foot level. First, the dip is the angle that a bed, stratum or in this case a vein is inclined from the horizontal. Down-dip tells the direction of the incline. Its opposite would be up-dip, although this term may not be used throughout the mining industry. Mining districts develop their own terms over time, so there can be confusion of meanings even between experienced miners. For the non-miner who is trying to get a grip on evaluating gold companies, the first concept they must deal with is reserves. The Alleghany Mining District is very fortunate because the gold deposit cannot be qualified or quantified using a reserve projection. The investor today is barraged with reports about proven reserves, probable reserves, possible reserves, inferred reserves and a resource. Whew! Believe me, these terms are not interchangeable but many exploration companies as well as others lump them together. I think it is done to fuel great expectations for those seeking a play in the gold industry.

Q: Why should individuals or other entities be interested in the Sixteen to One operation and give some examples?

A: An important fact in evaluating the likelihood and meaning of meeting the two goals (stock appreciation and gold distribution) is the number of outstanding shares. This is a very important statistic for comparing all corporations. On December 31, 2003, there were 12,867,250 shares issued and outstanding. The number remained the same on December 31, 2004 and December 31, 2005. Dilution was nil. The upcoming December 31, 2006, number increased by 118,204 to 12,890,204 shares issued and outstanding. This small increase was due to a stock conversion for debt, money owed a shareholder who helped purchase the Gold Crown mine in 2005, directors’ fees and a long overdue account payable. For a company that has been financially handicapped, it avoided dilution just to keep the operation going. We are not fueling our operation by selling stock. We are one of very few small gold companies that actually mines gold for its cash flow.

Q: Is a gold dividend a fluff concept or for real?

A: It is for real. One of our past directors, Lee Erdahl, was a director of Ranchers Exploration and Development Corp and became its president after the untimely death of Maxie L. Anderson. Mr. Anderson paid a gold and silver dividend. It may be the first declared in kind dividend by a public corporation. I find it an inspiring accomplishment. As of today, a gold dividend of a quarter ounce per 1000 shares would require 3,250 ounces of disposable gold. This is a realistic number for the Company to meet.

Another requirement necessary to declare a dividend is the company must be debt free. Ours was debt free for half of the 1990’s. It was debt free by mining and selling gold, not by selling stock. It also paid a $0.05 per share dividend in 1995, the first dividend in thirty-five years. For most of its corporate life the owners were generously compensated with an annual dividend and the company was debt free and met its annual cash demands. Tax laws were different but with an “in kind- pro rata distribution”, the onus of double taxation will not be a factor in distributing profit. A goal of a gold dividend is for real.

Q: If you never had a public offering how were the 12,890,204 issued?

A: When I took over as president in 1983, there were 180,000 shares outstanding. Many were issued to former owners of mines the company acquired.

The company did a three for one stock split when the stock was very low priced. It had no dilution effect on the shareholders of record. Everyone’s percentage of ownership remained the same. It made no difference for the dividend goal. Dividends must come from profit not from selling shares. Selling shares is not revenue. This was brought to light when reading the 2006 annual report of Klondike Star Mineral Corporation. I like its idea to find the underground source of the placer gold found in the Yukon. I can relate to the excitement and perhaps monster gold pockets still remaining after eons of erosion and geological changes. We have the respected Blue Lead dead river below the Bald Mountain and Red Star claims. We know the veins exist from prior mining and drilling below its bedrock. We know that nuggets were found still encased with some quartz. We know much about the geology of this property. I like what Klondike is doing and wish them great success. Management has a different view of its corporate structure and its ownership. It appears as a one-dimensional plan for making money, stock appreciation. With xxxx shares outstanding and 5700 shareholders, a future gold dividend seems unlikely.

As I look at Klondike’s Balance Sheet and Statements of Operation a long standing and most popular pattern is evident: no revenue, ongoing dilution, high general and administration fees and high public relations expenses. With no revenue and expenses of $8,778,272 about 56% went to General and administrative (3,392,679) and Public Relations (1,538,207). Mineral exploration was $3,379,652. Shares outstanding increase annually as the company uses dilution to fund its program. This time period 3,423,000 shares were added. Nothing is wrong with this business plan. It is the one that most exploration and under financed companies follow; however there is more to the analysis of the impact of number of shares outstanding.

Few people know the number of shares outstanding in the companies they own or contemplate buying. Look at Newmont (I am a shareholder). It has 312,984,000 shares outstanding. That is a large figure. Another gold producer, Barrick, with 554,270,000 shares outstanding, tops it. This type of analysis is important to evaluate a gold company. Check its “market capitalization (market cap). Multiply the shares outstanding by the share price to determine a market cap. This is the total value the market places on the corporation. Sixteen to One is slightly under $13 million. Klondike is slightly under $40 million. Newmont is more than $12 billion. A gold dividend is not in the future for any of these companies except the Sixteen to One.

I understand why Klondike goes to financial markets to raise working capital. But why did Newmont announce a $600 million loan in November? Its stated reasons seem odd in light of its great stream of revenue. Klondike has no other choice but to continue borrowing or diluting existing shareholders in order to stay in business.

These companies and more of the Barrick types and many more of the Klondike types are competing for working capital at a time when the world awakens to the need and value of natural resources. These are the opportunities available to an eager market, a market that has only begun to be excited by the prospects of $800 or $1000 ounce gold. I am bullish for Original Sixteen to One Mine because of its different risk to reward relationship. I am sure that there is one just as favorable in other gold opportunities. I just don’t know of any to invest in. What is missing to the casual researcher of our company must be the reviewers’ reluctance to project what it will become when its two-step financial plan is successfully implemented. It is public information for the most part. Some items (all positive) are withheld for security reasons and because of their confidential nature.
 By Michael Miller

12/30/2016  11:31PM

While scrawling through some internet headings, I found reference to our FORM 10-QSB. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549


For the Quarter Ended September 30, 2002 File No. 001-10156

On October 29,2002, The Sierra County Grand Jury issued an indictment against Michael Meister Miller, Jonathan Farrell and Original Sixteen to One Mine, Inc. The next court date is November 20, 2002 for arraignment. Management believes the accusations are groundless; however, because the instigating prosecutors are private non-governmental lawyers outside the standard criminal system, a vigorous and time demanding defense and offense are necessary to protect the shareholders' interests. Even unfounded criminal accusations are mentally debilitating and time consuming. Because Miller and Farrell hold key management positions, the company may suffer substantial and significant damages due to the distraction caused by the prosecutors.

What a time! What memories! Why did I bring it up today?

With a Company like ours, history is relevant and important for someone wishing to judge what is ahead. Junior gold companies tend to issue press release about how the permitting is going and drilling projections. We are different. The purpose of this web site is to make history available to you and the many people who know nothing about California gold mining, the Sixteen to One or how we have survived into our third century.

The presentation to Sierra County Grand Jury by corrupt lawyers almost fifteen years ago threatened our very existence. The charges were specious but had to be defended with vigor. We did just that. The unethically lead lawyer should have been disbarred. He wasn’t. He lost his job and moved on to some other job, which he also lost. He should have been disbarred! We survived this attack!

Our small but vastly important natural resource development industries face a similar crime by government employees from various agencies. The crime to the public and those working in these industries centers in how regulations are enforced in light of how the respective governments wrote the laws for regulation. I want regulations and I want them fairly enforced, enforced as Congress and State houses wrote them. In almost every regulatory law I have read (and there have been many) reasonable is mentioned along with beneficial use to the public and non-public. We survived these attacks!

I look forward to the time when the Americans holding high agency positions set the example for their employees to become the helper to Sixteen to One mine (and all improperly regulated entities) not a rogue cop. It may not be far away. Let’s be progressive, moving forward or step by step. I believe in progress and promote reforms or changes. Your ideas and participation are most welcomed. The United States benefits from the domestic gold brought into the financial market and the need is increasing each day.

For our hard working traditional, hard-rock, underground, gold miners and directors, our message for the 2017 year is “Truth, like gold lies at the bottom.”

We will do our part to preserve, protect, enhance and bring a rare American natural resource into the coffers of our country. I dare say, we will exploit our gold, which means we will out it to use. The 2017 year makes me, an overtly optimist, smile. Truth, like gold, lies at the bottom. Happy New Year.
 By Michael Miller

08/11/2015  9:23AM

Errol Christman passed away July 25, 2015. He was 74. He grew up in the mining town of Grass Valley, where one of America’s great underground gold mines dipped thousands of feet below the Pacific Ocean surface.

I met Errol in the late 1970’s. He had a month to month lease to prospect Sixteen to One in late 1970. He paid $250 per month. It worked out well for Errol. The old workings above the drain tunnel level had quartz pillars that were left to support the ground. By drilling these pillars he sacked high-grade gold, which financed a growing mining equipment business. His time underground at the Sixteen was short but profitable.

Some people faulted Errol for removing the pillars and causing irreparable destruction. I was not one of them. He took advantage of an opportunity given him by the mine management in San Francisco. Our Company had quit mining in December 1965. It gave existing miners permission to go into the mine to eke out a modest living.

Fortunately for the future, no one brought metal detectors into the old workings. We did in 1992. Success was instant. The single biggest day was in 1995. We drilled blasted and sacked 25 2,500 ounces in one shift. Gold spot was $400 an ounce, so it became the Million Dollar Day. This pocket was less than ten feet from where the ‘old-timers’ stopped mining. Errol did well. So have we. Ours is a rare and exceptional gold deposit. Knowing this to be true has kept its owners in place for over 100 years. Errol was a part of our history.



© 2017 Original Sixteen to One Mine, Inc.
PO Box 909
Alleghany, California 95910

(530) 287-3223      
(530) 287-3455

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(530) 287-3540


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