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How to Approach Thin Veins & Cost

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 By Michael Miller

02/21/2019  4:10PM

Thinking about investing in gold?

Three important areas to ponder: Technical, communication/marketing and operational expertise.


Technical expertise should provide a clear understanding of resource potential, extraction and delivery to market. Engineering, geology, legal, finance and accounting professionals are there to develop and scrutinize opportunities determining that the opportunity is economical and worthy of pursuit.

Communications and marketing expertise engage investors, regulators, end-users and the public. They promote the company to investors, sell the end product and reassure that the project abides by laws and social expectations.

Operational expertise make the project happen. Their objective is to make sure the goals and objectives of the senior management team are realized.

Qualitative considerations are: What is the previous track record of management team? How have they overcome the challenges they were given? Do they have a stake in company, or “skin in the game”? Does management have a clear and simple vision and mission? Do they mask meaning with jargon or can they communicate opportunity in clear, simple terms? What is overall management style and reputation? These types of questions provide a framework for understanding how success or failure occurs.


“In the general resource space, beware of frogs masquerading as princes because there are a lot of those.”
This quote from Mercenary Geologist Mickey Fulp is a good guiding principle for those evaluating the investment potential of an exploration-stage gold company. The game of mining stock speculation attracts many a charlatan, The difficulty becomes separating the wheat from the chaff.

Rick Rule, a long time analysist who wears a Sixteen to One gold ring, describes successful investing in resource stocks as solving a fundamental riddle. “How do you anticipate exploration success before the financial community reacts to the success? While no investment can be 100 percent de-risked, especially in exploration-stage mining, where there are no revenues and plenty of costs, there are a few lines of enquiry that savvy investors should pursue.”

Management: If you were on the hiring board of a major company, would you give the job to somebody who had never done the functions asked for in the job description? Many investors do not bother to research. “The easiest thing to look at is the track record. Have they had success in the past? It sure is nice to have a couple of wins under your belt.” says Ryan Walker, mining analyst. It’s also important to know the intentions of management and board. Do they plan to sell their project to a bigger mining company with the technical expertise to turn it into a mine? Or are they explorers hoping to be miners without the requisite experience to make that happen?


Ownership: Do the managers and directors own a significant number of shares versus the “float,” or the outstanding shares owned by retail investors? Fulp thinks 50 percent of a company’s outstanding shares should be in the public float, which shows both management commitment and is enough to generate a volume of shares traded that can cause the stock price and market cap to substantially increase.


Property: Like real estate investing, when purchasing shares in mining companies a good rule of thumb is location, location, location.. This is due to geopolitical intangibles, such as the threat of expropriation and political instability,” says Chris Berry, of House Mountain Partners. Fulp takes jurisdiction even further by refusing to consider projects in countries where the political situation is considered risky. Consider the deposit’s proximity to other mines. The old mining adage, “to find a mine look near a mine” certainly applies to Sixteen to One. Ownership of the deposit is also important, since ownership factors heavily into who will control future profits and takeovers. Look for the company that owns 100 percent of the asset and has no underlying royalties that they have to pay. Yes, for Original Sixteen to One Mine, Inc.

The deposit’s location is also important with respect to potential expansion. If the company can show that not only does it have a good deposit, but that mineralization lies outside the existing or prospective mine boundaries, that is clearly a good sign for investors.

Geology: The geology of a given project is fundamental importance in deciding whether or not to invest in a gold junior. In gold exploration, the three most important factors are grade, tonnage and metallurgy. High grades are often touted as “king” when it comes to gold exploration. It’s true that many a mine has been built on the back of a high-grade deposit. No greater high –grade mine has sustained production over centuries than the Sixteen.


Mining is to a large extent about de-risking, so it is not surprising that the highest risk-to-reward ratio occurs at the discovery phase: drills are turning on a prospect the explorer and investors are eagerly awaiting drill results. As a company de-risks a project the value of the stock should generally rise. These are good catalysts for investors. Rule insists that the juniors he invests in have a game plan for how they, and investors, are going to make money, and when. “Make the promoter explain in detail how the company’s activities will increase both shareholder value and stock price.

Mineral exploration requires strong capital and an even stronger stomach for risk; but sometimes the risk can pay off big with a well-executed discovery. However, the odds of hitting a wall are much higher than hitting pay dirt. Even a large claim package in elephant country can turn out to be little more than moose pasture. The deposit could be too small, too low grade, or saddled with a host of other project killing pitfalls. A commonly cited statistic among industry experts is that the probability of a mineralized body becoming a mine is about one in 3,000.

Assets do matter and the more quality the better odds for shareholder rewards..
 By Michael Miller

12/13/2018  11:57AM

“Twenty four years ago a dormant wad of gold signaled the beginning of fresh technological power into the Sixteen to One mine. It was a simple metal detector. For decades a 22 ounce sponge of gold lay on the floor of the main drain tunnel. It is memorialized in a poster called, “Gold the International Language”. For gold seekers this innovation sparked an international rush to buy off-the-shelf, hand held metal detectors, the ones seen on many California beaches.
It led to the production of thousands of ounces of gold from the historic California gold belt.
Physics and electronics had added to the centuries of experience and knowledge about mining for gold.


The most logical place was the Northern California gold belt, a 200 mile deposit under the Sierra Nevada Mountain. The most accessible site was the Sixteen to One mine in the Alleghany Mining District.


The major tool for hard rock underground gold mining will always be geology. Nothing will ever replace prospecting, exploration, development and production as nature’s intuitive geological formations, nothing; however the concept of detection is here to stay.


Forty four years ago chemistry resurfaced as a guide for miners to the hidden high-grade gold in the Alleghany Mining District. Fluid inclusions, ion calculations and all mining leaning chemists could imagine were explored, theorized and tested. Did it give the miners a new twentieth tool? Not yet but those differing ions in quartz may someday.


The twenty first century exploded the technological market with something called a “smart phone”. I don’t have one and don’t even know how the land line phone is capable of performing its magic; however others do. Let’s marry the smart phone technology with the current science of gold detecting. The result will make history. The union will give birth to a smaller and lighter tool with added discrimination features and depth, speed and reliability. All the necessary components likely exist in today’s market. The beta site for perfecting the smart detector can only be the Sixteen to One mine, a proven deposit for producing gold over 164 years. The time is now. The place is here.”



These were my thought two years ago. The smart phone evolved. Now Mars is accessible for photography, science continues with unimagined results, but no one has figured out how to identify gold (one of earth’s densest elements on earths) in a quartz vein. The Sixteen to One host to gold is Quartz, a trigonal mineral (SiO2), transparent and friendly to electronics.
Pass this along, please. WE have a sharing plan. I know someone is out there who could get really excited about locating 10 to 20,000 ounce pockets of gold.

There is no better way to acquire gold than to mine it and share in the bounty. We have a plan.
 By fredmcain

05/16/2018  9:48AM

MINES WITH TRACKS

Group,

I thought I post a new message under my sub-subject on this list of "Mines with tracks". As many miners already know, most mines started to steer away from underground rail haulage about 30-40 years ago.

However the pendulum of getting away from rail and going to LHD trucks may be beginning to turn.

Here is an interesting article on rail haulage that I found:

https://www.e-mj.com/features/opportunities-and-challenges-of-rail-haulage-systems-in-current-mining-operations/

URLs will not "highlight" on this forum so you will need to "copy and paste" to your browser.

I'd copy and paste the entire article but it's too long. It makes for interesting reading, though. :)

Railroading in mining might just stage a comeback. Personally, I feel like our president was smart to keep his rail system in the 16 to 1 mine.

Regards,
Fred M. Cain,
Topeka, IN

...

 

  
 
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