Our successes this year have given me lots of opportunities to grapple with one of my recurring concerns in managing this company - deciding when an event in the life of the mine is material enough to require disclosure under SEC regulations. The choice is between telling you a lot, which may numb your ability to judge our performance, or telling you so little that you might lose a financial opportunity to someone who hears the news from other sources.
A big gold find at the mine could have an impact on the price of our stock, for three reasons: 1) an increase in the company's immediate profitability; 20 the possibility that we've discovered a new ore zone; and 3) increased credibility for the company in the investment community. So I've generally chosen to err on the side of caution, telling you a lot.
The obvious downside to this choice is that you may become deadened to Sixteen to One news. Some of you probably think we're making this all up anyway. Others remember how restrained we were before the metal detector program brought us success, and will trust us even when the news is this good.
Our continuing discovery of gold in significant quantities may or may not be material, but we figure you’d like to stay informed. At the usual risk of seeming like promoter rather than a miner, here goes.
Biggest Day Since Start of Program
Friday the 13th was far from unlucky for the Sixteen to One: in our best day since the beginning of the metal detector program last January, we recovered more than 400 ounces of gold. This find from the 1700 level puts us over 820 ounces for November, with six work days left to go. We have a few hot spots yet to investigate, so we are looking forward to one of the best months since the beginning of the strike in January.
Third Quarter Financial Results
As you know from the newsletters, much of July, August and September was devoted to the unglamorous tasks that allow smoother gold production, like setting up the mill, clearing rock from the 2200 level and maintaining the winze (one of the main underground haulage ways). The result of this diversion of energy from gold production was a small loss ($0.02 per share) in the third quarter. We do not believe that this loss is indicative of a significant trend. Our nine-month cumulative results show a profit for the year, and recent discoveries of high-grade pockets on the 1500 and 1700 levels ensure that the fourth quarter will be profitable as well.
Our recent 100 included a comparison of revenue and expenses in the third quarters of 1991 and 1992. We include some excerpts of interest below. If you'd like a copy of the full 100, just let us know.
"The Company took over operations at the Mine from its leaseholders in 1991, so the third quarter of 1991 was our first quarter as an active owner. Little gold was found during this quarter, and revenues were only $2,807.00.
In January of 1992, the Company began using handheld metal detectors to locate gold underground. The method proved well suited to the mineral deposits at the Mine, as third quarter 1992 revenues of $149,730.00 reflect.
Expenses during the third quarter of 1992 were almost 20% lower than expenses during the third quarter of the proceeding year ($199,477 for the third quarter of 1992 compared to $248,563 for the third quarter of 1991). This decrease reflects the Company's new ability to locate gold in the Mine by using metal detectors.
Our third quarter 1991, pre-metal detector efforts to produce gold moved record tonnage of rocks, resulting in high costs for explosives, hauling, power and miscellaneous expenses. Third quarter 1992 operations were far more efficient, because the use of metal detectors allows us to identify gold bearing rock before it is blasted, drilled or hauled. This minimization of time and supplies expended on barren rock has resulted in substantial savings."
The gold recovered from Friday's find on the 1700 level is some of the prettiest we've seen. The quartz matrix is especially white, and the gold is formed into unusual, almost crystalline faces, making it very light reflective. Six to eight hundred dollars would buy you a good-looking specimen the size of a fat medjool date.
Happy Thanksgiving from the Sixteen to One!
Michael M Miller