"Original Sixteen to One Mine, Inc. Buys Time for Technical Exploration"
The following press release was transmitted on Business Wire New Service last week. One again, we felt the need to shake up our plans and acted accordingly.
Original Sixteen to One Mine, Inc. Buys Time for Technical Exploration
Original Sixteen to One Mine, Inc. (PCX:OAU), announces today a restructuring of its plan of operations and workforce. The decision surprised none of the miners, who, like many in the industry, are facing hard times. The move is designed to conserve capital and encourage more focused mining.
Unlike other companies in the gold mining industry who cite the price of gold as the main reason for reducing their operations, Michael M. Miller, president, feels otherwise. "Of course the price affects revenue," he says. "A decline in production, however, pushed us to reconsider where and how we were mining the underground quartz vein, not so much the price of gold." Production total for 1998 equaled 3,737 fine troy ounces (fozt) down 36% from 1997 production of 5,869 fozt.
The Sixteen to One mine has been in operation over 100 years and is the second oldest U.S. publicly traded gold mining company. Over 1.1 million ounces of gold have been produced from the Northern California mine. Most production originates in extremely high-grade concentrations. The California Division of Mines and Geology Bulletin 193 lists the largest high-grade pockets found in California. The top three pockets were in the Sixteen to One mine. The last large pocket ($2 million) was mined in 1995.
"Understanding the unique nature of the gold deposit in the Alleghany District corroborates the recent change in mining methods," says Miller. "There is great confidence that undetected high-grade pockets exist. In addition to geology, miners intuition and just plain luck, we are benefiting from entrepreneurs improving the technology of identifying gold in the quartz vein."
Miller says that maintaining the miles of underground habitat as a beta site for scientists is a high priority. By reducing the number of underground headings, thereby reducing the work force, the newly formed association of miners will focus on short term targets with the highest probability for gold. The company has less expenses and the association of miners assumes risk with the potential for greater rewards.
"Shareholders' interests are best served by preserving our accumulated inventory to allow for ongoing technology to advance in reliability," Miller states. (released February 17, 1999)
An unmentioned intangible loss or a loss that cannot be measured in dollar signs from this reduction is the break-up of a very talented, professional and dedicated group of miners. Another loss is the elimination of activity in some good looking headings with great potential. The concept of an association of miners has a long history with our Company. In December 1965, management announced that the mine was shutting down. As far as the Company was concerned, it chose not to bank a payroll, other than Richard Brooks, a long time miner and resident Alleghany deputy sheriff. Other long time miners joined together to work the mine. As the water slowly buried the lower levels, one by one, they continued to mine. Their compensation depended on how much gold they produced instead of the assurance of a paycheck. Miners continued to work above the 800 foot level even after the water spilled out the "21" portal into Kanaka Creek almost three years later.
In 1991, a dozen miners united in an association called "Go for the Gold." The Company had little money. It was to be a ninety day blitzkrieg, whereby everyone earned a minimum wage and a percentage of the gold recovered. The group drilled, blasted, mucked, hoisted and trammed record footage and tons. Their monumental efforts failed to locate enough gold. The program was abandoned 120 days from its inception.
In 1992, a small group united again and with the aid of the Fisher Gold Bug and White's Gold Master metal detectors located and produced thousands of dollars of gold, including a 22 ounce slug featured on a poster entitled "Gold, the International Language". Mining at the Sixteen to One changed forever. Miners gained an understanding of modern technology that improved the odds of success in the game of chance.
Once again the collision of man and nature has placed us in financial danger or risk. Our inventory is reduced from the past three years of unprofitable mining. Unlike 1991, when I spent almost all our resources breaking rock before we called it "deep enough", we did not eat all the food in the cupboard. We have a plan to mine our Company back to prosperity. However, do not allow miner's optimism to minimize the very real financial pressure we are living with. Times are hard. Time are tough.
While writing this letter to you a director called and characterized our business as a game of chance. That will be the name for this current mining plan. Do you want to participate some more? How far do you want to participate in our plan?
As of today's date the "Game of Chance" yielded enough gold to continue. Noteworthy is a spot previously unannounced but known to have gold in view. It is below the 2400 foot level in the second exit of the southern part of the mine. We were unable to mine here because of safety considerations. In January, miner Bruce completed a long and difficult raise between the 2600 foot level and the 2400 foot level. This allows the miners to block the second exit during active mining and be in compliance with our standards of safety. The gold mined in this location is very concentrated. One rock weighed about five pounds had 22 troy ounces of gold. More remains to be mined.
Many of you, as well as most people unfamiliar with the Sixteen to One gold deposit, have difficulty realizing the magnitude of the gold concentration or its richness. For comparisons, most highly touted Nevada or foreign mines list reserves in the range of .02-.05 ounces per ton of ore. In other words, in order to produce one (1) ounce of gold, the miner must move 50 to 20 tons of ore. Some of the more recent underground mines in Nevada are mining what they call high-grade ore, measuring between .25 and .75 per ton. It will require between 8,000 to 2,500 pounds of rock to produce one (1) ounce of gold. At our mine a ton of high-grade contains between 2,000 and 6,000 ounces of gold. Each day and each round at the Sixteen to One is a new game of chance.