Original Sixteen to One Mine, Inc.

Newsletter #28 - October 1993

Dear Shareholders,


Apologies are due - it has been far too long since the last newsletter. Those of you who have been with us a while know that no news sometimes means we're too busy mining to write, and that's the case here. After doing our duty by the mine with three months of clearing, mucking and drilling, the mine did its duty to us and rewarded us with a very satisfying two month run that does not seem to be over yet.


Harvest at the Sixteen to One

August and September were harvest months for the Sixteen to One, as we enjoyed our biggest day, our second and fourth best months, and the most spectacular specimen recovered from the mine in modern history. We attribute these achievements to our increasing sophistication with the metal detectors and our first chance this year to assign all three crews to active mining in virgin ground with high expectations for gold.


High Production in August and September

On August 9, 1993, work on the 2200 and 800 levels yielded our single biggest day's production since we took over mine operations in 1991 - 550 ounces of gold. Additional production from these and one other spot on the 1300 level combined to give us an August total of 1430 ounces, our second best month since the Sixteen to One became its own operator. September's figures were also good, with a production of 704 ounces - our fourth best month.


The Whopper

Part of August's excitement was our first sight of the "Whopper", a beautiful 18 pound specimen containing 141 ounces of gold. When it surfaced in the muck pile, the miners were fascinated to see that part of the specimen actually shows drillmarks, so the Whopper is a piece of demonstrative history as well as an enormous prize. Figuring gold at $350 an ounce, the Whopper has a value of $53,000 for its gold alone, with potential specimen value up to 10 times that figure. The American Mining Hall of Fame Museum in Leadville, Colorado is interested in having the Whopper as part of its permanent exhibit, but we are also investigating private sale options.


The Big Picture - Production, Costs and Predictability

Production- I'm enclosing a chart of monthly production beginning in January, 1992. Production in an underground mine like the Sixteen to One is not and never has been consistent on a day-to-day or month-to-month basis, so it's not possible to explain each of the ups and downs on the chart as I'd like. Some points bear noting, however.


Our all time high-1588 ounces - came in March of 1992, the first full month we attacked the mine with metal detectors.(1) The near zero production of June and July 1992 was expected and planned for (see Newsletter #20, May 15, 1992) as we diverted miner-power from active production work to get the mill up and running. Similar slow-downs occurred this year, most notably in June and July, as we devoted energy to the necessary tasks of clearing levels, de-watering the mine, putting in air, water and electric lines, and installing track. In fact, as I noted in the President's Message of June 15, 1993, non-cash producing work is a vital part of mining, and 50% of our miner-power from July 1992 to June 1993 was assigned to rehabilitation and clearing work.


Our August production of 1430 ounces, our second biggest month, is notable because it occurs a year and a half into the metal detector program, when the easiest and most obvious targets have been mined, and we have to work harder for our gold. Instead of just scanning existing tunnels for signals, we now drill deeper into the face of the mine, combining metal detection with traditional techniques of geological inference to locate potential ore zones. The Whopper, for example, came from a new raise off the 2200 level, called the 2203, which we drilled for five weeks in response to a weak signal and a promising geological configuration.


Costs- Back in March of 1992, we estimated that it took about 140 ounces a month to cover Sixteen to One running expenses (see Newsletter #19, March 13, 1992). With an expanded crew of 17 employees, that figure is now about 270 ounces. Obviously, this makes it harder to run at a profit on a month by month basis, as we may not make 270 ounces in months devoted to rehab and clearing. When you look at the chart and note May's measly 44 ounces, remember that month's clearing of the 1500 level and de-watering of the 2400 level created some important target areas for future production. Our current average for May through September is approximately 545 ounces per month, a healthy margin over the break-even point of 270.


Predictability- In earlier newsletters, I've mentioned high expectations of certain areas in the mine: the newly accessible Red Star (1500 level); the recently de-watered 2400 level; the areas identified by the RimTech tests (radio imaging method of gold detection) last November; and the area mined in the 1991 "Go For the Gold" effort predating our use of metal detectors, to name some of them. Though you might expect our recent bonanza to come from one of these areas, all recent production came from new sites developed as they were identified by the crews.


As for the targets mentioned above, they have yet to be developed. Some of you are undoubtedly wondering why.


You can't be efficient in underground mining without being flexible. To get the most out of our budget, we try to move machinery, miners and supplies as little as possible. This means that if we see geological indicia of gold in an area that's more accessible than previously identified targets, we follow up with detectors and drilling. If we get a good signal, we mine the area until we've run out of gold. Designation of new targets can also result from strong signals in unexplored but easily accessible areas - we never go anywhere in the mine without our metal detectors these days.


Here's a prime example of the way new information changes our mining emphasis. While two of our crews were cleaning up their last headings (drill sites) below the 800 level in September, Randy Yeager and his metal detector "Sally" were making their way back to the hoist through a previously unexplored area of the mine. They discovered a signal three feet off the rock - that is a signal so strong that Sally sang out even though she was three feet away from the mine face. Randy went back for drills and dynamite, started mining and found a significant concentration of gold.


Once the area had produced 200 ounces we revised our priorities to set it up as a full blown mining site. We've gotten 400 ounces out of the heading to date, and since exploration of the surrounding area has produced strong signals in an 80 foot radius, we expect to be mining there with a 2 man crew for the next 4 to 6 weeks.


None of the targets inventoried earlier has been crossed off our list. Although this may make our operations (and our newsletters!) seem less predictable, it is good news for the mine and for the company - instead of three or four promising areas, we now have 10 or 12. We still have confidence in the 1500 level (as well as our other identified targets), but we don't forget where those targets are located, either. The 1500 level heading, for example, is a real bear to get to - every piece of equipment and every miner trip costs us 30 minutes in and 30 minutes out. The Sixteen to One does not have "reserves" in the sense that the SEC (Securities Exchange Commission) uses the term, so we're always glad to take gold where we find it. A Whopper in the hand.....


Public Education Efforts

I spend a fair bit of my own time and some of the shareholders' trying to educate the public about our mine. The goal is not only to generate interest in the Sixteen to One, but to create a favorable climate for traditional hard rock mining. As part of this process, the Sixteen to One had exhibits at the Nevada County Fair and Sacramento State Fair in September.


The Whopper went to Nevada County, and created an enormous stir. Fair authorities told us our exhibit was the most popular in the fair, and that people were calling them and coming just to see our miners and our gold. Sierra County, which featured Sixteen to One gold at its State Fair exhibit, won six ribbons, including first place for county exhibit and best of show. Over six thousand people signed up to guess the value of our exhibited gold. Too bad they weren't appraisers instead of estimators - the highest guess for our $18,000 worth of specimens was $335,000. My favorite guess was "priceless".


The Sixteen to One presence at the fairs was made possible by the willingness of the entire crew to spend unpaid evenings and weekends staffing our booth. Thanks, guys.


Sincerely yours,


Michael Miller

2022 Original Sixteen to One Mine, Inc.