Dear Shareholders,
What a wealth of fact, fiction, poetry romance and deceit has been built around the thought conjured up by that simple word gold. When I began my journey with this old gold mining company in 1974, overriding facts convinced me the pursuit was a rock solid choice. In 1974, who was thinking about gold mining? Few, if any were, except the historic management and shareholders of Original Sixteen to One Mine, Inc. They owned the longest surviving producing gold mine in the West: the Sixteen to One.
I thought, “There must be reasons why the owners kept the property and corporate organization. There must be. Why did those generations hold their belief and trust in the last mine standing?” I decided to give the pursuit five years of my life to find the answer. The answer was a simple word: gold. It still is in 2017. Mining has proven our wealth and value. Our assets, opportunities and potential continue to increase. Unfortunately, accounting rules and an illogical share trading market called “Gray Market” cast a false value of our assets as dollars on the enclosed balance sheet.
In a state where gold is a proper and popular noun, adjective and adverb, hard rock gold mining has ended, except for us. Once again Sixteen to One is the last mine operation standing. Last year our net profit was $610,160 or $0.04 per share. This is nothing to brag about but a positive indication of our direction. My belief is: gold drives the operation. The crew remains small (ten). We are very aggressive in attacking the issues before us; however the goal is only one: gold.
The theme for the present and future: Everyone is right some of the time. No one is right all the time. No one has made “it” without someone. If you have never been to Alleghany, now is a great time. In 1983, the annual meeting moved from San Francisco to Sacramento, then to Alleghany, home of our mine; so all shareholders can visit the mine and kick some rocks. Three underground locations will be available for your inspection. The gold tent will be open with a variety of items to purchase or just admire.
Our crew began a tough but significant project last December: reestablish the 49 WINZE for mining. Crumpled stairs and ground support, failed electrical switches, transformers and wire, dilapidated compressed air and water lines faced the miners. The 49 WINZE, access to the southern levels (of the underground), is a vital component of mining. It became a victim due to depreciated gold prices over a decade ago. The task seemed an overwhelming head ache to even think about its rejuvenation; but we did think about it and decided to risk our profit here. Why is our future tied with the 49 WINZE project?
The Company has two new gold detectors with proven successes of identifying gold in quartz previously undetected with older models. Our miners stopped working in the deep levels due to uncontrollable economic changes. It was not the absence of gold. I saw multiple areas with visible gold targets now below today’s water level. Our current inventory (gold) gives me capital and confidence: we will be walking on the 1500 level by June, the 1700 level station will be renovated by August and the 2200 level will be dry by December. What jump-kicked this project over other great targets (see Ray Wittkoppp’s memorandum) is the possibility of pumping the 3000 level. No one has walked this level since 1939. This is iffy, but this deepest working could be detected by June 2018. The 49 WINZE also satisfies federal requirements for a second exit for miners, which influenced my decision to renovate.
Last year besides mining gold and maintaining or repairing infrastructure, I confronted regulatory drama with tools of reason and common sense. Two giant, harmful distractions remain but are disappearing: improper federal enforcement by Mine Safety Health Administration (MSHA) and California’s misguided water public servants. Inspectors with little or no underground working experience descended onto our property, wrote citations without the experience to evaluate what they were seeing. Regulating government agencies cost us dearly in time and money over the past twenty years. Some consider these main problems for miners. Others consider them the price of doing business in California.
What about water? California is nationally known for its environmental hostilities towards business. The mineral and timber extraction businesses became easy targets. Our operation does zero environmental/public harm, zero. Sixteen to One water has minerals naturally because the entire watershed and Kanaka Creek are mineralized. Water passing through our property has no adverse effect on any beneficial use downstream. Outright reckless enforcement by some Californian public servants is shifting towards reason. Top water consultants are working with us and regulators to fix problems. Indeed it is an exciting time.
Some shareholders want the opportunity to cash out some shares. I support this desire. Historically, promotion is part of my job. I look forward to the time when spending money on stock promotion is the right time. With two consecutive profitable years, improved relations with regulators and the significant underground improvements over the past ten years, we are an attractive new investment for anyone without a gold position.
The term capital allocation refers to how a company spends its money. For example, it can pay down its debt, pay its shareholders a dividend, buy back some of its shares, buy another company or use it to further its own growth. The money should be spent in the most productive ways. When a company’s capital is not allocated effectively, it’s wasted and that hurts shareholders. The past four years we have allocated our capital to further our prospects of mining gold. How? Infrastructure and accessibility to five high-ranking targets. Gold drives our operation. Its strong price is a bonus we cannot influence, but we have taken advantage of it. Sixteen to One gold ranks at the top within the jewelry businesses and we actually mine the stuff.
Earlier I wrote, “The theme for the present and future: Everyone is right some of the time. No one is right all the time. No one has made ‘it’ without someone.” Your help will help the Company make ‘it’ a reality. With 1600 shareholders receiving current information, you are or may know that “someone” interested in participating in our future. My point: someone exists with the mind set and resources to join us in advancing these goals: mine lots of gold from our exceptional properties, keep the gold mining tradition alive, strengthen our domestic economy, improve national security, provide great jobs, pay a dividend and increase our appeal for promotion. I doubt there is another junior gold mining company with better untapped targets and therefore potential. Our asset is gold. Please help that "someone” find Original Sixteen to One Mine, Inc. I pledge to work with that qualified “someone” in negotiating an agreement that benefits each party: our shareholders and the new investor.
Best wishes and thank you for your support during the past years. Come see the mine this June 17th.
Michael Meister Miller, President and Director
April 22, 2017