For the past six months my letters to you have ended in a pile of unsent drafts on my desk. Company needs or circumstances have interfered with their completion. Both good and troubling events have happened since June. Instead of detailing the past six months, I will touch upon the many topics surrounding our company.
The shareholder meeting in June was a success. Everyone pitched in and made the day at the mine another memorable event. Shareholders were treated to two live musical performances in the ballroom. Charlie Brown, Sandor Holly and I welcomed Scott Robertson as a new director. Scott, a Certified Public Accountant, helped me audit the corporation in 1983, when I regained the presidency of our company. Retiring director Richard Sorlien was acknowledged as the company’s first Director Emeritus. Dick’s decade long association with the mine contributed to developing a professional corporate integrity seldom found in small public corporations. We also owe great appreciation to Leland Erdahl, director since 1992, who withdrew his nomination for re-election. Lee brought a broad corporate awareness into our activities. Thank you, Lee.
In August the Company completed its purchase of the entire mineral rights, a twenty acre patented claim and the on-site mill and equipment of the Plumbago mine in the Alleghany Mining District. The Plumbago is the second richest gold producer in the district. The Sixteen to One is first. The long time family owners are as excited about joining our company as I am in having the opportunity to mine the “Plum”. The purchase price was 50,000 shares.
The timber harvest plan for Alleghany was approved on August 24th. Harvesting began immediately which generated gross revenues of $494,741. Timber receipts and gold sales created third quarter positive earnings. Due to weather restrictions, logging ceased November 15th. The timber harvest plan for the Brown Bear mine was not submitted for approval as initially represented by the contractor; however, it was approved on October 18th. The Company was unable to get competitive bids on the logging in time to commence operations. Logging will begin after the spotted owl nesting in June.
The Company rehired its core group of employees on October 3rd. There are sixteen full and part time people. It is a well-rounded, capable and motivated group. Wish us luck. The primary underground activity is driving a raise between the 1700 foot level and the 1500 foot level in the central portion of the mine. Before the layoff in February, the underhand stoping below the 1500 foot level was our hottest prospect…over 500 ounces recovered. We are approaching this area from below, averaging between 25 – 30 feet per week. Secondary activities include clearing the old twenty-one tunnel and renovating the Tightner Shaft from the 1700 foot level to the water level just above the 2400 foot level. Our goal is to de-water the mine to the 2700 foot level in order to metal detect the existing workings. The crew will also evaluate the potential of the lower levels. No one has been down there for fifty years.
The Company began to feel the effects of a new attitude of the Mine Safety and Health Administration (MSHA), the government’s health and safety regulators for the mining industry. Enclosed is a letter I wrote to our Congressman. I enclosed it because I want you, as owners, to get involved. I would appreciate it if some of you would step forward to actively help me protect and preserve our right to mine. Our crew is 100% behind the effort. The crew is 100% against the current activities of MSHA and feel their health and safety have been compromised.
In a gold market that is severely depressed, our company has been crippled but fundamentally is as strong as it has been since I became its president in 1983. There are many paths to follow in the near future. We continue to be desperately low on operating capital. It has been much worse, however. Nevertheless meeting the financial requirements of our scaled down operation is a challenge.
Quick notes:
1. John Scully, our specialist since 1989, retired. We are serviced by an agent for Wedbush Company on the floor of the Pacific Exchange.
2. Ian Haley, superintendent since December 12,1996, took a leave of absence in May. He elected not to return to work for the company. Jonathan Farrell, who hired on in 1994 and was promoted to superintendent, is the current mine manager.
3. Shareholders and directors who loaned the Company $300,000 in 1998, agreed to convert their loans to stock. This reduction in liabilities and a pay down of $100,000 on our bank line of credit has substantially improved our ability to operate.
4. Directors have not taken any cash payments for almost two years. I have not had a regular pay check since February 12, 1999. A couple of shareholders asked about this so I thought I would let all of you know.
5. If you have a Sixteen to One file, go back and read about mining the “Wild Card” heading on the 1500 foot level. If you use computers, continue to check our web-site: www.origsix.com. Updates went dormant for awhile. We just resumed maintaining the site.
6. The Sixteen to One mine was featured in the January 2000 issue of Rock and Gem Magazine. One story covers the company and the other tells about two of our rock carvers. It is worth finding.
Thank you for understanding the pressures we have endured. Of course there is something that each of you can do to help. Just let me know what it is and how I can assist you. There has never been a more dedicated core of Sixteen to One personnel. We know what needs to be done underground and intend to return the company to profitability. All of you have a great holiday season. One year ago our company appeared so fragile to some that I was questioned why we reserved the Miner’s Foundry in Nevada City for December 17,1999. We will have a party and all of you are invited. We are looking for food and craft vendors to attend and talented entertainers to join the party. Call for details. Our gold jewelry will be on sale. There will be live music and a live broadcast on KVMR FM radio. By the way, we reserved the building for 2000 as well.
Sincerely yours,
Michael Miller