Does our company have the tools to excel as a gold producer?
Will our company profit and if so, what can its owners expect? Where are its strengths and its weaknesses? Can it overcome the weak areas? How?
Our crew [including officers, directors and a growing number of professional supporters] is discussing these questions and many others. The “growing number” is significant and is a key to our success. There are so many options or paths to travel towards achieving success. What is “success” anyway? To understand our choices it is necessary to under-stand our corporate goals for the company. If you understand these goals, you should know the role you want in our future.
I am not content or satisfied that all my decisions the past year have been the right ones; however they were the best choices when factoring the likelihood of success, the potential loss and the all important rewards. Our supporters remind me to focus on the goal, be patient, know what I want from each situation and be ruthless when necessary. This is what I remind the miners: Safety First, Quality of Work, Accountability, Responsibility and Efficiency. The miners are the ones whose work turns potential into reality. By adhering to my reminder, they will achieve our common goals.
Our corporation owns a number of gold mines, whose total gold production has approached 2,000,000 ounces. Are these mines depleted? We think not. Can our gold deposits be profitably exploited? We think yes. One goal is to increase production. Production last year was 1,725 fine ounces. We netted a profit of $399,863 and reduced debt. We invested the remainder of the money in the Sixteen to One mine. The Sixteen to One is our primary target; however, the goal is more than preserving the asset or maintaining its existence. The Sixteen to One is a unique operation. According to federal sources it is the only single product underground mine still operating in the West. We know that it is unique for additional reasons: the deposit contains very rich concentrations of gold; the existence of gold cannot be “proven” as in other gold mines but the location of “pockets” within the well- defined vein system is predictable.
The largest “pocket” found in the Sixteen to One was 83,000 ounces. It rested just below the 800-foot level between the 49 Winze and the Tightner Shaft. A careful study of the trends of “pockets” suggests a high probably that a larger “pocket” exists up dip and to the north of the Tightner Shaft. Our goal is simple: find and mine this “pocket”. This is our plan and this is what we work for: sink a new shaft in the Red Star and drift on the vein. It requires an infusion of major capital. The risks of mining in Alleghany are always present, but in this specific proposal the rewards are obscenely worth the effort. At today’s spot price of gold an 84,000 ounce pocket yields $35,275,000 (much more as gemstones). The estimated cost of the project is $3,500,000, which includes sinking the shaft, driving 1,000 feet of drift and opening the lengthy 250 foot level for drainage, ventilation and secondary escape way.
The Red Star is a legitimate target and one that has been written about by many mining men. Our goal is the execution of this plan. Raising the capital to complete the shaft project is challenging because of the many choices. But choices must be made and made now. Therefore, the board of directors approved the sale of our Brown Bear mine in Trinity County. I am not happy to sell the Brown Bear mine. It was my hope that our mining would produce the capital to sink the Red Star Shaft; however, mines are not built on hope.
On a much different yet related subject, the Company is aggressively pursuing its claims for damages against the four lawyers and their employer, California District Attorney Association (a nonprofit California corporation) who prosecuted the heart of our company.
Not only did they prosecute to put our two main employees in prison, but also prosecuted to put our company out of business. The consequences of their actions made it impossible to attract investors to supply the working capital proposed to sink the Red Star Shaft. Their illegal, false and negligent behaviors have significantly tainted our reputation. If you were able to follow the case on our website or in the newspapers, you will remember that I estimate the loss to you and me as shareholders is $2 per share. This reasonable estimate adds up to $25,734,500. None of the defendants have this much money, but Lloyds of London does.
Another relevant subject is finding a suitable marketplace for you to increase or sell your ownership in the company. The OAU X-Mart (web site) has provided sellers and buyers a fair market. We do not pretend it is liquid, nor are we suggesting it is satisfactory. A goal is to find a mainstream marketplace. A summary of recent transactions is included in this report.
The last goal to mention today is our desire to see you at the annual shareholder meeting this year. Unless you read the entries at www.origsix.com, you know very little of past events. Last year was the poorest year for direct communications from the company. I apologize without excuses and pledge it will not be repeated again. I recently found a new way to reach you and am anxious to put it in place to see what you think and evaluate your reactions. Join your crew this June in Alleghany and learn why we anticipate a profitable and rewarding future. We have planned a new walking tour of the active headings. You will be thrilled to be a part of America’s oldest gold company and see its underground operation.
Michael M. Miller,