Historically, mining was separated into four distinct areas: Prospecting, Exploration, Development and Production. Years ago a fifth area emerged: Reclamation. Miners and companies were sometimes classified according to these activities. For example, an exploration company operates without the expectation of revenue from the mining and sale of its commodity. Their income comes from stock offerings. Our company never held a public offering and has relied on mining gold for operating capital.
Financiers, shareholders, regulators and investors pay attention to the differences in the above classifications. Much was written about “exploration” during the last bull gold market. Many small exploration companies could only tout their value, real or fictional, through repeated press releases based upon potential results from drilling programs. Pure speculation! I rarely read a detailed report that projects the necessary infrastructure and costs required before the first ounce of gold is poured. By studying the whole picture, persons can deduce reasonable monetary needs, a time line for a return and more.
Mining companies present cost analyses in a different way. Reports cite reserves as the potential or likelihood of future revenue. These reports have definitions of reserves that truly boggle the mind. They include: proven, probable, possible, inferred, indicated, and a resource, the weakest classification. A “resource” is too vague to meet the criteria for reserve status; however many exploration companies lump all their mineral occurrences as Reserves. It flatters the operation. We do none of this. The Sixteen to One does not meet the standards, which makes us an oddity.
Another required analysis for evaluating a gold mining company is based upon mineral resource potential and certainty. The level of resource potential expresses the favorability of the area for a given resource; the level of certainty indicates the confidence with which the level of resource potential was assigned. Too frequently, a junior company (even some of the large gold companies ignore this disclosure) fails to discuss the economics of mining. I’ve read many news releases that praise the mineral resource and ignore reality. Any mineral resource must be a concentration of material of intrinsic economic interest with reasonable prospects or expectations for eventual economic extraction. Simply this means the miners must get the stuff out of the ground and into the market at a profit!
Essentially, once a deposit is elevated to proven reserve status, it is an economic entity and an asset upon which loans and equity can be drawn—generally to pay for its extraction at (hopefully) a profit. Minerals are perhaps the most global commodity of industry. The analysis must include: economic factors, environmental factors, marketing factors, legal factors, political factors, and social factors. The Sixteen to One deposit earns high marks in all categories. Yes, even environmental in California, the most hostile state for industry in America.
Public awareness of mining has increased because of high profile mergers and acquisitions, the consumer demand from China, India and others and consequently higher commodity prices. With increased awareness comes concern about where future supplies of metals and minerals will come from. Can supplies be maintained and increased? What damage will this cause to the environment or to communities affected by mining? Not only are mining companies having to get better at estimating and reporting their mineral assets, they need also to explain how these assets will be mined and what the impacts of the mining will be, both positive and negative, so that the needs of all stakeholders can be taken into account. Minerals company managements like to know what the potential of their company is or when their exploration target might be getting weak.
Again, we are an oddity in the gold industry.
The following news release was issued on February 11, 2013. Since then we have made several discoveries and yes, the new detector identifies gold:
“Maybe this will be the technological breakthrough anticipated since metal detectors were first used underground,” said Mike Miller, president of the nation’s oldest gold mining company. “We’ve been quiet for too long, dealing with uncommon sense interferences from both federally employed people and by mean spirited California water regulators”, added Miller. Original Sixteen to One Mine, Inc. became one of 500 one hundred year old US companies and its Sixteen to One mine in Sierra County is the longest operating gold mine in North America.
The company recently completed negotiating a service agreement with Quartzview Corporation, a technology start-up company. Quartzview is a developer of deep sensing technology. Its objective is to develop and demonstrate the ability to detect the presence of gold. The corporate founders mined Silicon Valley for high-grade engineers with both hardware and software skills to develop its technology. Miller remains cautiously optimistic. “Ground Penetrating Radar (GPR) has proven its ability to penetrate and return a signal well beyond ten feet. We know our mine well and will work with Quartzview to fine tune the software to distinguish gold from other occurrences,” Miller mused.
Work is proceeding in the mine with a device invented in Germany but with a software program created in Silicon Valley specifically for the Sixteen to One. I will provide you with details at the Shareholders Meeting on June 15, 2013 in Alleghany. For the thirtieth time, I humbly accept you trust and confidence that this old mine is an economic winner and our crew will deliver the goods.. Please come to this year’s meeting and see for yourself.
May 14, 2013
Michael M. Miller, President