Once again the time arrives for news from your gold mine. A year ago I wrote of three goals for the 2014-15 year: lower the present water level; remove blockages to access gold targets; work with a non-affiliated “high-tech” group to find a 21st Century detection system for our mines. The water level is about 400 feet lower than it was last year; the crew is preparing a detailed exploration operation in a previously blocked vein; the detection company has the hardware to see into the quartz greater than at any other time. Understanding what we are seeing remains unclear; now software interpretation is the focus. Step-by-step the obstacles are disappearing.
On June 20, 2015, our annual shareholders’ meeting takes place in Alleghany. There are no good or bad surprises to announce. The Underground Gold Miners museum is holding its annual gold specimen display that weekend.
One noteworthy event is our acquisition of a new gold detector from Australia. Promotional material claims a 40% increase in depth from prior models. In February the crew incorporated this tool into our detailed exploration program. Early results prove that the depth has increased. Where to explore is decided by historical production, geology and detection. This new Mine Lab detector gives us a fresh look at the vein throughout the mine. I am cautiously optimistic. Most every person familiar with this mine knows that more gold remains unmined, but where is it?
That nasty overhanging California water agency lawsuit settled on February 11, 2015. The government sought over $2 million for not filing thirteen test reports. The issue was never about pollutions or environmental damages. We settled for $234,000. I was not a happy miner. The agency ignored notifications that milling ceased in 1998. The time and expense for 1,460 annual tests became unmanageable. The agency denied repeated requests to change our requirements. Our attorney said to take the offer: lack of funds to continue the lawsuit.
The Alleghany district has long been famous for the high-grade gold ore of its quartz veins. Nearly all the production is obtained from small shoots. Owing to the particular type of ore prevalent, production is irregular. Due to a scaled back crew, the odds of mining those gold pockets have grown against us. Something must turn this around. Half our crew is attending the detection program. The other half is working on projects to open new areas for exploration. No one is mining for gold. This must change. The cure is to increase efficiency and in a miner’s words “break more rock.” How shall we do this? We must expand the crew, purchase supplies in volume and hire a couple of top maintenance men. Outside capital makes this happen.
The price of gold remains reasonably high for profitable mining. I’ve considered the likelihood of mining our way back to profitability. It is possible, but other options exist: sell stock through a private placement, offer gold futures below spot price or joint ventures creatively designed to meet all party’s needs. Money equals a shorter time to find that magical pocket of gold. We will, therefore, “break more rock.”
Our industry (as many others) is experiencing a lack of skilled employees. Reasons vary. While our crew is small in numbers it is large in background, experience and training. One other important factor stands out. This crew is highly motivated to succeed. We accomplished much last year; however, we define success as producing gold. You should expect it in the coming year.
The four following pages are worth reading, which is why they are printed in the Annual Report. It is background material for others to evaluate our Company. A financial lift does wonders to achieve our success. Suggestions are welcomed. Frequently people ask, “Why do you stick with this gold mining business?” I reply that my confidence in the richness of our mines has never wavered over forty years. I sometimes mutter to myself this quote: “You may be deceived if you trust too much, but you will live in torment if you do not trust enough.”
Michael M. Miller, President
April 30, 2015