The following story appeared on the front page of the business section.
A legendary name from the Mother Lode’s gold-mining heyday is back in business, expects soon to be listed on the Pacific Stock Exchange and has some other glittering expectations.
Original Sixteen to One Mine Inc. owns or controls several adjacent gold mines near Alleghany, a tiny community clinging to the Sierra foothills about 40 miles northeast of Nevada City.
The corporation has Sacramento connections. The president and chief executive officer is Michael Meister Miller, a descendant of the Meister family that once manufactured horseless carriages here and later switched to auto sales. Attorney Brian Van Camp is the corporate secretary and a director.
When the original Original Sixteen to One Company operated from 1896 to 1965, its six-mile vein system produced more than 1 million ounces of gold. So how much gold could be left?
Plenty, says Miller.
“Geologists think about 20 percent of the (company’s six-mile) vein system has been mined,” he said. “That leaves a lot.”
Ore from the area is “very, very rich,” said Miller. “There are only four or five places in the world that have gold like the gold from the Alleghany mining district. It goes to 2 to 3 ounces a pound (of ore), like 4,000 to 5,000 ounces a ton.”
Miller said the firm is only now reaching the point where it can begin mining. But an outside firm that leases two miles of the six-mile vein system is already operating and doing well.
In one recent month, the lessee took out about 1,600 ounces of gold, worth about $700,000, Miller said. The lessee pays its landlord a 10 percent royalty, he said.
Original Sixteen to One Mine Inc. has spent the last several years doing “pre-mining” work in the long-closed mines, which have a total of 25 miles of tunnels. Preliminary work included pumping out millions of gallons of water, retimbering some walls and ceilings, and getting old machinery into running order.
There also was the problem of finding or training people to do the grueling, sometimes dangerous work. Original Sixteen to One Mine now has 70 employees.
Some might jest that the firm now has an even more laborious task—working with the Securities and Exchange Commission to pave the way for the stock listing on the Pacific Exchange. The planned ticker symbol is OAU. The O is for the firm’s name and AU is the elemental symbol for gold.
The Pacific Exchange already has agreed to list the stock, although the mining corporation doesn’t meet the exchange’s usual requirements for the number of shareholders, net worth and profit, Miller said. “We’re way off on their standards on all three criteria,” he said cheerfully.
An exchange spokesman in San Francisco said “it’s not unusual” for the exchange to accept a company that doesn’t meet the criteria “if it looks like it’s in good shape. I’m told the listings committee—because of the long operating history and high-caliber management – thought it was a good stock.”
Miller said the firm previously had stockholders only in California but several years ago set out to broaden its investor base. It now has 350 stockholders in 26 states, with 2.4 million shares outstanding. It has no debt, Miller said.
The firm last year used a private placement to raise $430,000 in development capital and currently is offering another small placement of 77,000 shares to raise $162,000. “I’m really not looking for a lot of investors right now,” he said.
But eventually, as operations expand, the corporation may make a public offering, he said.
“The reason for going public and for getting listed on the Pacific Exchange is to look after the shareholder,” Miller said. “If shareholders need to sell their stock to raise money, it gives them an opportunity to get fair value. And if we decide to raise money through a stock offering, it gives our future buyers a better chance for a return than if it were just a non-traded company.”
Also, a listing on the Pacific Exchange “will open us up to the small guy,” he said.
The firm has not yet paid a dividend, but said Miller, “that will happen. I don’t think it will happen next year, but I am sure it will the year after.”
“We have no doubt of our success,” he said. “Our company was a dividend-paying company for years and it paid about 45 percent of its gross in dividends.”
Miller is bullish on gold mining and says that many Californians have misconceptions about it as an investment and an industry.
Potential small investors either shun gold because they don’t know how to evaluate it as an investment – or they fall hook, line and ingot for a sharpie’s promises of sky-high returns, Miller said.
American business also shies away from mining, but foreign firms are rushing to buy up U.S. mining properties, Miller said. “We’re being inundated by Canadians, Australians, Swiss, Japanese, he said. “They’re coming in and buying our mineral properties.”
“There’s also the perception of mining as detrimental to the environment, which is totally false,” Miller said. With underground mining, done with drills and explosives, someone up on the surface “won’t even know there are people down there working.”
Before it was forced to close in December 1965, the Original Sixteen to One Mine Corporation was the only operating gold mine in California and was believed to have been the longest, continuously operating gold mine in the West and the only operating gold mine left in California.
It had kept going even during World War II, when nearly all gold mining ended because men and explosives were needed for the war effort.
In 1965, the mine fell victim to simple economics: It cost $50 to extract an ounce of gold, then worth $35. (Gold currently trades for about $415 an ounce.)
The company – the little Sierra County community’s only major employer – fought to survive. It made one last, vain effort to raise operating capital by auctioning a collection of “irreplaceable” gold and quartz specimens, then worth an estimated $6,000 at $35 an ounce.
Original Sixteen to One was closed about a decade before a lessee began limited mining operations.
Miller, previously in construction, restaurant and entertainment businesses in Southern California and in Davis, got involved in the corporation in 1974 at the suggestion of his father, Dwight Miller. A stockholder since the 1950s, Dwight Miller was one of several stockholders who wanted to see the firm back in business. Originally incorporated in 1911, Original Sixteen To One Mine Inc. was reactivated in 1977.
The corporate nave dates back to the discovery of the rich vein in 1896. That’s when presidential candidate William Jennings Bryan was campaigning in favor of unlimited coinage of gold and silver at a ratio of 16 to one.
Original was added later, after other mines also claimed the “Sixteen to One” name, Miler said.
By Marguaret Peterson
Bee Staff Writer