Letter to Shareholders
The most significant development in our company since the last newsletter are reflected in two distinct areas. First, lengthy and necessary lease negotiations were concluded with our current lessee. Second, thirteen shareholders who are closely identified with past policies and attitudes sold their interest to mining individuals from the Midwest.
Granting rights and performance conditions in the sequences of leases beginning in 1974, have been strengthened and clarified. Minimum dollar payments have changed from a single annual payment in December of $25,000 to quarterly payments totaling $60,000 per year. In 1986, minimum annual payments shall be increased to $120,000 with an additional increase to $180,000 in 1991. We established a gold clause if the lease is to be extended beyond twenty years.
Professional and recognized standards of performance are included throughout the lease. Milling tonnage was established quarterly. This will prod the lessee to produce enough ore to insure emphasis on underground development. Both sides agree that the document should serve us well in exploiting the mineral potential we believe exists within the property.
At our request, Lucky Chance Mining Company ahs changed the name of its wholly owned subsidiary, Sixteen to One Mining Company to LCM. Although the leased premises are mutually called "the Original Sixteen to One Mine," there should be no more confusion about who is who. This was a particular thorn to many shareholders, especially when the Sixteen to One Mining Company was in the federal bankruptcy court in Reno, Nevada. We are happy to inform you about the survival of Original Sixteen to One Mine, Inc. and the demise of Sixteen to One Mining Company.
The Robert McMahan interest apparently negotiated the transaction to sell its holdings in Original Sixteen to One Mine, Inc. (approximately 10%) as long as the offer to purchase was extended to relatives and friends. Included as sellers were several Wells Fargo trusts and Robert Maxfield. The sellers consistently opposed our concepts and proposals to redirect the company. To illustrate this point, they opposed all three proposals presented to shareholders at the special meeting January 17, 198. Even the innocuous motion to change the annual meeting to a convenient summer date failed, due to their collective position. Seventy seven percent (77%) of those who voted approved the idea.
In light of the sellout by these shareholders, and after checking the position of the new shareholders, the board of directors decided to set the next annual meeting on June 15, 1984. On Saturday, June 16, 1984, we will hold an open inspection of our assets in Alleghany. Shareholders able to attend will gain a greater perspective on judging the value and potential of our company. We anticipate this becoming an annual tradition.
The drive from Sacramento to Alleghany is about 2 1/2 hours…paved roads.
Overnight accommodations are available in Nevada City and Downieville. In Alleghany the Golden Eagle Inn and Kenton Mine Lodge have rooms. Reservations should be made in advance.
You will notice that the incentive stock option plan for officers and employees and approval of updated and revised Bylaws is before you again. We encourage shareholder approval of both these proposals in order to keep our company aggressive and competitive in the mining industry.
ACTIVITIES IN ALLEGHANY
LCM completed the new main haulage way earlier this year. Geologists have been carrying on a gold evaluation program in the pillars and stopes above the drain tunnel. LCM reduced its manpower in March to eight. In March the mine and mill produced 22 oz. 18pwt. of gold. Of special interest were several pieces of "high-grade" that could be considered specimen pieces. The un-watering program is maintaining the water at the 1300' level.
LCM management has decided it needs to raise additional capital to develop the mine. The method of recapitalization and amount are unknown at this time. Mr. Del Marting assumed the position of president in January. It seems the biggest problem before Mr. Marting revolves around preparing a workable mine plan suitable for the Sixteen to One and then locating the funds necessary to execute the plan. Even then success hangs upon a professional business-like execution of the development plan.
Michael M. Miller