I am so happy to sit here and write a real letter to you.
The Internet is a blessing and a curse for most of us senior folks. Our website, which I continue to encourage you to visit frequently, has preempted the newsletters. Except for legal or special news and information, I can give you the everyday facts about the Company’s affairs online.
Over two hundred of you have registered on our website to receive e-mail updates. (Go to “Register” at www.origsix.com) When we post financials or have extraordinary news, you get a notice immediately. There seems to be a small unfairness to this electronic business, which is the curse. The blessing is we can now broadcast routine yet important information without the expense of printing, postage and time. I do miss writing you because I got to know so many of you before the Internet became a way of life. You have told me how much you enjoy hearing about the mine, which in turn encouraged me to write you letters. Well, an occasion arose that demands a letter.
A shareholder called last week, who is very supportive of Underground Gold Miners Museum (UGMM: struggling nonprofit corporation founded in 1995). He proposed to donate $20,000 to the museum to purchase one or more gold specimens from the mine with the idea of getting matching funds. He sees this as a way to support the mine, get a tax write-off and ensure that a portion of the unique gold specimens mined in Alleghany remains here. Rae and I are touched by his graciousness. The museum was a dream. It became a reality with a heavy cost in both private support and time. This offer brings tears to my eyes. It recognizes the importance of preserving and enhancing both the history and culture of hard rock gold mining. Also, it presents the importance of mining to California and America. I ask for your participation.
For those of you who do not follow the Forum on our website here is an update of operations at the mine. Since January of this year the miners have been working on clearing a cave-in on the 1,000-foot level just north of the Tightner shaft. This will open up an area that has not been readily accessible since before the use of metal detectors in the mine. This large block of ground is directly below a productive area on the 600-foot level. We like its potential.
Clearing the cave-in is taking longer than expected. “Muck is slopping onto the level” as one of the miners put it. The miners are spiling, which means to drive timbers ahead of an advancing tunnel through treacherous, loose, watery ground.
In addition to the crew clearing the cave-in, we have two to three active headings off the 1,000-foot level where miners are looking for gold. Small amounts of gold continue to trickle in, but so far results are disappointing. In order to improve efficiency the miners’ change room (“Dry”) and mine-site office are moving to the building near the Portal. Work has been intermittent due to higher priorities.
Most of what the miners and staff are working on is quite positive; however some unpleasant things in the past have haunted our cash flow. Our miners have not been able to take on gold targets requiring significant capital expenditures and time. Economically speaking, we are failing in the theory called “dynamics of scale”. We have too few miners breaking too little rock to meet our historical production figures. Fixed overhead plus the current expenses of mining have been greater than revenue. Does that make sense? We need more miners breaking rock in virgin areas of our property. Our gold sales are great. Demand for jewelry-grade material is high. We are selling our gold inventory into a very solid gold market both for jewelry and bullion. The gold bear is dead and the gold bull is alive. The operation needs working capital to enhance its options for success.
These problems are not new. The company never stands still. We wither at times. We blast our way into posterity. It has happened over the course of three centuries many times. One of the historical facts that I learned thirty years ago was how management controlled its finances. They were successful. I use our ancestors’ philosophy of gold mining just as lighthouses mark the way for ships and sailors.
The shareholder who is putting up $20,000 believes the museum is important today and likely will be more important for our children, grandchildren and everyone who has never touched the experiences of gold. Let’s meet his goal of matching this generous donation. Checks should be made out to: UGMM and sent in the enclosed envelope. This offer came out of the blue; however the Company is offering the entire one hundred piece gold collection to anyone who can keep it together. The price is $3.5 million and includes the star, “The Whopper”.
I’m sure you must realize how exciting this is for us and how important it is to the museum, the company and the mine. The museum is a 501 (c) (3) non-profit California corporation, donations are tax deductible to the full extent allowed by law. Original Sixteen to One Mine Inc. is also a California corporation, but it is definitely organized for profit. If ever there was a win-win situation for shareholders, this is it.
Michael M. Miller
P.S. Annual meeting scheduled for Saturday June 23rd. Details in May. Hope to see you.