Original Sixteen to One Mine, Inc.
KNCO Radio Interview on March 7, 2006
HOLLIE: Hi, Thanks Mike.
Hollie Grimaldi-Flores and Michael Miller
Weíre ďOn the Town In the TownĒ in the studio at KNCO right here in Grass Valley. I have a very special guest today I am excited to introduce to everyone. From the Original Sixteen to One Mine, the Director, President and CEO, Mike Miller. Welcome Mike.
MIKE MILLER: Hi Hollie, Iím glad to be here.
HOLLIE: Thanks for coming. Obviously mining right now, has been in the news quite a bit and before we get started talking about the oldest running gold mine in the United States which is the Original Sixteen to One Mine, I want to talk a little bit about some of the differences between coal mining and gold mining. So can we talk just a little bit about whatís been going on in West Virginia before we get started?
MIKE MILLER: Sure, Iíd be happy to. There is a tremendous amount of difference. Although I think there is a brotherhood of mining like there is in any type of trade or profession but the first most obvious one is that the coal mines are considered whatís labeled ďgassyĒ, and the mines of the Sierra Nevada which would include the mines here around Grass Valley and the mines up in Alleghany and all of the Mother Lode are ďnon gassyĒ mines. That means that there is no, there is really not a natural build up of methane or of any other type of hazardous gas.
HOLLIE: Obviously in both types of mining you are underground, so if you are far enough back in the tunnel, if there were - heaven forbid, some sort of collapse would that same issue happen with the carbon monoxide? Would that be an issue?
MIKE MILLER: Not really, throughout history of the west, the mining in the west, there have been several fires that have changed the method of safety control but the real - the harm that occurred back in West Virginia is really unique to coal mines. If we have accidents, and I think thatís what, Iím keeping an open mind to this right now. I believe that it was a very tragic accident. From what Iíve read and I think that everyone should keep an open mind until we can have more, really information from the investigators. But if we had a situation out here it would be completely, completely different. Iíve wondered a little bit of what went wrong with the rescue back there because we had a happy experience in mining a few years ago, if you remember?
HOLLIE: I do.
MIKE MILLER: Was it twelve or thirteen men were trapped well below the surface and I thought it was incredible that the mining industry was able to get those fellows out by drilling holes. Locating them, drilling holes, providing the air and the support to get them out. It was really quite an emotional episode in the U.S. mining history.
HOLLIE: Right and I would think that you said a brotherhood amongst all miners whether itís gold or coal that Iím sure you were watching that with a special interest.
MIKE MILLER: I donít have a television up in Alleghany, but I just happened to be around a television set that night when they came out Ė when the happy event occurred. And was watching live and it just made my eyes tear up. It was just so emotional. The industry itself last year for example 2005, there were I think it was either 22 or 25 accidental deaths in the mines. Mining itself is a very very heavy construction. In it the miners have quite a variety of skills - they have to handle explosives, understand the pitfalls of hazardous situations. In fact itís I kind of say like if we were evaluating NASCAR drivers today we probably would eliminate the races. But - or the one thing I read in the newspaper when the first disaster, then this last disaster came out. It said that I think that in the last ten years 22,000 cheerleaders had gone into emergency wards for accidents in cheerleading, so for 22 or 25, Iím sorry I donít remember which it was, but it was a very low number of accidental deaths in the industry. I would consider it a very very safe industry for heavy construction.
HOLLIE: And that is interesting. I think that is interesting because as you say the perception is so dangerous but statistically what you are saying is that it is really quite safe in the overall scheme of things.
MIKE MILLER: No Iím saying it is quite dangerous.
HOLLIE: Oh, okay.
MIKE MILLER: I think itís very dangerous. I think itís dangerous to be a professional quarterback with three hundred pound guys running in there and trying to knock your head off too.
HOLLIE: True, true. But with the right precautionsÖ
MIKE MILLER: Um huh, and training, background, experience and training thatís what it takes. And then a cooperation that I think will - to me the mining industry of most of our industries that we have in the world today is probably the most misunderstood industry. I just happened to get into it by chance thirty years ago and I knew nothing about it prior to that but Iíve been a student and a practitioner in the trade now for about thirty years.
HOLLIE: Well that does bring me to the next logical question which is how did you become involved in gold mining yourself?
MIKE MILLER: It was really two pronged for me. It was two pronged. What I didnít want to do and part of what I wanted to do. But I didnít know what I wanted to do but I knew what I didnít want to do. I had graduated from UC Santa Barbara in 1965. I grew up in Sacramento, born and raised in Sacramento. Iím a fifth generation Californian so Iím pretty familiar with northern California. Even though Santa Barbara is a beautiful place I couldnít wait to get out of there. I wanted to come back to northern California and get involved in something that was more into natural resources or farming. I did stay in business in Santa Barbara for I guess it was ten years after I was graduated from the University.
But my Dad had owned some stock in this old company called the Original Sixteen to One that he had bought in the fifties. He knew I wanted to get into logging or farming or I never even considered mining because nobody was doing any mining at that time. We came up to Alleghany and took a look at it. This was before gold was decontrolled. I was an econ graduate at the university and even going thru all of my history at school I didnít realize that the United States government had frozen the price of gold in 1934 and made it illegal for Americans to own it. I either missed that in my classes or elseÖ
HOLLIE: I missed that somewhere.
MIKE MILLER: Well I found a lot of people really had missed it. We missed a lot on those issues, but it was right in a very very exciting time because there was a lot of smuggling going on. I think with gold going to Mexico, going to other places and the United States government was trying to keep it the same price. Here in Grass Valley there is tremendous gold potential and there was a tremendous history so the local newspaper was picking up on this and it was just actually December 31, 1974 that the price changed and I had come up to the area in, actually in October of í74. So I went back to Santa Barbara and asked my econ accounting teacher who introduced me to the geology teacher about, ďIf gold is decontrolled where would you go and what would you do?Ē He said well the Sixteen to One in Alleghany would probably be one of the first spots that I would take a look at. Thatís how I ended up here.
HOLLIE: You had the interest. Rather quickly then after that you became a Director and President and then in reading a little bit I found that there was a coup d'ť tat, could you tell me a little bit about what happened when you were originally running the mine.
MIKE MILLER: Well when I originally - I did whatís called a proxy fight. It took basically eight years but I was elected President and the existing owners were very wealthy people and they were second or third generation heirs of their founders since the company was located in well - the mine was 1896 some of the claims go back to1858. So there is a long history of these people and for some reason they didnít want a young guy like me coming around asking a lot of questions so there was great resentment. And one by one I would just pick them off. Got in there in 1979 and one of the fellows I put on the board decided to vote against me and they elected him President so I was the victim of a coup in 1979, but licked my wounds and got back in 1983 and I took it over for good then.
HOLLIE: And you have been ever since. We are going to take a short break and when we come back we will talk more about making a living as a gold miner in Nevada County. Actually you are by Sierra County is that correct?
MIKE MILLER: We are in Sierra County but we spend most of our money in Nevada County.
HOLLIE: Iím Hollie Grimaldi-Flores for KNCO News Talk 830. Well be right back.
HOLLIE: Hi welcome back, this is Hollie Grimaldi-Flores. We are On the Town In the studio today at KNCO studios in Grass Valley and Iím talking with Mike Miller who is President and CEO of the Original Sixteen to One Mine. Mike one of the things I wanted to talk about is the reality of making a living gold mining these days. How is the Sixteen to One doing and how do you do as an owner in this operation?
MIKE MILLER: I guess you could say itís like a rollercoaster or a teeter-totter or itís feast or famine. Itís really the nature of the mines determine the success of the type of the way a mine is run. Too many times people think that all mines are the same and they are not - even around here. Around here the grade of the ore, the type of the rock structure all of that should determine how you make an operation. Itís been quite an up and down road for all of us. There has been, we are victimized by high utility prices and other things like that. But I think itís a tribute to the crew a lot of the people and people that weíve come in business with that when weíve had down times that kind of let us get along there with a few little extra debts. For example PG&E, our bill was so high we owed them $100,000.00 at one time which is a little bit heavy.
HOLLIE: I feel so much better now about my utilities.
MIKE MILLER: I know - I went into the PG&E office there in Grass Valley and people were waiting to pay their bills and the lady said, ďDo you want to pay all this off?Ē and I said, ďDid you see the amount?Ē She said, ďOh my God - itís like $96,000.00!Ē And the people behind me in line just moved back a little bit. I said I donít think I can, but we did pay them off and that support was really great.
The mine itself is a very very high-grade gold mine. It lends itself to the type of activity that weíve done. The most we have had is sixty employees, right now we have seven in Alleghany and I also am working as a contractor on the Empire Mine job. We got gold out yesterday, we got gold out three days this week. Because of this I brought some gold to show right here on radio. I thought the radio audience would love to see the gold too. I knew youíd love to see the gold too soÖ
HOLLIE: Like me nodding my head up and down.
MIKE MILLER: Itís a very unique gold and you can see it sometimes in some of the stores around Grass Valley as well.
HOLLIE: Could you tell me in brief the process for removing gold from this particular mine?
MIKE MILLER: Well it is drill, blast and muck. In 1992 we introduced the metal detectors to underground gold mines and it was a huge success. Weíve been able to now look inside the rock about four feet and we have indications with a little bit of an investment we could probably get more like fifteen or twenty feet. Ourís is a - you know the big mines in Nevada are open pit and they are high volume were - ours is less. My motto is less is best. If we can focus in on where we want to drill, blast and muck and it will eliminate moving a lot of waste rock that would be fine. Weíve also set up other ways to process the material but basically with the Sixteen to One I donít know what the percent is Ė maybe 70% goes into the jewelry trade, which has a high markup. High premium.
HOLLIE: What is muck?
MIKE MILLER: Muck? Didnít you have to muck out your closet?
HOLLIE: Gold mining and muck.
MIKE MILLER: There are lots of slang words for gold mining like this is going to pan out.
HOLLIE: Right, right.
MIKE MILLER: Light at the end of the tunnel, fire in the hole, all that stuff, bent your pick, good as gold. Gold is really a great word thatís been used throughout history. In music, literature, pagan and religious documents everything like that. But muck is just a good old word means youíre going to kind of clean it out. In the mine after you drill and shoot the rock, you shoot it and you get broken rock of different sizes in the tunnel and it has to be removed. So we have another, we have a mucking machine.
HOLLIE: (Laughing) Who knows where this could go?
MIKE MILLER: The old guys had a mucker and that was a shovel. I mean we have these mucking machines they are like little tiny scoops. You know its boys and their toys. Its one reason some of the guys really like to go into mining.
HOLLIE: Immediately I have three questions, which lead me in all different directions. One is: Is tailings an issue? Is that one of the issues that when people talk about gold mining is that from the muck?
MIKE MILLER: Well tailing, there is mine waste and then there is mill waste. Tailing are usually called mill. From the mill. The mine waste is usually muck.
HOLLIE: OK, but its not an issue getting rid of the muck?
MIKE MILLER: Ah, no in fact the muck that we have been using is a great building stone and it is good road rock. We have no problems around Alleghany and actually we have sold some down to LA as well.
HOLLIE: It has its own resources.
MIKE MILLER: It is. I think today like any industry you need to start using all of your waste.
HOLLIE: Unfortunately we have to take another break; I have fifteen or twenty more questions. Iím Hollie Grimaldi-Flores from the KNCO studios with Mike Miller talking about the Original Sixteen to One MineÖwe will be right back.
HOLLIE: Hi Welcome back, this is Hollie Grimaldi-Flores and Iím on the town, actually in the studio with Mike Miller who is the President and CEO of the Original Sixteen to One mine. Itís right here on his business card; it is the oldest operating United States gold mining corporation. And with that much history Mike, Iíd like to talk to you a little bit about, I understand there is a museum up at the mine, can we talk about that?
MIKE MILLER: Yes there is. Well itís not at the mine, its in Alleghany in the old Alleghany Supply Store where the Post Office is. What happened was, you can become addicted to mining. Itís a pretty good addiction too. So we wanted to preserve and protect the history as well as being active involved in day-to-day mining. So I think it was about nine or ten years ago we formed a 503c non-profit called Underground Gold Mines of California. And currently we have probably the best drill collection on the west coast, maybe the best drill collection in the United States, I donít know. Itís kind of a BIG thing to say but I know it is one of the better or best. One of the top drill collections around. Going back from the old hand crank drills to modern drills. Actually there are fourteen I think in the museum and the possibility of having another eighty drills on display.
Well the museum, what I did with the Sixteen to One was allow the museum to make its money by using the mine for tours. So the museum is responsible for opening the Sixteen to One Mine up to the public. And they have been great tours. We also are a public corporation and every year in June we have our shareholders meeting where we get a couple hundred shareholders come up and they get an opportunity to tour the mine and see their investment. So itís been quite a good event.
HOLLIE: If people come to the museum will they also see samples of the gold that has been pulled?
MIKE MILLER: Yes, the woman that basically runs the museum is also the secretary of the corporation. The corporate secretary. So we are working hand in hand to provide the mining experience for people from everywhere. And we do have people from everywhere that come by.
HOLLIE: For you to continue to do this Iím guessing that gold must have a certain amount of value. Could you tell me about the pricing and how it works, who decided that?
MIKE MILLER: Yeah, I wish I could tell you how it works!
I mean that would be . . . ; )
But first thing is on the museum and on the Empire mine too where Iím doing some work there. They have a tremendous support of volunteers. Iíd like to get a plug for the museum. The museum needs volunteers. You can call the Sixteen to One office at 287-3223 or look at the museum website which is called undergroundgold.com but it really does need some help from some men and women that would like to participate in having a museum in a very active mining town.
But now the price of gold.
Well like what we say is it is either going to go up or it is going to go down. Something happened in the last three or four months that has caused I think a lot of eyes to open and that was the speed with which it went up. It was in a bear market for ten years. It came out of a bear market and was creeping forward. Of course when it was in a bear market nobody hears about it. But it appears that there is no single source or single buyer that has been able to monopolize gold.
There is something that Iíve become aware of, itís a term called an oligopoly. An oligopoly is a form of a monopoly in which the effective control of a market is exercised by a limited number of sellers. And I think that is what has happened right now. I think we have reached a consolidation in the mining industry and it is being manipulated. The strange group that is out there right now is a new market that opened November 22nd that I see no press about, but it is in Dubai. I think there is a new player in the game and I think it is throwing all the old players off course.
HOLLIE: Which then, so demand is up so the cost is up?
MIKE MILLER: Well, the price you mean?
MIKE MILLER: Thereís a smaller number of producers that there were fifteen or twenty years ago. And I think everybody will say we are in a bull market now for gold. But what Iíve seen in the modern media Ė is that they are using the same old standards that they used twenty, twenty-five years ago to evaluate this. I think that they are wrong. So I believe there are people that are not even associated with the mining industry that are making the money or driving the price. So itís been rather rapid, is my point. It was, like hit $561.00 last week, or something, which was really a surprise.
HOLLIE: Is that good or bad for you?
MIKE MILLER: It made me nervous. I donít know why but it made me nervous because it moved so quickly. Of course it is good for us in the long run unless it affects the jewelry demand by pricing the gold jewelers out of the business. Because most of our material, which I brought some today too, I could show you.
HOLLIE: Yeah, you could show me and I can, or we can describe it.
MIKE MILLER: Well this one a lot of people in Grass Valley have seen it. And I know something has happened in this region, is so many people have moved into this region that have no idea where they really are, in Gold County.
HOLLIE: Oh my word!
MIKE MILLER: This is a little one we call the ďWhopperĒ.
HOLLIE: Extremely heavy! At first I thought I was looking at the jaw of a shark or something it is so large. This is pretty incredible!
MIKE MILLER: We took that to the Nevada County Fair about nine years ago or ten years ago. It is a half a million-dollar specimen.
HOLLIE: Ok, Iím holding half a million dollars worth of gold right now.
MIKE MILLER: We had so much fun with that. People would come up and want to take their pictures. Of course, if we melted it down it would be around $80,000.00. So there is a premium for gold in jewelry or gold as specimen.
HOLLIE: And there is no danger of having this break off or chip off or anything?
MIKE MILLER: No, not really, the reason gold is gold is because of itís unique properties, that it has not been able to be reproduced by mankind in its usage. It is more than meets the eye. We wouldnít have gone to the moon or gotten back without gold. All of the people that use computers and telephones and electronics if you really want it to work there is some gold in some of these communication pieces of equipment.
HOLLIE: I am wondering about the reaction the first time you saw this. Did you pull this out?
MIKE MILLER: Well our miners did - but it was quite a great experience and we want to re-live that experience again sometime which I am sure we will.
HOLLIE: Well I am afraid that we are already out of time and we have barely even touched on the subject Mike so Iím going to actually have to figure out when we can have you back. I hope it is not too long. We havenít talked about the adit, with so many things going on it just sounds like an exciting time for mining.
MIKE MILLER: Well thank you and I would like to come back because I think our communities would like to know some of the reality of gold mining.
HOLLIE: Very much, so we will make this TO BE CONTINUEDÖ Stay tuned for ABC news, for KNCO News Talk 830 Iím Hollie Grimaldi-Flores.
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