‘There’s gold in there’
ALLEGHANY – Approximately 1,500 feet into the depths of the Sierra Nevada foothills, a dull droning sound grows continually louder with each step, until it begins to reverberate throughout your body.
As a large drill grinds through solid rock and quartz, the physical sensation it creates in the body is nothing compared to the excitement it generates for the miners.
“Absolutely there’s gold in there! It’s going to turn the Sixteen to One around,” miner and drill operator Joe Witterman said Friday.
The news is a delight for Michael Miller, president of Alleghany’s Original Sixteen to One Mine Inc. He hopes this is only the beginning of better times for the oldest continuously operating underground gold mine in the country.
In five of the past six years, the company has seen a loss, not a profit. It has been plagued with citations from federal and state regulatory agencies. Because of that, coupled with increased costs for workers’ compensation, utility rates and low prices on the gold exchange, the Sixteen to One has struggled to stay afloat.
Operations have been scaled back drastically, from an all-time high of 60 employees to its present staff of 11. The company has relied on sales of its gold-streaked quartz rock to jewelers to help sustain mining operations.
But the future looks much brighter for Miller’s beloved mine. At the close of market Friday, the price of gold was $409 per ounce, up from rates as low as $250 in the past year.
Higher prices will yield more for the gold currently being produced in the mine, and that production has been made easier now that power has been restored to the mine. Electricity was shut off after the Sixteen to One fell $93,000 behind in payments to Pacific Gas & Electric.
Miller said he reached a deal with PG&E late last week to pay two months in advance – about $15,000. Without electricity, the mine crews could not pump water out of the shafts or operate some of their heavy equipment.
In addition, Miller said all regulatory actions against the Sixteen to One have been remedied and the mine is now is compliance.
Now that the external problems are dealt with, the company can now concentrate on its efforts underground.
A few weeks ago, miners pulled out a high-grade pocket of gold worth about $63,000. They hope their latest discovery will net far more, Miller said.
The crew of eight miners earn their living based on production at the Sixteen to One – named after a centuries-old ratio for the value of silver to gold. When gold is extracted, 30 percent of the value is split among the miners.
Ian Haley, a 20-year veteran miner at the Sixteen to One, said spirits improve dramatically when “we are in gold.”
So Thursday, when Dave Hill’s metal detector picked up a strong signal, he and Witterman began the labor-intensive task of getting to the gold. By Friday, they had blasted more than 30 feet into solid rock to get near the vein of precious metal. The drill helps inch them even closer.
“We’re expecting to see gold today. We’ve been praying to the miner gods all week,” Witterman said. “We’re excited. It’s the first time we’ve gotten a signal in a while.”
While increased production of gold from the mine is good, Miller wants more financial backing to begin projects with the company’s “underdeveloped assets,” he said.
There are 29 miles of access in the mine, which Miller said has one of the highest concentrations of gold around. At one point in its history, crews extracted an average of 500 ounces of gold a day from the rock, he said.
While the small crew currently working is effective, additional labor would allow production in more areas.
To expand operations, Miller plans to attend the annual North American Prospector Expo next week in Houston. The show brings between 8,000 and 10,000 people – all investors and speculators, Miller said.
His main goal is to find new shareholders. Currently, there are 12.5 million shares held in the Sixteen to One. However, the Security and Exchange Commission authorized the company’s total shares at 30 million.
“We’re starved for working capital,” he said.
Miller will use “The Whopper” to lure potential investors. The impressive 14-pound piece of gold-covered quartz – plucked from the mine in 1994 – is worth an estimated $500,000.
At the expo, shares of the Sixteen to One will be sold for $1 with a minimum purchase of 100,000 shares.
“The whole offering represents 10 percent of the company,” he said.
Miller hopes enough shares can be sold to allow the 108-year-old mine to build up operations. If not, the Sixteen to One will look at putting together an initial public offering of its stock.
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