The Sixteen to One Mine in the Alleghany Mining District is a unique mine and requires a unique operation, recognized by its owners, its miners, geologists, engineers, and some public agencies during the last decade of the twentieth century and to the present. It is a traditional high-grade, hard rock, underground gold mine. The same company owns and operates (maintains) the mine. Original Sixteen to One Mine Inc, (owner) incorporated in California in 1911. Experts estimate that less than thirty percent of the deposit has been mined. Production is approximately 1,500,000 ounces of gold.

The Company began a new exploration program last quarter led by a California registered geologist. The basis is strictly geology: identifying hydrothermal solution pathways, evaluating the ore potential and mining environment.

There are over thirty miles of horizontal workings and millions of cubic feet of vertical excavations called stopes. The entire grounds are not maintained for mining. Once an area is targeted for mining, travel ways and escape routes are brought into safety compliance. Production miners set up a heading (face) and begin a drill-blast-muck sequence into the quartz. Gold is hosted in the quartz vein in exceedingly rich concentrations called "pockets". Metal detectors are regularly used underground as a tool for guiding the direction of the work. Metal detectors are also used as a tool to classify the ore underground. This has the positive affect of reducing the volume of rock taken from the mine, thereby reducing costs.

In 1992, the company initiated a gold marketing plan of selling gold in quartz as a gemstone. This produces revenue significantly greater than selling gold into the spot market. Demand for the Sixteen to One gold-in-quartz gemstone exceeds supply.

Production has been termed a "feast or famine" situation for over 100 years. Reserves in a high-grade gold mine cannot be termed as "proven". By industry wide definition of phases of a mine operation, the operation during this quarter is rehabilitation. Due to the extensive workings and small size of the crew, maintenance and rehabilitation must periodically be prioritized over exploration, development and production. Exploration aims at locating the presence of economic deposits and establishing their nature, shape and grade. The investigation may be divided into (1) initial and (2) final. At the Sixteen to One the search for gold or ore embraces: (1) geological surveys; (2) geophysical prospecting; (3) boreholes; (4) surface or underground headings, drifts or tunnels. When miners detect the presence of gold, the Company evaluates the indicators and if warranted, moves its operation from exploration to development. When the presence of gold is evaluated, the Company moves its operation into production. The company hoards gold and sells it according to short-term cash needs. This fact requires an operator to manage its cash flow to operate between pockets. It is difficult to undertake major expansion plans with an uncertain supply of capital.

BALANCE SHEET COMPARISONS

For the nine-month period from December 31, 2018 to Sept. 30, 2019 total assets decreased by 23% primarily due to a 42% decrease in inventory and 17% in Accounts Receivable. The corresponding revenue decrease was from a planned shift from production towards development and maintainence.

For the same nine-month period long-term liabilities decreased by 6%.

STATEMENT OF OPERATIONS

Revenues for the three-month period ended Sept. 30, 2019 show a negative amount due to the fact that the gold that was sold this quarter was mined and transferred into inventory at a higher price than the current gold market. This results in "cost of goods sold" which is included in the "gross income" figure to exceed total income. The fact that the company's software program uses the average cost method for cost of goods sold further complicates this problem. The company cannot afford to purchase a more robust software program at this time.

Revenues for the nine-month period ended Sept. 30, 2019 compared to the same period in 2018 were 9% higher due to a higher percentage of sales being generated by bullion (raw gold) rather than gemstone sales.

Operating expenses for the three-month period ended Sept 30, 2019 were 5% lower than in 2018 due to the shift of priorities to new maintainence and development of lower levels of underground workings. Operating expenses for the nine-month period ended Sept 30,2019 decreased by 6% compared to the same period in 2018 for the same reason.

For the three-month period ended Sept. 30, 2019 the company showed a loss of $111,187 compared to a loss of $143,560 for the same period in 2018. For the nine-month period ended Sept. 30, 2019 the company showed a loss of $251,447 compared to a loss of $289,966 for the same period in 2018.

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