SKIPPERS, LIMITED

Otago Daily Times, Issue 22730, 16 November 1935, Page 11

SKIPPERS, LIMITED

INCREASE OF CAPITAL DISCUSSED BY SHAREHOLDERS UNEMPLOYMENT BOARD'S SUBSIDY The decision to increase the capital of Skippers, Ltd., to £85,000 by the issue of £IO,OOO in preference shares was discussed at a meeting of Dunedin shareholders last night. After the position of the company had been outlined by the chairman, Mr S. P. Cameron, and the proposal had been fully discussed by the shareholders, a motion was carried expressing the confidence of the meeting in the future of the company, provided the extra capital could be raised. It was stated that information had been received that night that the Unemployment Board had made a grant of £SOOO to subsidise work on the new scheme for the installation of a hydro-electric power plant to provide power for working the claim.

The intimation that the Unemployment Board had made a grant of £SOOO was given to the meeting by Mr Cameron. He said that this was a subsidy which was to be spent on the basia of £1 for £1 on the work done on the new scheme, and it wag to be retrospective to the time when operations were commenced on the claim. This subsidy was of great assistance to the company, for if they had not received it, at least £BOOO of the £IO,OOO preference issue would have been required to undertake the work. OPERATIONS OUTLINED.

Outlining the object of the meeting and the operations of the company to date, Mr Cameron said the meeting was more m the nature of an informal meeting; it was a meeting of local shareholders, and not in any sense a special general meeting. It had been arranged because it was not possible for local shareholders to be present at the general meetings of the company, which were held in Christchurch, and consequently they knew little of what was doing in the company except through the press and circulars which were sent out from time to time from the office. It was for the purpose of placing such general information as they desired before shareholders that the meeting had been called, and in particular to discuss with local shareholders the question of the issue of preference capital, and impress on them the necessity for supporting the new issue in their own .interests, and also the necessity of interesting their friends in the issue. Mr Cameron went on to say that the company was incorporated on July 10, 1933, for the purpose of securing certain mining rights and 1 privileges covering three miles and a-half of the Shotover River from Maori Point to Skippers Creek. Development work commenced in January, 1934, and gold production in November, 1934. To date 4610 z of gold had been recovered, and the return showed approximately a-half ounce of gold to each square yard of bottom worked. Less than three-eighths of one acre of ground had been worked, and this ground had all previously been worked by the early miners, so that the results could be considered eminently satisfactory when they considered the very small amount of yardage which the company had been able to- handle since commencing operations. Two great difficulties were experienced last year—first the abnormal season in the shape of floods and the general high state of the river, and secondly the extreme shortage of sluicing water at times when they could have profitably worked the claim. This seemed almost a contradiction —flood conditions on the river and yet serious shortage of head water —but such was the case. In their original plan it was intended that several acres of the beaches should be worked per year, but it was obvious from the outset that the water supplies for sluicing purposes were not in such a wholesome condition as the supply .which was vouched for prior to the purchase of the claim, and it was found impossible to work any large area with the water available. Again, the cost of running the standby plant was out of all proportion, and it became obvious that if the claim was to be worked successfully, they must have ample water power, and that it must be cheap power. The company possessed valuable water rights in the Skippers Creek, and it was now proposed to utilise these for the generation of their own hydro-electric power supply. The probability of the weather conditions returning to normal during the next season, in which case the existing plant might be quite suitable, had been carefully considered, but the directors positively refused to jeopardise _ the success of the company's undertaking by banking on this eventuality without making adequate provision to cope with another adverse season. Ample power at cheap operating cost was the key to success at Skippers. The principal features of the engineering proposals were:—(l) The installation of a hydro-electric power plant at Skippers Creek to generate approximately 300 h.p. This meant harnessing the creek, the capacity of which, excluding flood periods, fluctuated between 12J-20 heads, but never fell below the minimum of 12$ heads. Provision would be made for increasing the power by 100 h.p. at a later date. The foregoing improvements would give the company sufficient power to operate a 3in nozzle at 200 ft pressure, which would permit completing a paddock of an extended size in 10-14 days. Had they had this power during the past two months they could have worked six times the area of bottom in the same period in which they had worked the one which gave the very profitable return of 1230 z. (2) The power would be cheap power, and the Diesel plant would be entirely dispensed with. (3) The present water race, the supply from which during the last season was most irregular, would still be available as a reserve. (4) A much greater degree of independence from the vagaries of Nature than hitherto would be reached. When the second stage was completed—i.e., when the company was able to generate 400 h.p. at Skipper's Creek —they would be able to work still further yardage, with the possibility of working two paddocks simultaneously. This would be possible because the old pelton wheel, which was being used in the new scheme, would go back to the existing water race, giving them an additional 100-160 h.p. In propounding this scheme the directors relied on the advice of their sluicing manager (Mr J. Thomson) in regard to sluicing requirements, their hydro-elec-tric engineer (Mr H. R. Climie) in regard to engineering questions and estimates, and their mine manager (Mr R. D. Climie) in regard to general organisation. Apart from these three, they had called in Mr J. R. Templin, a highlyqualified engineer, who was invited to examine and pa6s an opinion on the soundness of the engineering proposals and accuracy of the estimates. Mr Templin approved of the scheme in every_ detail. Apart from the very high engineering qualifications of the Climie Bros.—Mr H. R. Climie was one of the highest degreed electrical engineers practising in New Zealand —they had Mr Thomson, the sluicing manager, whose experience on the Shotover River was second to none.

The whole success of Skippers, Ltd., was dependent on their securing a further £SOOO to £6OOO additional capital. If this was secured the directors were convinced that they could make a success of the company and show a handsome return on the capital subscribed —but it must be to the shareholders that they looked, and the future success of the company rested on the support they accorded the new issue. Shareholders in their own interests were urged to subscribe freely to the present issue of cumulative preference shares, which carried the right to convert into ordinary shares within three years from June, 1935. CLAIM MANAGER'S REPORT. The claim manager (Mr R. D. Climie) said that owing to the strong support given by the Department of Mines the Unemployment Board had met the company very generously. The secretary of the department had attended the board's meeting at Wellington, and had reported favourably on the company's prospects. The Minister of Finance (Mr J. G. Coates) was expected to authorise the payment of the subsidy that day, and, as the company had spent about £ISOO,

it could make application straight away, and the money would be forthcoming to help to carry on. He had been asked point-blank by a big shareholder in Wellington how long it had taken to save the gold 'for the last wash-up. Such a question he looked on as a direct insult, as there was no question of any action of this description. As a matter of fact, the wash-up mentioned had come as a tremendous surprise, for whereas a return of about 50oz had been expected, the actual yield was 1230 z of very nice gold. The area of the bottom of the paddock was just under 300 square yards. A shareholder: What depth?

Mr Climie: Eighteen feet. Mr Climie added that a careful timetable of the time worked had shown that the work had taken 870 men-hours—-about one-sixth of the time it would have taken had there been suitable plant to carry it out. The work done conclusively proved that with efficient plant the working of even the poorer parts of the claim would pay good interest on the money invested. They might strike places, of course, that had never been touched, for only three miles below the claim the company's sluicing manager, Mr J. Thomson, had taken no less than £26,000 worth of gold from a very small section of the river. This went to prove that sooner or later, if the river were systematically worked, good ground must eventually be struck. At present, working the claim with the existing plant was like attempting to extinguish a warehouse fire with a garden hose. He was absolutely convinced that there was plenty of gold in the ground if only they had the means of working it. He himself held 30,000 shares, and had. offered to take up £3OO worth of preference shares, and he thought it was quite a good proposition.

QUESTIONS BY SHAREHOLDERS. In answer to a question, Mr Climie eaid it would not be possible to harness the water running through the flumnig fqr the purpose of securing power. There was only about 11 feet of fall, and at most 112 h.p. could be obtained at the expenditure of a great deal of money. Replying to a question whether, if a hydro-electric plant were established, the existing fluming would be wasted, Mr Climie said that the flume plates wouid come in for wing-damming the river. It might pay for itself that way. The same shareholder wished to know when the 1230 z mentioned by Mr Climie had been washed up. Mr Climie replied that the wash-up had commenced on August 24, and finished on October 24. Air A. C. Cameron expressed the opinion that the company seemed to have been "/ let down" badly with regard to the capacity of the fluming, and now it had been found that the Diesel plant would not carry the load itself. Would it not pay to run the Diesel? Mr Climie explained that the Diesel plant cost £lB per day to operate. Mr Climie went on to say that if the capital were available the plant could be installed in three months, so that it would be possible to commence work in the autumn. He added that, so far, there had been four wash-ups only, and the profit on the last had been £SOO. It was stated by Mr Climie that there was no truth in the statement that the Diesel engine had not been resting on "solid ground. Actually, it was resting on a solid rock formation. They were now trying to sell the engine. Mr A. C. Cameron said the alternatives facing the company seemed to be to walk out and abandon what had been put into the claim or go on with the job of installing the hydro-electric plant in Shotover Creek. . In reply to another question, the chairman said that approximately £2OOO had come in from the new issue, and applications were continually coming in. Mr Climie said it would be possible to evolve a scheme whereby they would be able to complete a paddock a week. EXPRESSION OF CONFIDENCE.

After some further discussion the following resolution was moved by Mr A. C. Cameron and carried unanimously:— "That this meeting of Dunedin shareholders' expresses confidence in the future of Skippers, Ltd., provided that capital can be raised for the hydro-electric plant, and commends the preference issue to the shareholders as it is understoo.d thai the plant cannot be installed unless the preference issue is raised." Mr A. C. Cameron suggested that they should try to raise £SOO from each of the four centres. A vote of thanks to the chairman for his explanation of the position was carried by acclamation.