GOLD TAX AFFECTS WAIHI

Otago Daily Times, Issue 22907, 15 June 1936, Page 11

GOLD TAX AFFECTS WAIHI

CONCERN EXPRESSED IN LONDON

REQUEST TO THE GOVERNMENT

(From Odb Own Corrbppondent) (By Air Mail)

LONDON, May 9. The possibility of the Martha Gold Mining Company (Waihi), Limited, being forced to reduce the number of its employees unless some relief be granted bv the New Zealand Government by the abolition of the special gold export tax, or by a rebate on the tax, was emphasised by Lieut-colonel E. H. L. Beddington, chairman, at the ordinary general meeting of members at Southern House on May 7. "We feel," he declared, " that the onerous taxation we suffer is appreciably reducing the life of the mine, and hastening the arrival of the day when we shall have to abandon the present programme of a large output and considerable employment, and follow instead the policy of mining high grade ore with a smaller number of men at work, notwithstanding the fact that there will still remain in the mine a substantial amount of ore capable of being worked without loss in the absence of an export tax on gold." The directors' report and the statement of accounts for the period ended December 31, 1035, were received and a final dividend of Is per share, free of Income tax, was declared. The balance of revenue amounting to £OOO3 19s lOd was carried forward. CHAIRMAN'S ADDRESS.

In his address to the meeting, attended by some 30 shareholders, Lieut.-coloncl Beddington said that the company's balance sheet was a good deal simpler than that of its predecessor in consequence of the changes that were made last vear. Out of the total assets of £404,215 no less than £304,577 were liquid and were represented almost entirely by investments, bullion and cash. The directors were bound to capitalise the profits earned from January 1 to March 14, and in consequence the dotailed profit and loss account only covered the remaining portion of the year. When discussing figures, he would always refer to those for the full year. From the mining operations during 1935, they obtained £529,719 for an output of 221.127 tons of ore, as compared with £540,714 from an output of 229.351 tons of ore for the previous year. EFFECT OF STRIKE. The reduction in tonnage —8224 tons —might be ascribed to the ten-days' strike at the mine last October, while the difference in the amount realised for bullion was more than accounted for by the reduced tonnage for 1935. Gold last year realised an average price of 3s 3.*55d higher than in the previous year, but, unfortunately, the heading values fell again last year and were 11.4 d lower than for 1934.

Maintenance of the sterling value of their bullion sales was entirely clue to the premium on gold. During 1930 the average price of gold was £7 2s 1.2 d per fine ounce. Their gold realised £7 2s 3.71 d per fine ounce, a figure slightly better than the market average. For silver, owing to the high price current during last year, as the result of the American Govqrnment's policy, they had considerably enhanced results. Ore reserves at the end of 1935 showed an increase of 27G1 tons in the general account and a decrease of 5217 tons in the suspense account. The total reserves showed a net decrease of only 245(5 tons in spite of the mining of 221,000 tons of ore, of which 22.000 ions came from the Junction Mine during the year. He wished that a similar position could be recorded with regard to the value, but unfortunately he had to record a reduction of 2s 7d per ton for the 158.42 S tons in general reserve. IMPORTANT PROSPECTING.

Prospecting for new blocks of ore was carried on continuously throughout the year, the most importai work being that to the westward of No. 2 shaft, where investigations were continued at Nos. 3, 4. .5, 6 and 7 levels on the Martha Lode. The testing of the north branches of the Martha Lode in the north-west sectioD of the property also received attention. Starting from the Payne north-west crosscut, they had driven to the west a distance of 454 feet on the lode, finding occasional patches of good ore. A crosscut had been started to the north-west at 200 feet west of Payne cross-cut to test the country to the north-west and it was intended to project thi so, n 400 feet. At 105 feet in this cross-cut a reef was intersected and had been driven on 137 feet to the west and 00 feet to the east. This reef contained patches of good ore: investigations were being continued. The prospecting drive southward on the Edward Lode on the No. 12 level, begun during 10"4, was extended to 072 feet south of Eel cross-cut. There were no indications of any substantial blocks of payable ore, but investiga'ions would be continued, as payable ore existed in the level above, about 40 feet further south.

In the upper i ,rt f tin Edward Lode a good deal of investigation had been carried out and had resulted in the mining of a substantial quantity of ore o f good grade. The result of intensive development work, amounting t. 14,178 feet, had been to secure barely sufficient ore to maintain the balance of the ore reserve.

OPERAI JNS CEASED.

In May it was decided to cease mining operations in the bottom level (No. 15) f ns all the broken ore there, which was payable ia existing conditions, had been drawn off. In order to effect an economy

of power and labour in connection with pumping, the water was allowed to rise and the country between the Nos. 14 and 15 levels was being used as a sump. Any saving which could be effected in these underground operations was very acceptable, for last year working costs at 32s 3.49 d per ton showed an iucrease of 6.95 d per ton over 1934 and of Gs 10.93 d per ton as compared with seven years ago. The chairman feared that working costs were more likely to rise than to fall. In a mine such as theirs, where mining had been in progress for over 40 years, the cost of maintaining the shafts and levels in first-class condition was considerable. Further, the possible introduction of a 40hour week throughout New Zealand was bound to add to their costs, though to an extent that co,uld not at present be foreseen.

The battery superintendent's report showed a steady and persistent fall in the bending values of the ore for the last seven years amounting since 1930 to no less than 9s Cd per ton. This fall showed the difliculties that the staff were encountering in their effort to maintain tonnage. A large tonnage was essential to low costs ns the overheads were thus widely spread and their present practice was to utilise the full capacity of the mill and treatment plant in order to get the lowest overhead costs and thus make it possible to treat low-grade ore, which otherwise would have to bo left in the mine. , ONEROUS TAXATION.

During 1935 the special export duty on gold and old gold duty together amounted to about 4a per ton, and, in addition, the company was liable for income tax. The directors felt that the onerous taxation suffered was appreciably reducing the life of the mine and hastening the arrival of the day when they would have to abandon the present programme of a large output and considerable employment, and follow instead the policy of mining high-grade ore with a smaller number of men at work, notwithstanding the fact that there would still remain in the mine a substantial amount of ore capable of being worked without loss in the absence of an export tax on gold. If the export tax on gold and the old gold duty were removed 4s per ton would be saved, and the absence of any further increase of costs involved by legislation as to the lours of work or an increase of wages would mean that an additional tonnage of ore of a grade not economical to mine in existing conditions would immediately become available. This would ensure the continuance of employment on the present scale for a longer period and would confer benefits on all parties; on the shareholders, by ensuring that the overheads continued to be spread over a large tonnage for that period; on the mii.ers, by providing employment of the existing number for that same period; and on the Government, who would be losing the export duty on gold, but who, instead, would have a longer period during which to tax their dividends and —an even more important matter —would have the knowledge that employment at Waihi and Waikino would continue on the present scale instead of being sharply curtailed —the inevitable consequence of being forced to adopt the policy of mining only high-grade ore. THE WISER COURSE. " If the New Zealand Government feel they must maintain the special gold export duty from the point of view of revenue raising, although they admit it to be economically an unsound tax," continued Colonel 3ec'.dington, "surely it would lie wiser for them to allow a rebate on a sliding scale according to the lowncss of the grade of the ore from which the gold is extracted, with the object of encouraging the mining of low-grade on- and permitting the extraction of the large quantity of such ore which, on the present basis of taxation, must be left in the ground for all time. We put forward this suggestion because, in addition to our responsibility to you members of the company, we feel a very heavy responsibility towards our employees at the mine and the inhabitants of the townships of Waihi and Waikino. which have grown up as a result of the mine's activities. We can sec the time coming when we shall be forced to reduce the number of our employees, and we dislike that thought intensely, and therefore, while we should much prefer the complete abolition of the special gold export tax, if that is not obtainable we trust that the New Zealand Government will seriously consider the suggestion of a rebate of the gold export tax on a sliding scale, in order to postpone for as long as possible the time when we shall be forced for economic reasons to cut down employment at the mine." During 1934 and the early portion of 1935 the New Zealand Department of Scientific and Industrial Research organised a geophysical survey in the Waihi district; various testa were made and

reports and plans were sent to London by the department. Their New Zealand executive had given these reports very ecrious consideration and they recommended that at least two boreholes be put down with a view to testing the ground in a portion of the property. The directors had agreed to this recommendation. MR COATES NOT CONVINCED. With regard to the payment for the Hora Hora undertaking, the chairman regretted that it did not prove possible to convince Mr Coates, during his visit to England, of the harah and inequitable treatment meted out to this company's predecessor by the late New Zealand Government. He expressed the board's indebtedness to the staff in New Zealand, all of whom continued to display such outstanding loyalty and skill in their work that it became embarrassing to mention individuals. THE DIVIDEND. This company's predecessor declared last May an interim dividend of 0d per share, free of tax; in November last year the company declared an interim dividend of Cd per share, free of tax, and the l>oard now recommended a final divided of Is per share, free of tax, thus maintaining, from the members' point of view, the same distribution as they had received since 1921. 1 He moved that the directors' report nnd statement of accounts for the period ended December 31, 1935, as submitted, be received and adopted, und that *a final dividend (No. 2) of Is per share, free of income tax, be declared, and that the balance of revenue, amounting to £9603 19s lOd, be carried forward. The motion was seconded by Mr R. H. Muir..

"OUR VERY STRONG FEELINGS." Mr H. Espir said: "I should like to convey through this meeting to our executive in New Zealand our very strong feelings on the question of the treatment which we hope we are going to receive from the New Zealand Government. The chairman has told us how onerous the present gold tax is, and I understand that Mr Milligan is pressing the point home as hard as he can. I gather that the Minister of Mines In New Zealand is very favourably disposed towards us. In the past any expressions of opinion which have come from this meeting have not been treated by the New Zealand Government with any too much attention, and for what it is worth I should like to convey to the Government there through our executive the feelings which we have on this side on the question of the tax. " The chairman has made it quite clear that the employment of the miners in New Zealand is to a large extent dependent on the treatment we receive in respect of this tax, and we are very concerned at the possibility of operations having to be seriously curtailed owing to tliis heavy tax. If we can obtain an expression from here which is a unanimous one that we not only welcome the efforts of Mr Milligan but would like him to exert every possible effort to maintain the pressure and ultimately to realise his point I think we should lie doing ourselves, the miners, and the New Zealand Government a good turn." In reply to a question, the chairman stated that the profit and loss account, the figures for expenditure, the income shown in the report r.nd statement of accounts, were all in New Zealand currency. The profit, however, included the factor of exchange and was in sterling. Mr W. 11. Lovatt said he had listened to the chairman's addrer.s with very great interest, and he hop"d that parts of it were intended for the Government of New Zealand rather than to raise doubts in members' minds as to the continuity of the mine. The accounts showed that they ought to be very thankful that the" ore reserve had only decreased by 2000 tons in the year. ' He was quite hopeful that by this time next year they would be able to make the same report. The report also showed that the tonnage of broken ore had been maintained very satisfactorily and haC increased by (10,000 tons. He was pleased to hear that the board was doing whatever it could about the geophysical survey Expenses appeared to be rather heavy, and he thought that overhead charges should lie kept under very careful consideration in view of the fact that the contents of the ore were slightly diminishing. He noticed that for nine months of the

past year the directors' fees had been £2OB 15s 4d, whereas the regulations stipulated that the directors were legally entitled to a much larger fee. It was very land of the directors to give their services to the company for such a small remuneration.

In reply to a question, the chairman stated that the directors of the Martha Company were the same as those who had controlled the Waihi Company. He felt sure that the board and the shareholders were in complete agreement with the remarks of Mr Espir.— (Hear, hear.) They would be passed on to the New Zealand Government. NOT FOR GOVERNMENT ONLY. "My remarks were not solely for the ears of the New Zealand Government," continued the 1 chairman. "They were a survey of the facts as the board sees them, and with regard to the life of the mine our view is entirely reflected in what I have said. With regard to the directors' fees, we are not as modest as Mr Lovatt has suggested, because he forgot to look at the full year's figures, but at the same time they are less, and have been for many years, by one-third than what we are legally authorised to draw. With regard to the overheads, we are doing our best to keep them as low as possible. I do not know of any extravagances as compared with the past years, beyond the fact that the age of the mine is bound to cause an increase in our expenditure, and, of course, wages went up during the year." The motion relating to the accounts and dividend was carried unanimously. Mr W. P. Gauvain, retiring director, was re-elected for another term. Thanking the shareholders, Mr Gauvain said that it was 31 years since he had joined the staff of the company. He felt it a great honour to be elected to the board.

A vote of thanks to the New Zealand staff was proposed by Mr Lovatt and carried unanimously.