THE O.P.Q. COMPANY.

Otago Witness, Issue 2258, 10 June 1897, Page 22

THE O.P.Q. COMPANY.

SOME INTERESTING- FIGURES. Since the publication of our article on the above company the Tuapeka Times has devoted itself to a consideration of the prospectus issued by the New Zealand Minerals Conipany, and in a fair and temperate article it sums up as follows the prospects of the mine burdened with the huge capital which the promoters of the company have fixed :—: — " Indeed the history of the reef during tho last 30 yeai s can very w? 11 stand the ordeal of examination and inquiry. But yet it does not tend itself to exaggeration of the wild and reckless kind of which it is now the subject at the hands of men who might reasonably be expacted to know bstter. No doubt it was found necessary to resort to these time-worn methods in order to reconcile the public to the generous terms which the promoters of the concern laid down for themselves. However, it starts with the curse of overloading hanging heavily over it, like some other mining properties in the district, and is thus unfortunately prevented from proving its value by the periodical distribution of dividends, which i 3 of all others the most effectual manner of inviting investment and brioging under the favourable notice of capitalists the undeveloped mineral wealth of our district. But as regards the investing portion of the British public, their inability to profit by experience almost places them beyond the pale of consideration. It is notdiflicult to conceive of them succumbing to ths blandishments of thacompany promoters and their allies with regard to those things of which they have no possible means of informing themselves. Those matters having reference to the productive capacity of mining property must always be taken largely on trust by investors. But there is no reasou whatever why they should nob be able to understand that £50 00D, which in this instance represents the amount set a^ide for working capital, cannot possibly, even under t"he most favourable conditions known to this form of investment, provide interest on a capital of £159,000. The case of such people 13 hopeless, and, as we have already said, they are almost beyond the pale of consideration, were it not for the important fact that the interests of such people are identical with the interests of the colony, and, in this particular instance, with the interests of our own immediate district." We have since the publication of our article obtained a copy of the full prospectus issued in London, and it shows that the company was put on the market by the New Zealand Minerals Company ia the most attractive and seductive form. Ib is indeed to those who are not fully conversant with the vicissitudes of gold aiining properties a most convincing document. We make one or two extracts. For instance, it says: — Appended are copies of letters and reports upon the property by Mr Neil Kenwf.dy M.I.C.E MallaKer d local manager and engineer. I m^f?, r *n^ Prof. Black, M.A , D.Sc, [ l a ae ?\ s J " fidin., Professor of Chemis- SlI Anlonrl try, Ota-o University. f e^ ?l?o I Mr L. O. BE.U-, mining engi- Minerals | neer and surveyor," Dvn -\ $$&s** ! As to which we will only remark that the ! University Council will probably hardly j approve of one of its professors being so described and thua connected. Indeed the question ra*.y well be raised if it is wise that the name of one of its professors should figure in mining prospectuses so prominently. Mr Beal says : — I have no reason to modify my past favourable opinisn of this property as being most suitable and encouraging for developing oa a large and systematic scale. Total estimate of works £13,500, and including an amount for management, reserve, &c, I should say from £17,500 to i £20,000 was necessary as a working capital of the I company. With a capital such as this available, I I should say that this property could he developed into a large and sound and profitable mine, and bhould under capable management yield a good return on the capital iuve 3 tet(. j As Mr Beal names £20,000 as the maximum i cum necessary as a working capital, and by the I outlay of which the property could be developed into "a large and sound and profitable mine,"

ib is difficult to understand why the Minerals Company, who purchased the property for £5000, should launch ib on the market with the enormous loading covered by a first iasue of 80,000 £1 shares, with a prospective total capital of £150,000. Mi* Kennedy's reporb conies in at the end of the prospeotus, and it contains gome figures which afford food for reflection, and to which the gentleman in question has probably ere this regretted having given the authority of his Dame. We make the following extracts :—: — It will be a question for the future management to decide whether the whole lode c-in be treated more economically, or whether it will pay better to extract only the quartz, but the following two estimates will be of interest now :— (a) Extracting Quartz Only. — length of lode 4500 ft, by depth on dip 1100 ft by thickness, sft divided by 14 cubic feet per ton = 1,767,857 tons. Deduct 267.557 tons for old works, &c , then we obtain a total amount of 1,500,000 tons, containing loz of gold. Allowing lidwt for working expanses, we get a net value of 14dwc, but wa will calculate on » profit of only 12Jchvt, or say £2 10s per ton of ore. 1,500,000 tons at £2 10s = £3,750,000 total profit. (6) Extracting Whole Lode.— Length of lode 4500 ft by depth on dip 1100 ft by thickness Sft divided by 14 cubic feet per ton = 2,828,571 tons. This we will call 2,500,000 tons containing only 12dwtof gold, although Professor Black places the average of the lode at over 16dwt. Workiug costs in this case would be less, I think, but allowing for them as above, we get 6dwt of gold profit, which will be worth £1 4s. 2,500,000 tons at £1 4s = £3,000,000 total profit. The foregoing figures bSiow that we can calculate on a total profit of £3,000,000, and allowing one year for starting operatieus we get an average yearly profit of £150,000 per year during ths term of the lease. This figure will enable you to fix the definite capital value to be placed on this property. Working Capital. — When dealing with this question I must at once state my opinion that the amount usually supplied by companies for the opening up and equipment of mining properties is quite inadequate. The results of mining operations from their very nature can never be foreseen. A little bad luck at the start coupled with insufficient capital has again and again ruined companies possessed of properties which have subsequently been proved of incalculable value. It will be observed that in adranciDg reasons why it is neccß3ary to provide a large working capital, Mr Kennedy says "the results of minint/ operations from their very nature can never ie foreseen." These are true words, and are a ntriking commentary on their writer's extraordinary announcement; that " the foregoing i figures show that we can calculate on a total profit of £3,000,000, and allowing one year for starting operation^ we get an average yearly profit of £150,000 per year during the. term of | the lease." ■ \ With this final extract, which expresses the belief that for twenty-one years the company will get an uninterrupted profit of £3000 per week, the public can draw their own conclusions as to the justice or otherwise of our criticisms.