Shares and MINING

Observer, Volume XXVII, Issue 37, 1 June 1907, Page 20

Shares and MINING

By Obadiah.

THE London money market shows no great variation. The Bank of England figures are satisfactory, 'mere is a small accretion of gold, and the reserve is slightly larger than in the previous week. Compared with a year ago the Bank figures are strong. The open market discount rate has hardened slightly, probably because of demands for the end-of-the-month settlements.

In Australasia the position is all that can be desired. Abundance of money lor all reasonable demands is available, but the loan applications 01 tne otates may niaiit) inroads into tne uvailaoie ciymtts. i\evv bouth Wales is on the market lor a hallmiliion loan, wnicn will be obtained witnout any trouble.

Breadstuffs have advanced, but the increased prices are not so great as to warrant so heavy an increased impost on bread consumers as the trade is imposing. The action of the a lour-j.Viiiiers' Association and the proniptituue with wnich the master baiiers have lollowed their example, ieaus to the suspicion tliat these two groups are m collusion. If there in any law against the restraint ot trade it ougnt to be put into force.

The advance in the price of bread is equal to over 14 per cent., but housenoiders would be loolisli to let the baker tatten on them. .blour by the bag is fairly cheap, and any kind of a good housewiie can oaKe, and do it cneaper tnan the baker.

The report of the London and Lancashire Jj'ire Insurance Company ior lyuti is interesting, as it covers the losses by the ban rrancisco disaster. The gross losses ot the colupuny by the earthquake and connagration were £1, / oU,U(JU, but deducting reinsurances, etc., the total was brought clown to £925,000, still a very large sum, raising the total losses for the year to £1,0b0,561. But the nett lire premiums were £1,422,349 and accident premiums £169,688. After covering all charges, but adding in £589,949 interest on investments, it has been found necessary to reduce the surplus on the profit and loss account from £497,735 to £104,068, and to transfer £250,000 from the reserve fund.

The dividend has not been affected, and has absorbed £92,900. The fire fund has been increased by £40,000, and the reduction in the company's balance and reserve has been only £643,667. The funds in hand are still as much as £1,782,068, in addition to the uncalled capital of £2,052,000. At the same pace the 'Frisco loss will be completely wiped out in three years— perhaps sooner, because the United States rates have rightly been increased all round. This serves to show how a vast disaster of the kind can be dealt with by a world-wide office. The policy of building up reserves pursued by the London and Lancashire and other British companies proved to be their mainstay in the time of need and enabled them to meet their obligations promptly and well.

The report of the Phoenix Assurance . Company for last • year states that the premium income, less reinsurances, amounted to £1,533,316. The total losses of the company in connection with the San Francisco disaster amounted to £624.241, which sum the (directors have decided to write off the general reserve.

The result of the year's working apart from the San Francisco fire, and after making a further -rovision for unexpired risks of £50,000, is a profit of £238,643. This has been carried to the profit and loss account. Including the balance brought forward and allowinp 1 for the interim dividend and addition to general reserve of £174,241, this leaves £238,790, out of which a final dividend of 18s per share has been paid.

At the annual meeting of policyholders of the A.M.P. Society, neld in Sydney, Mr F. E. "Winchcombe, reporting on New Zealand, stated that in .New Zealand the new business had amounted to £859,417, bemg £}237,503 in excess of the revious year, and £140,917 in excesß of the previous record year (1886). The amount completed was equal to nearly £1 per head of the white population. The net gain, after deuucting all void business including transfers outwards or inwards, was Ibb4 policies, assuring £0!Z5,ii20..

The annual income of the brancn from all sources was almost £500, 0U0 and the total funds on the branch books amounted to £4,141,97/. Xhe policies existing on the branch books numbered 34,694, assuring £y,427,9yy. The gross amount or new business in the A.M. P. omce in .New Zealand last year waß greater than that of the .New Zealand Government Life Assurance office, in which ail public servants must be assured.

I received the other day a lengthy prospectus of Jb'erguson's Mining and bmeiting Company (.-Limited), and, having perused it, I am prompted to ask wnether the law was not recently made much more stringent with regard to prospectuses and inducnments held out to invest money in projected undertakings. Some of the statements in this particular prospectus must certainly be received with considerable caution. The company appears to be formed for the purpose of working a smelting process, for developing copper properties at Whangaroa, and for acquiring two quartz claims at Coromandel, two at Waiomo and also two flux properties ab the former place.

I have nothing to say in reference to the smelting proposition. It may be the best in the world, but we have lively recollections ol ; other costly furnaces from which great expectations were entertained, and which proved to be failures. !N either have I any comments to make on the extensive copper deposits at Whangaroa. They may or may not be there. "What has excited my surprise is the extravagant and, I believe, unwarrantable statements in the prospectus concerning the Coromandel and Waiomo properties, seeing that we know something of these districts and what may be expected from them. One most extraordinary, if not wholly reckless, claim in the report of Mr Charles E. Stone, MJ 1 .1.M.E. 1 is this:— "ln fact, the project is so complete and self-contained that you have in THESE PROPERTIES OBES SUFFICIENT TO LAST THE COMPANY FOB A.T LEAST 100 YEARS."

Now, it must be apparent to anyone with the most elementary knowledge of mining that these bold words are not warranted in a prospectus seeking to induce .persons to invest money, for the obvious reason that without enormous development it is impossible to say that there are in these mines ores sufficient to last even ten years. Also, without frequent and exhaustive assays, it is equally impossible to say whether the values carry down. The daily output of this plant is estimated at 100 tons. Now, I say without hesitation that there is not in either Coromandel or Waiomo one mine sufficiently developed to guarantee a daily supply of 100 tons of payable ore for even one year, to say nothing whatever of the 100 years estimated.

The twp most highly developed mines in the -Auckland district are the Talißman and TVaihi. In the

Talisman mine, where the workings are the deepest in the colony, it is only claimed that there are two yearß ore in sight. And yet the Ferguson Mining and Smelting Company has the assurance to say in a printed prospectus that it has in the properties ore sufficient to last for 100 years. The Waihi Company, with its vast developments, will scarcely claim to have seven years' supt>lv of ore in bight. But the Ferguson Mining and Smelting Company, with little or no development, claims to have a hundred wears' supply of ore at the rate of 100 tons per day. Speaking o£ each of the mines owned by the company, the engineer claims that a low level tunnel would give a specified quantity of backs. If these low level tunnels were driven, and they do not appear to be, what guarantee is there that the reef would live down to them, or that it would be payable r* To guarantee 100 years of ore in any of the mines, would necessitate a score of low levels, and many more than that, even if the reefs ket>t their size and value. These should be driven before the assertion is made that the company has a 100 years' supply of ore.

Then again, the output is estimated at 10U tons a day, yielding £4 per ton, or a daily return of £400. The assay value of the ore is given at £4 per ton, so that the company in its prospectus is guaranteeing full extraction, which is an impossible thing to the best reduction plants in the world. One property, the Coromandel Queen, is scheduled to nroduce ore, evidently for 100 years, at assay value of £4 10s. This undertaking, I am propared to say, will astound the oldest and most exnerienced of the Coromandel miners. They could scarcely have realised that this bonanza was lying unworked in their district for so many years while Coromandel was depressed and stagnant. If the ore is worth £4 10s per ton, it scarcely needed a smelter to extract the gold.

The space at my disposal will not warrant me in reviewing this extraordinary prospectus in detail. l nou±ce, however, that a schedule is given of the profits from some famous smelting plants, and, in the final columns, the probable dividend of the Ferguson Mining and Smelting Company (Ltd.) is estimated at 8s per share. This rate of profit is calculated to satisfy the most avaricious investor. But as it appears to be estimated on a daily output of 100 tons of pre of an assay value of £4, which assay value uever decreases in value, and is dependent on full extraction, intending shareholders would do well to take some sound mining advice before investing their capital. Also, it would not do to take that promise of a hundred years' supply of ore too seriously. It may be there, but the investor knows just as much on that point as the engineer who made the estimate does. No man can see a foot into the ground, and doubtful indications are not to be depended upon. I would recommend this prospectus to the careful attention of the Auckland Stock Exchange.

The report presented at the annual meeting of the Northern Steamship Company disclosed a cheerful state of affairs. The nett profits, after making liberal allowance for depreciation, showed a total of £9.037, and the sum brought forward from last year, £806, brought the amount to the credit of profit and loss account to £9,863. The directors are able to pay a dividend of seven per cent., and carry forward the substantial nest-egg of £1,182. Wnat more convincing evidence of the -prosperity of the company could b$ desired ?

The sharemarket made holiday for two days in connection wiljh Empire Da-" but in any event the volume of business for the week has not been large.

Bank of New Zealands continue firm, buyers still offering last -weed's price of £10 ss, but holders refuse to be tempted at less than £10 10s.

National Banks have been done at £5 pB 9d, and there is a selling quotation of £5 10s. * • •

Insurance stocks are firmly held. Buyers of New Zealands fail to find sellers at £4 8s 6d, South British buyers have eased their prices to £5 4s 6d, with a substantial margin between them and holders, and Nationals are inquired for in vain at £5 4s 6d.

In mining, Waiotahis have dropped to a lower ngure than they have seen since the last splitting up of shares, viz., 23s 6d, with a tendency to drop still further, tnough the return tor the month is certain to be large, and the usual dividend of Is 3d is looked for next week.

The slight drop in Waihis, which have changed hands at £y 5s 6d, is mainly due to the placing of a large parcel upon the market in the realising of an estate. The reports from the mine continue excellent, and the dividend of 3s is-> payable this week.

Regarding Talismans there is an excellent feeling, prompted by the cheerful accounts concerning the appearance of the lode at No. 13 level, where the ore for a distance of more than 40 feet has averaged £y per ton, with a width of 4to 5 feet. A dividend of Is per share (£15,000 in all) has just been declared, and shares are at about 335.

Tairua Broken Hills reports the best return of the last six months, £1800 from 550 tons, but the market is a shade easier than last week.