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good enough to inform me (by telegram to save time) whether you purpose allowing Mr. Thompson to draw against the first £100 as he proceeds with the work. I have, &c, AValter 11. Pearson, Dr. Hector, Government Geologist, Wellington. Commissioner, Crown Lands. Mr. Thompson to Commissioner of Crown Lands, Invercargill. Sir, — Invercargill, 4th January, 1873. I hereby agree to trace or test tho outcrop of coal on w rest side of Nightcap Hill as follows:— 1. To lay bare the seam for 20 feet along the outcrop, and by pits in the line of the strike, so as to get the trace trend of the seam. 2. A surveyor to be approved by you to set his level on the true strike, and strike the seam on the east side of this hill, in line of bearing. 3. To flag out outcrop to lowest level. This I will do for tho sum of £100; and if the seam prove to be a payable one, I will receive a bonus of another £100. I have, &c, To the Commissioner of Crown Lands, Invercargill. T. J. Thompson. Mr. Thompson to Dr. Hector. Dear Sir, — Invercargill, 23rd January, 1873. I have the honor to furnish you with a report of my labours in trying to trace and find outcrop of coal in S.E. slopes of Nightcap Hill. I have ascertained the dips or strike at the outcrop at the fence for a length of 30 feet, which I find has a strike li inch to 1 foot to the south, and 2| inches to 1 foot to the east. I took Mr. Aitken, an authorized surveyor, up with me, and we took the levels over the hill to the lowest level for a distance of half a mile, and found that we were 25 feet above the coal outcrop. I send you a plan and tracing of elevations, and line taking, and sample of ironstone and coal that I got up the hill side, 20 chains from coal face. Taking into consideration the angle which the coal dips at, it would require a great depth to tap the coal. I thought it proper to acquaint you of particulars. I walked over towards Wray's Bush to look if any tramway truck could be got to the coal, and find that a line could be constructed without any heavy cutting by following up south side of the gully which all the south spurs end in; the line would be nearly straight with Winton and AVray's Bush and coal crop. It is a gradual ascent from Opio Creek, with the exception of going down of the terraces to the creek, about half a mile to south from coal crop, which a siding road could well be made cheap. Please to let me know particulars of ironstone. I have, &c, T. J. Thompson. Dr. Hector to Mr. Pearson, Invercargill. (Telegram.) AVellington, sth February, 1873. Thompson's report not clear, as seam can only dip one way at a time. Averaging his sfatements, gives N.N.E. as direction in which coal should be sought for at lowest level. No pay till he finds coal on east slope of hill. AVhat thickness does he consider seam at fence ? Sample sent is good. J. Hector. Mr. Pearson to Dr. Hector. (Telegram.) Invercargill. 11th February, 1873. Re Nightcaps. —Thomson states dips were taken from right-angle sections by spirit level, the mean of the two giving strike of coal, and, according to dips, has little chance to find same seam on east side near surface. Does not understand no pay till he finds one east side. Not according to agreement. AVill stop till hears further. AValter H. Pearson, Commissioner, Crown Lands. Mr. Pearson to Dr. Hector, AVellington. (Telegram.) Invercargill, 15th February, 1873. Re my telegram of 11th instant. —Thompson says he has offers of other work. Is he to go on with Nightcap exploration ? Expense going on. Thickness of seam at fence 7 feet 6 inches, and not through when he left. AValter H. Pearson. Dr. Hector to Mr. Pearson, Invercargill. (Telegram.) Wellington, 15th February, 1873. Thompson's contract is to find the coal on the east side of Nightcap. Of course I expect him to go on with the exploration. If he thinks it can't be found, he should give it up and let you get some one else to try. Have written fully. J. Hector.