New Guinea Goldfields, Ltd.
pp. 36-37 · Read in the full issue
Annual Accounts Show Company at Interesting Stage of Development.
AN interesting financial position is dis closed in the annual report of New Guinea Goldfields, Ltd. for the year ended September 30, 1932.
The nominal capital of this Company is £5,250,000. Of this there has been is sued 4,080,000 ordinary shares called up to £1 each and 375,000 called up to 1/each —thus making the total issued capital £4,098,750. In addition, there are other liabilities bringing the total to £4,269,599. This is balanced on the as sets side by the following items: Mine property £3,718,970 Buildings, plant and equipment 167,968 Stores, etc., on band 28,292 Sundry debtors 12,544 Cash at oank and on hand . . 43,355 Payments in advance 7,225 Balance at 30/9/31 £185,124 Add nett expenditure for year 30/9/32 for prospecting and development, £106,177 .. . 291,241 £4,269,599 This is a huge investment on which to make dividends. If only 5 per cent is to be paid on the issued capital, the Com pany will have to make a net profit of not less than £200,000. Therefore, we
turn with interest to the accounts for the year under review and find that the value of the gold produced and sold was £112,992. Against that there has been charged the following expenses: Wages and native labor £10,432 Royalties, rentals, stores 5,931 Management and overhead ... 9,727 Depreciation on plant and equipment 490 This leaves a net profit for the year of £84,906 —which is well on the way towards the £200,000 required.
The bulk of this Company’s present expenditure, however, is shown, not as a current expense, but as a capital ex penditure under the heading of “Pros pecting and Development Account.” This shows that during the year under re view the Company made a net expendi ture on prospecting and development of £106,117, the bulk of which was: Prospecting and development . . £64,363 Roads survey and construction .. 2,457 Geological survey 8,321 Depreciation on plant 13,172 Administration expenses, Sydney and London 13,442 This £106,117 has been added to £185,124 of similar expenditure incurred in previous years making a total of £291,241 on prospecting and develop ment account, which is shown as an important item of assets.
Just before the American financial crisis caused a slump in gold shares, New Guinea Goldfields, Ltd. shares were quoted in the vicinity of 7/-. After the fateful 3/3/33 they fell to around 5/6.
There are those who believe that, as suming that the value of gold is main tained, they are good buying at that price. A careful examination of reports and accounts suggests that this Com pany may yet show an annual profit of anything from £100,600 to £200,000.
This would give an excellent return on shares bought at 5/- or 6/-. The ques tion for investors really is this: As suming that sales of gold represented, say, £200,000, how much of the expendi ture now tucked away in capital ac count under the heading of “Prospect ing and Development” would be brought into current expenditure and charged against the gross value of the gold pro duced? If, as the arrangements of the accounts suggest, the greater portion of
this £106,000 expenditure last year on prospecting and development will cease when the particular mines affected come into full production, then N.G.G. shares will yet be worth something consider able.
The Official Reports.
For the year under review, the direc tors’ report states that “very good pro gress has been made in all the prelim inary work necessary for proving the ore bodies at depth. With the installa tion of the power plant, shaft sinking has been pushed ahead on the Plateau, and it can reasonably be hoped that de velopments during the current year will multiply the ore reserves appreciably.
The working of the alluvial areas has been conducted very profitably during the period under review, as will be seen from the accounts.
“Though it may be as disappointing to shareholders as it is to the directors that the mill at the Golden Ridges is not yet working to the capacity for which it was designed, the results of full scale work have demonstrated the success of the modified flow sheet which should re sult in low treatment cost. Orders are being placed in Australia for additional cyanide tanks which will enable us to treat up to 4,500 tons of ore monthly, which is 50 per cent, in excess of the capacity as originally designed. Our en gineers are exerting themselves to obtain the greatest output whilst the price of gold is high. They advise us that from March 1 until the additional tanks are installed, the mill will treat about 1100 tons of ore monthly for an estimated profit of £7000.
“Prospecting work, which has been carried out by a well-organised staff under Mr. H. M. Kingsbury, the Com pany’s geologist, has discovered new dredging areas which are potentially very important. One area is a grass flat measuring eight miles long by 1500 feet wide, and the other measures 10 miles long by 3000 feet wide. Our applications for. leases on these areas will be dealt with at an early date. A complete cam paign of drilling will be necessary to determine the values and the character of the bed rock, but as an indication of the possible values it was ascertained that six of the best panning beaches averaged 3/6 per yard, calculated on the price of gold at the par rate of ex change. The prospectors were unable to reach rock bottom on these beaches owing to water. Arrangements are being made to send a well-known dredging en gineer to estimate the value of the areas and to advise on the method of working.
“A substantial increase in the ef ficiency of our native labour force will result from the amendment which was made during the past year in the Ordin ances. We are now permitted to indent native labour for three years in lieu of two years as heretofore. It usually takes about a year to train a boy properly and build up his constitution by good food, so that we will in future obtain two years’ effective work from a trained boy instead of one year.”
The report of the Mining Trust, Ltd., consulting engineers to New Guinea Goldfields, follows:
Edie Lode No. 1.
The drift West was turned to the South at 1,100 feet in order to crosscut Edie Lode No. 2, and at 1,130 feet from the portal passed through what appears to be a faulted block of the vein, assaying 19 dwt. gold and 6.2 oz. silver over a width of 10 feet. This ore will be prospected later from crosscuts driven beyond the zone of heavy ground in the vicinity of the fault. Edie Lode No. 2 was encountered at a
distance of 1,290 feet from the portal and driv ing to the West along the lode is being con tinued. No. 1 Shafts which has been sunk to the level of this drift, was continued when power was available for pumping, and has now reached a depth of 122 feet below the drift.
About 20 feet below the drift the shaft passed through the vein, which essayed 1.3 oz. gold and 9.5 oz. silver.
Edie Lode No. 2.
No. 2 level was continued to the South-East along the vein for a distance of 900 feet, for which distance the average assay is 9.2 dwt. gold and 15 oz. silver over an average width of 40 inches. This level then connected with the drift from the Water Race Adit, which has been driven an additional 450 feet to the East on the vein, which assays 6 dwt. gold and 10 oz. silver over a width of 11 inches. The drift is 100 feet vertically below No. 1 level and the face is now 180 feet beyond the South- East limit of the ore shoot on No. 1 level.
No. 3 level has been driven 770 feet North- West from the crosscut from the adit on Edie Lode No. 1 and will shortly be connected with No. 4 Shaft.
As the old shaft down to No. 1 level was in heavy ground and bad repair, a new shaft, No. 4, has been started from the surface and has now reached a depth of 350 feet. The shaft encountered the vein at a depth of 340 feet and from 340 feet to 350 feet: the average assays were 13 dwt. gold and 8.5 oz. silver over an average width of 37 inches, full width not exposed.
Edie Lode No. 3.
A crosscut. South has been started from the Water Race Adit to cut Edie Lode No. 3 at a vertical depth of 230 feet from the outcrop, but has not yet encountered the vein.
Location No. 9A.
The Deep Level Adit to cut the Surman Vein has been driven a total distance of over 600 feet and is now approaching the vein. Work at this location has been intermittent and is only continued when labour is available.
Golden Ridges.
Part of the ore-body has been stripped of overburden ready for mining, and prosfpecting work has been continued on a smart scale in search of similar deposits. An interesting discovery of exactly similar ore has been made about half a mile from the Golden Ridges, and a thickness of 7 feet of ore, assaying 1.75 oz. gold and 11 oz. silver, was. found in the discovery trench.
Subsequent trenching indicated a length of 400 feet of ore. assaying 13.6 dwt. gold and 2.3 bz. silver over a thickness of 10.9 feet, but a prospecting shaft put down to test the con tinuation of the ore bed failed to find ore, and it is not yet possible to estimate the import ance of this discovery.
The Power Plant has been completed and is giving good service. The delivery of power to the Plateau was delayed by landslides during the erection of the transmission line and excep tionally severe thunderstorms. These difficulties were in due course overcome.
The Mill was completed in August but has not yet attained the test results. Certain physical and mechanical difficulties were en countered which may necessitate alterations in the flow sheet, and owing to the great distance from all sources of supplies any alterations necessarily take time. The estimated value of the ore has been confirmed by the preliminary work, and there is no reason to doubt that the difficulties referred to will be overcome.
Since February the alluvial leases have been worked by the Company, yielding a working profit of £84,906 (Australian).