Reconstruction

New Guinea Goldfields Ltd. are Proposing Reconstruction

THERE is little comfort for either shareholders in New Guinea Goldfields Ltd. or the Administration of New Guinea in a statement made by Earl Castle Stew art, the chairman of the Mining Trust (which controls N.G.G. Ltd.) at the annual meeting of the Trust in London recently.

The Earl said that for some time past negotiations had been going on with the Sydney board of the New Guinea Gold fields Ltd. in regard to financial recon struction of the latter company. He had recently received a cablegram to the effect that agreement had been reached upon the general principles which should govern such a reorganisation. There were still some details of substantial importance to be settled.

Which probably means that, as we have forecast repeatedly, those shareholders of N.G.G. Ltd. who trustingly accepted N.G.G. scrip in payment for their valuable leases on the Morobe field, are going to “take it in the neck.” They have seen this “pup” of the all-powerful Mining Trust muddle along for about five years, wasting many tens of thousands of pounds through stupidity and inefficiency, and they are just as helpless to do anything now as they were then. It is a tragic example of the kind of thing that has distinguished some large-scale mining operations in every country and in every decade.

The Trust chairman stated also that New Guinea Goldfields Ltd. had in hand at the beginning of December £A240,255 and £stg 45,000 was due to the company as the remainder of the call on the Min ing Trust’s shares. It had been estimated that ore reserves at the Golden Ridges would permit of work being continued until early in 1936 at the present rate of profit. Before then the mill at Edie Creek would be erected and would be treating 30,000 tons a year. It was estimated that the scale of operations could be maintain ed for five years at least.

It was impossible to estimate profits from alluvial work (he continued) and no statement of annual profits for the five year period could be made. Further profits would depend on the results of develop ment work now being undertaken to test the Edie veins at depth, and on discoveries on the other leases of the company. The search for sulphide ore in depth on the Edie veins was being continued by drift ing from the No. 1 shaft.

Any casual person, reading that vague statement of pious hopes, would suppose that N.G.G. Ltd. had commenced opera tions quite recently. Instead the Co, has been at work in New Guinea for at least five years. The Mining Trust group and the Placer-Bulolo group got in on this rich, new goldfield almost simultaneously.

The Placer-Bulolo people formulated a plan and set to work to produce gold on a worth-while scale; and their gold has been coming out for the better part of two years, on a steadily increasing scale, to the great enrichment of the Territory. By comparison, the Mining Trust-N.G.G. Ltd. group have not appeared in a favourable light. Their gold production to-day, when set against the issued capital of N.G.G.

Ltd. (4,405,389 shares of £1, of which 4,130,389 are fully paid) is ludicrous— particularly when it is remembered that N.G.G. Ltd. is squatting on a large sec tion of the rich and still undeveloped leases of the field.

Bulolo G.D. Ltd.’s £1 shares are quoted

at £9; N.G.G. Ltd.’s £1 shares at 6/3.

Further comment is needless.

The Annual Meeting

The annual meeting of shareholders in New Guinea Goldfields, Ltd., will be held in Sydney on March 27. It is reported that Mr. Frank Hambridge will retire from the directorate.

A proposition has been made—but, we understand, has not been seriously con sidered—that the interests of New Guinea Goldfields, Ltd., should be sold to the Placer-Bulolo group; or that, alterna tively, the two groups should be amal gamated. From the public point of view, it seems a great pity that something of the kind cannot be done. The connec tion with Placer-Bulolo would provide a guarantee that operations on the field would move swiftly on a well-ordered plan, and that there would be adequate gold-production within a reasonable time; and it also would assist the un fortunate N.G.G. shareholders by raising immediately the market value of their holdings.

Something of a definite and drastic character should be done. Only a super optimist can expect the price of gold to remain indefinitely at its present level.

If N.G.G. continue at their present rate they will reach worth-while production about 1938, when the economic pendulum will be swinging back to lower gold prices. [Since the above article was put into type, the company’s directors issued their annual report, and proposals, for the general meeting. It is proposed to reduce nominal capital from £5,250,000, in £1 shares, to £1,312,500, in 5/- shares.

Paid-up capital which has been lost or is, unrepresented by available assets is to be cancelled, representing a loss of 15/- per share on 4,472,331 issued shares that is, £3,354,248 is to be wiped out.

The issued capital would then be £1,118,083, in 5/- shares.]