N. G. Goldfields Ltd. Reduce

CAPITAL BY 75 per cent.

Shareholders of New Guinea Goldfields Ltd., Held their annual meeting in Sydney on March 27. Features: Issued capital written down from £4,472,331 to £1,118,081; dividend of 4 per cent declared (equal to 16 per cent, on capital written down); Mr. J. P. Blaikie Webster (of Mining Trust) becomes chairman; Major G. A. Harrison joins board, and retires from general managership, and Mr. E. A. De Latour takes latter position; announced that policy of vigorous development will be followed, and that may expect better rewards in future.

THE annual meeting of New Guinea Goldfields, Ltd., which was held on March 27 was attended by about 300 per sons. Mr. Blaikie Webster, who recently has come to Australia as the representa tive of tbe Mining Trust presided. The proceedings were expected to be lively: but only a few questions were asked and little criticism was offered. It was clear that there was among those present an undercurrent of discontent; but it was felt that nothing was to be gained by opposing the recommendations of the directors, as the latter held far more than sufficient proxies to carry out their wishes.

The chairman, in moving the adoption of the annual report, addressed the meeting at length.

The chairman said that the year’s profit of £180,000 was £50,000 better than the previous year. Income from alluvial mining was lower at £65,000, but the treatment of a larger tonnage at Golden Ridges mill gave an operating surplus there of £151,000. Including £50,000 brought forward from the previous year, the company’s ac count was now £230,000 in credit, and it was proposed to pay a dividend of 9.6d per share, absorbing £171,000 and leaving £59,000 to be carried forward.

The chairman said that his outstanding impres sion of a recent visit to New Guinea was the

enormous amount of pioneering work that had Administration. He described the huge difficulties that the company had had to meet in its initial stages owing to enormous transport costs and the absence of mechanical power. He said that the company pioneered the triple-engined aero

plane; made details surveys; ascertained the

possibility of constructing a road from the coast; carried out an exhaustive geological survey of the whole field; and built roads, bridges and an aerodrome for the benefit of the whole community.

It was a unique record of pioneering work which entitled the company to every consideration at the hands of the Government concerned. The company now had on the field administrative offices, stores, hospitals, native quarters, and other buildings, together with houses of the most modern type, electric and water supplies, telephone service, roads, gardens and farms refrigerating plants and other amenities of civilisation.

In order to overcome one of their most serious difficulties they had finally arranged to purchase hydro-electric power from the Bulolo Co., and this new supply was now connected with all points at Wau, Golden Ridges, and Edie, which develop ment would enable them to keep their steam-plant at Golden Ridges as a standby. This new supply of power would enable operations at Edie Creek, Golden Ridges and on the alluvial leases to go ahead much more quickly.

Describing the “present position and programme,” the chairman said that in order to learn more of the three ore bodies at Edie, which they had so far developed, they proposed to commence

deep diamond drilling; and for this purpose exten sive new plant was being sent to the field. No. 1 shaft, now down 356 ft., will be sunk another 300 ft. No. 4 shaft, connected with Edie No. 1 and 2 and Karuka veins, will be used for main haulage. Work has now been commenced on the erection of the new central treatment plant at Edie which will be in operation in August. This plant is already assured of supplies until 1940.

Most of the cheaply-mined open-cut ore at Gol den Ridges has been extracted, and as deep mining is now necessary, a shaft is being sunk.

Present indications were that this ore would keep the mill going for at least another year. A tailings retreatment plant was being erected. Test ing work was proceeding at the adjoining Golden Peaks area where there may be considerable low grade material for this mill.

Important work had been done on the alluvial area. Testing of a small part of the property on the Bulolo River indicates a profit in sight there of more than £100,000 and attention is also being devoted to the claims in the lower part of the adjoining Koranga Creek, in regard to which they had entered into an arrangement, already producing revenue, with the Koranga Gold Sluic ing Co.

To expedite the drilling and other work being done in this area, an order has been placed for additional power driven alluvial drilling equipment.

Meantime treatment of the Bulolo gravels has been deferred, as the results from this alluvial drilling and testing campaign may make it neces sary to consider a much more comprehensive scheme of operations.

It is also proposed to test the possibility of gold occurrences in the Koranga Crater section by electric power diamond drilling. Geologically, this section has always been one of interest, recently increased by the exposure on the Koranga Sluicing Co.’s claim immediately adjoining N.G.G. property of a rich deep lead heading towards the c-ater.

The company has already commenced driving an adit from which, at a suitable distance, drilling will be undertaken.

Discussing other matters the chairman said that it had been decided to remove the company’s administrative centre from Wau to Edie; that steps were being taken to arrange air transport at a reduced rate; and that representations were being made to the Administration to secure better native labour conditions. The company was also urging the Administration to revise the incidence of taxation, which was now in the form of a 5

per cent, royalty on all gold produced. It was claimed that this system worked very unfairly and that it should be abolished, and instead a small tax imposed on the profits of all enter prises on the field, without penalising any par ticular industry or company, A member asked why Major Harrison had severed his connection with the com pany.

The chairman said that Mr. Harrison did not sever his connection. He was loaned by the Mining Trust to N.G.G.

Ltd. many years ago, and did very fine pioneering work in New Guinea. But he was a very expensive man and the Trust, naturally, wanted to use his services in other directions. He had joined the board and his valuable knowledge and experi ence would be available to the company.

The motion was carried and the direc tors then moved that a dividend at the rate of 4 per cent, be declared. They stated that they believed that share holders would experience better times.

A voice: They have been a long time coming. (Laughter).

The necessary motion was then moved to reduce the capital of the company both issued and non-issued by 75 per cent. — that is, by reducing the value of the £1 shares to 5/. The chairman said that the formal motion which had been already circulated to shareholders included the reduction (from £1 to 5/) of the 777,669 unissued shares of the company; but it had been strongly represented since then that it would be a mistake to do this, as it would leave the company with only £190,000 odd of unissued shares. It was therefore proposed to move an amend ment to the motion —the effect of which would be to reduce the 4,472,331 £1 shares already issued to 5/, and instead of re ducing the 777,669 unissued £1 shares to 5/, to create, instead of 777,669 £1 shares, a total of 3,110,996 shares of a nominal of 5/- each. This would leave the company with £777,669 of unissued capi tal to be availed of in case of need. The Board desired that the motion, amended now in the manner described, should be carried.

The chairman said that this question

of writing down the issued capital had received the very careful consideration of the principal shareholders in England and Australia. The balance sheet for years had been carrying very large amounts which were apparently not re presented by tangible assets. It was proposed to write off among other things the amount of £439,000 odd shown among the assets as “Prospecting and Developing Account.” It might be said that some portion of this should still remain as an asset; or that current earn ings should be applied to the writing off of certain of the assets shown in the capital account; but the board had deemed it better to write down the value of the assets immediately and take ad vantage of the much improved position now before the company. The share holders were asked to sacrifice a consid erable proportion of the nominal value of their shares; but in return they would immediately participate in a much big ger income. Another reason in favour of the proposal—but a reason, of course, that did not concern the directors —was the attitude of the share market towards shares which were quoted at a discount.

The market was inclined to assume that such shares meant that there were no funds or no property and no dividends.

Pie thought the shareholders in a mat ter of this kind should take the market quotation into consideration.

A member: If the capital is to be writ ten down like this, what assets do you propose to write down. I assume that you will not touch sundry debtors, or cash or stores or payments in advance.

The chairman agreed that those items would not be written down. The other assets would be reduced in valuation. He emphasised, however, that the same as sets would be there in the future —it was not proposed to destroy any.

A member: It is evident to me that the only object of this motion is to cover up the losses which the Directors have made in the past. I cannot see that any thing else is to be achieved.

A member: The more gold has gone up in value the more our shares have gone down.

The chairman said that the whole of those properties held by the company were acquired by the issue of paid up shares. The total cash subscribed in connection with the issue of shares repre senting £4,416,050 was only a little over a million pounds. It was not possible now to claim that there was on the field over three million pounds worth of proven ground.

A member: If you are going to reduce your capital from £4,000,000 to £ 1,000,000 do you think that there is any chance of a corresponding reduction in the cost of management and overhead expenses.

Another shareholder: Does this not mean that you paid those original share holders in scrip a good deal more for their leases than they were worth?

The chairman: That may be an in terpretation. The fact is that in the beginning there were a large number of

prospectors in that field and they were very optimistic. I had nothing to do with operations at that time but I as sume that the prospectors were rather eager to become partners in this company and they accepted our shares accordingly.

The chairman added that the reduction In the value of the issued shares was general—there was no distinction made between those who had subscribed cash and those who had received shares in payment for their ground.

A member: How many of these leases have been tested? I understand that some have been proved quite valueless.

Why not write off only those that have been proved valueless.

The chairman said that the company’s work up to the present had been re stricted owing to such difficulties as the heavy costs of transport and the lack gf power which prevented the operation of pumps and did not allow investigation to go below water level. It was pos sible —although he would not say so offi cially—that some of the company’s leases were not worth what had been paid for them. The work of testing would now proceed more rapidly. The company to day was in the position of receiving a fairly satisfactory income, based on what the market said was the value of the shares. If they accepted that position, adjusted their capital, and wrote down their assets, they were doing no harm to their shareholders. There were 300 or 400 leases and it was difficult to say what proportion of them was valueless.

A member expressed himself emphati cally against the motion as it had been amended. He thought that it would be most undesirable to make so large an amount of uncalled capital available to the board. This company had always been under the stigma that its capital was too heavy; and the criticism against the board and management was that, when ever they seemed to be getting on to good gold, they dashed off to experiment in some other direction and did not get on with the main job of producing gold. If the unissued as well as the issued capi tal were written down as originally pro posed, a check would be put on the board and management and they would be com pelled to get on with the job of producing gold and giving some reward to share holders.

Another member: Let us shorten all this —we are getting nowhere. Will the chairman tell us whether or not he has in hand sufficient proxies to carry this amended motion, whatever this meeting may think. (Laughter).

The chairman: I am the last man to use proxies to stifle discussion. We are very glad to have the opinion of this meeting. He went on to say that the board did not propose to acquire any new properties but would devote all its at tention and energy to developing the properties which it already holds in New Guinea and which it regards as very valuable. It did not intend to engage in any outside schemes which might in volve waste of capital.

The amended motion was then carried; directors and auditors were re-elected; and the meeting terminated.

The directors are now Mr. J. P. Blaikie Webster (chairman), Major G. A. Harri son. Mr. A. M. Hemsley, Mr. T. R. Mc- Culloch, Mr. D. P. Mitchell, Mr. J. M.

Bailey, and Earl Castle Stewart. Mr.

Bailey is a son of Sir Abe Bailey, the South African mining magnate.

Miss Daisy Coltheart and Nurse A. M.

Williamson, workers for the Methodist Church in Australia, have been accepted as mission trainees for Papua.