Fijian Bubble

Bursts

How Shares Have Declined

r "’HE fall in the Stock Exchange values of Fiji gold-mine shares, which com menced in October, continued throughout the ensuing three months.

One Melbourne newspaper, on January 30, said: Since August and September, when most of the peak prices were touched, the market has shown an almost uninterrupted reaction. Compared with highest valuations, the market capitalisations of the three chief propositions have fallen by an aggregate of about £2i million. This is illustrated in the following table:—

No one will overflow with sympathy for the shareholders. Those who hold original scrip can afford to hold on and await production developments: those who paid the ridiculous speculative prices of six months ago deserve exactly what they have got.

In this journal, in many successive issues, we pointed out that even if the new Fiji field were an El Dorado of delirious proportions, it would not jus tify the mad speculation that took place in Fijian gold shares during the early part of 1935. But, over a period of

months, the strange people of Collins and Pitt Streets continued to pour their cash feverishly into the offices of the gratified sharebrokers. Barnum said “there is one born every minute!”

There is no doubt that there is good gold in the Tavua field—quite enough to return a handsome profit on the cost of obtaining it. But there certainly is not enough gold there to justify the prices paid for Fiji shares in mid-1935. The shares, no doubt, will come down to their correct values, and the Fiji gold industry will be established and follow a normal course.

The continued fall in share values fin ally caused two of the biggest director ates early in February to issue reassuring statements.

The Emperor directors assured share holders as follows: No unfavourable developments have occurred.

Work carried out since the flotation of the com pany in August of last year has indicated a very large addition to payable ore to the estimates then given. No time is being lost in providing equip ment to enable the mine to be brought into pro duction on a large scale. Directors state that the monthly output from the present small milling plant is to be increased to approximately 2,000 tons, giving a monthly profit of approximately £6,000, pending the erection of plant capable of treating 12,000 tons monthly. Directors advise shareholders not to become panicky by sacrificing their shares at the present low market price.

The directors of Loloma (Fiji) Gold Mines N.L. issued a statement to the Stock Exchange on February 5: The directors said that “in view of the recent heavy fall in the market valuation of the com pany’s shares, a number of shareholders have re quested them to give some assurance in regard to the future of the mine.

“In order to assist them in giving this assur ance, they have requested Mr, W. J. Doran, who was manager of the mine to December last, to sub mit an estimate of the amount of gold which he considers had been proved by mine development to that date.

“Mr. Doran’s estimate up to the date of his departure shows that there is considerably more gold reasonably proved than is represented by the present market valuation of the mine.”

It was stated in the newspapers early in February that the market valuation of Loloma (25/- per share) was £1,125,000; that Mr. E. G. Banks, a direc tor, estimated there was 100,000 tons of 2j oz. ore in sight, worth £2,000,000; and that Mr. Doran’s estimate was 278,000 ounces of probable gold (£2,224,000).

The fall of values is illustrated in the following table:

M. Milliard, director of Etablissements Ballande, a large firm of general agents in Noumea, will leave New Caledonia by the Laperouse in March to spend furlough in France.

Peak Jan.30 Points. (noon). £ £ Emperor 2.950,000 , . 1.200,000 Loloma . 1,147,500 Koroere . . . . 502,000 . 75,000 Totals ... • . . . 5,192.500 . . 2,422,500

Mid-Oct.

Feb. 10.

Aloha Cent £22 £3 Emperor 14/- Fiji Corp £4 £5 G.M. of Fiji ... 30/- Koroere 5/5 Loloma 25/6 Tavua Dev 5/7 2/-