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NGG Shareholders Not Soothed By New Dividend of 3d Per Share

Contrary to expectations, the announcement by the New Guinea Goldfields Ltd. Directors (that the improved position of finances permitted the payment of a dividend) created a certain amount of liveliness at the annual general meeting of the Co. in Sydney on January 28.

[T was only 3d per 4/3 share (equal to 6 per cent.) but it was the first for 13 years, and the Directors expected a pat on the jack. They suggested that then ce (£250 per annum each) be in ireased to £5OO pa.

But the back-patting was not brthcoming. No sooner had Chair nan Julius Kruttschnitt completed iis cautious, but not pessimistic, re iew of the Co.’s prospects than a ection of the 40 shareholders pre ent (usually, there is difficulty in etting a quorum at this meeting) rent into action.

They insisted that this was a liserable return after 13 years in tie wilderness, and the expenditure f well over £400,000 (war damage wnpensation) on rehabilitation of hat was a very large gold-mining iismess. They suggested that in lew of the history of the Co., and le absence of any promise of any ling better, the Directors would be ell advised to sell the property The present generation may know ttle of the history of NGG Ltd s origin is found in the frenzy

which followed the discovery of very rich gold-bearing country in the Bulolo River-Edie Creek area be tween 1925 and 1930. A London group, directed by a man named Urquhart, created an organisation which pegged or bought up leases in all directions around Wau. Large cash capital was put in; but many of the leases taken over were paid for in new scrip. Ellyu Limited (made from the initials of L.

Urquhart) became New Guinea Goldfields Ltd.; and by the time the frenzy was over, NGG Ltd. had an issued capital of no less than £4,500,000.

In view of the conditions—the exceedingly broken and primitive country, and the enormous trans portation cost (only carriers and planes then were available)—the Co. could not make a profit worth mentioning on £4l millions, so in 1935 the Co. abandoned three quarters of its capital, and wrote its £1 shares down to 4/3. Total issued capital now is £950,371, in 4,472,000 shares of 4/3. It had an unfor tunate history of mismanagement,

the Territory was overwhelmed by Wa A W the war. a new Directorate decided to carry on and rehabil itate’ under a new General Man

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substantially

In timber production —freighted by lorry down to Lae, along the road made in war-time—and, in a modest way, in trading and planting. It appears to have been a hard struggle to get to the dividend-paying stage on the available capital; but the immediate prospects now are re garded as good. The share-markets value the 4/3 shares at about 2/-.

The 3d per share dividend means that shares bought at 2/- would be earning about 12 1 per cent. The question for investors is: Will the dividends continue?

AFTER two or three critics had had their say, a section of the shareholders defended the Board, and condemned the sugges tion that the property should be sold. They pointed out that, if withdrawal was contemplated, the right time was after the war when, from War Damage compensation and sale of the leases and the wreckage, enough cash might then have been assembled to give share holders 2/- or 2/6 per share. But a sale now probably would not re turn a quarter of that. An excellent job of rehabilitation had been done in restoring the Co. to its present earning capacity, despite the diffi culties created by (a) reduced usefulness of available capital caused by the reduced purchasing power of the deflated Australian £ and (b) the apparent reluctance of the Aus tralian Government to assist the Co. in any substantial way.

One shareholder pointed out that

although, last year, the Co. had earned £285,961 from bullion, and £113,401 from sale of timber, the Australian Government had col lected from the Co. a direct tax of £13,728 in the 5 per cent, gold royalty, and had imposed heavy im port duties on most of the Co.’s goods imported into NG for the pur pose of carrying on the industry.

It grants the Co. timber leases on

a hand-to-mouth basis, and it i poses a Customs duty of I2i • cent on all NGG timber imported i; Australia, although timber impc from other concerns, and from N Zealand, go in free.

The result of all this was tlr although the Co. had the quite si stantial income of over £400,000 the year, the total profit was o: £32,700, and the Co. had to go

its savings for a distribution of £55,904 to shareholders.

A SHAREHOLDER said that the main purpose of the Co. seemed to be to provide large salaries for the staff. This proposed distri bution, taking into account the fact that 13 years had passed since the last dividend, was equal to one-half of one per cent. What was the use of carrying on?

A director pointed out that, in the 13 years, there were four years of total war, and at least four years of reconstruction under the most difficult conditions. War Damage compensation was calcu lated on 1942 values; when it was paid in the late ’forties, the £ was worth much less than its 1942 value; and within three or four years, when they were spending it in rehabilitation, it had again declined substantially.

The chairman refused to be drawn into any optimistic forecast. But he quoted figures to show that, in the four months since the accounts closed, satisfactory profits had been made by the Co.

A motion to increase directors’ fees from £250 to £5OO pa was opposed by an amendment, which proposed that the matter be de terred for a year. On a show of hands, the amendment was defeated by a small majority, and the motion carried.

The Board (Messrs. J. Kruttsch aitt, N. L. Cowper, H. H. McNall, J. H. Hohnen and H. G. Carter) was re-elected.

The chairman reported that dur ng the year, the ore mined by the 30. from various sources totalled: Tons Upper Ridges Mine .. 19,774 Andersons Creek .. .. 5,782 Golden Peaks Open-cut 2,877 Homestead Open-cut .. 3,053 The Golden Ridges mill treated >0,036 tons of ore, averaging 0.393 iz per ton; and 8,306 tons of bat ery sands, averaging 0.184 oz. The Soranga joint workings were seri ously hampered during the year by xtensive flood damage.