C.—3

38

colony where the gold is found in such a minutely-divided state in the quartz—the finest flour-dust cannot be compared to it; it has more the character of gold being precipitated from solutions containing that metal. Any one, pounding up the stone in a mortar and trying to wash it off in a tin dish, after manipulating the muddy water for two or three times, will find in the last washing nearly as much gold in the dish as in the first panning-off. Very rich ore was found near the surface, and the lodes were a considerable size ; but, strange to say, so far as yet known, the claim first discovered on this field—namely, the Try Fluke, was the best. The other claims on the same line of reef never had the same rich ore. The field, however, is of a large extent, and only the surface of it in small portions has been scratched, as far as gold-mining is concerned, and no doubt fresh discoveries will be found in this district. On the Kuaotunu field there were about fifteen mines being worked last year, although in some of them the operations have now been suspended. These comprised the Try Muke, Eed Mercury, Great Mercury, Just in Time, Irene, Otama, Waitaia, Aorere, Kapai, Vermont, Try Again, Three Stars, Victoria, Lucky Hit, &c, in which there were ninety men employed either as owners or wages-men, and fifteen tributers. The wages-men obtained 7,821 tons of quartz, which yielded 2,6500z. 19dwt. gold by amalgamation and 1,0730z. by the cyanide process; there was also 261 tons crushed for the tributers for a return of 5660z. 14dwt. gold ; in addition to this there was 6,588 tons of tailings treated for a return of 2,3000z. 6dwt. gold: thus making the total quantity of stone crushed last year to be 8,082 tons, for a yield of 4,2900z. 13dwt. gold, and 2,3000z. 6dwt. from tailings, whereas for the previous year there was 9,660 tons of quartz crushed for a yield of 4,6020z. lOdwfc. gold, and 2,240 tons of tailings were treated for a return of 21oz. 7dwt. of gold by amalgamation and 3,4280z. 4dwt. by the cyanide process, making the total quantity of gold to be 8,0440z. ldwt. as against 6,5900z. for last year, thus showing a decrease in the yield of gold of 1,4540z. for last year. Try Fluke Company. —This has been one of the most successful mining companies on the Kuaotunu Goldfield. When gold was first discovered on this company's ground the ore near the cap of the lode was very rich, but as the workings went down the. ore became of a much lower grade. Notwithstanding this, the returns from the year's operations ending the 31st of December last showed a fair margin of profit. In addition to expending £277 14s. 2d. in erecting an additional five head of stamps, and £50 for the purchase of the ground held by the Mariposa Company, a dividend of £1,250 was paid to the shareholders. The balance-sheet for the period referred to showed the value of the gold produced and expenditure to be as follows :— Receipts. £ s. d. Expenditure. £ s. d. From 6,420 tons of quartz crushed at the Mine expenses .. .. .. .. 3,316 11 3 battery: 1,9150z. 6dwt. gold.. .. 4,573 9 3 Battery expenditure .. .. .. 1,849 911 Cyanide plant : 6,074 tons of tailings Cyanide plant expenditure .. .. 2,464 12 3 yielded 2,0840z. gold .. .. 4,756 19 6 General expenses, offices, &c. .. .. 413 9 4 Cartage .. .. .. .. 37 5 7 Purchase Mariposa Claim .. .. 50 0 0 Erection of five head of stamps .. .. 277 14 2 £9,330 8 9 J £8,409 2 6 This leaves £841 6s. 3d. profit on the year's transactions; but, as there was a balance of £640 10s. 4d. in the bank at the commencement of the year, it enabled the directors to pay a dividend of £1,250 and carry forward a good balance to next year's account. To analyse the expenditure, the cost of mining 6,420 tons of quartz was £3,316 lls. 3d., which is equal to about 10s. 4d. per ton, and the cost of crushing at the battery was £1,849 9s. lid., which is about ss. 9d. per ton. Therefore the cost of mining and crushing was about 16s. Id. per ton for the last year, and the general expenses, including directors' fees, &c, was equal to Is. l'4d. per ton, while the cost of the cyanide treatment of 6,074 tons of tailings, including £356 lls. 6d. which was paid as royalty to the Cassel Company for the use of the cyanide process, was £2,464 12s. 3d., which is equal to about Bs. T4d. per ton. The royalty paid amounted to about Is. per ton, or 7-J- per cent. on the value of the gold extracted. The value of the gold extracted at the battery was equal to about 14s. 3d. per ton, and from the cyanide plant about 15s. Bd. per ton. It will be seen from this that it is entirely due to the use of the cyanide process that this company has been able to work at a profit last year. Had it not been for this, if the cost of mining, crushing, and general expenses be taken into consideration, there would have been a direct loss of about £1,006 lls. 3d. There is a good prospect of this mine continuing to yield fair returns to the shareholders. A winze is being put down from the No. 3 or lowest level, and the stone from this at 50ft. down was of better quality than what it was in the level. The object is to sink this winze as far as possible in order to prospect the lode, as the construction of another level means driving from 800 ft. bo 900 ft., which is estimated to cost about £1 per foot. There is, however, a great deal of virgin ground on the upper levels which has never yet been prospected, and the company expect to find parallel or cross lodes which will be as profitable for working as the lode that is at present being taken out. Kapai— Vermont Company. —During last year there was an amalgamation of the Kapai and Vermont Companies. The claim of the latter company runs through the Kapai ground, and arrangements for prospecting had been previously entered into by the two companies, but the chairman of the Vermont Company found, upon visiting the district, that the bad state of the roads and the distance from the mine to the batteries would entail a considerable amount of expenditure for the transit of ore to the battery, so amalgamation of the two companies was decided on and effected. This company's property adjoins the Try Fluke on its southern boundary, and the whole of the operations so far have been directed to opening up and developing the lodes. The main level has been driven into the range, and the lode intersected by a cross-cut 275 ft. in length and at a depth of over 250 ft. below the crown of the hill. Operations were, in the first instance, directed