139

0.—3

Last year a number of said claimholders purchased Hendley and Company's water-rights for £8,000 on time-payments, paying interest at the rate of 8 per cent. The first payment of £1,000 has been made, together with the interest due. Extensive repairs and alterations have been made to dams and races, and the property is in first-class order, and, as showing the value of the ground, I have been informed that the whole of the indebtedness of the company will be paid off in a much shorter time than was anticipated. The necessity for a much larger supply of water is becoming more imperative every day, and the advisability of proclaiming at least the lower reaches of the Hokitika Eiver is more urgent than ever. The Kanieri Lake water-supply is contingent on the river being proclaimed. The company is still tunnelling through the terraces from the lake to Butcher's Gully, and has already constructed 3,000 ft. in connection with the race. The claims about Kanieri Forks are still turning out a fair amount of gold; they obtain water from the Kanieri Lake Eace Company, and but for this magnificent water-supply hydraulic mining in the district would be impossible. Craig's claim is still giving good returns. Goudie and party of tributers worked up for the fortnight to the value of £45 of gold, and Chesterman and party, also tributers, £124. This claim has produced gold to the value of something like £27,781, and it is reported that Craig has sold out to a company for £4,500 cash and £1,000 paid-up shares. The freehold consists of 470 acres. Holley's Claim (adjoining Craig's), also freehold, is under offer as a dredging venture for £1,600 cash. This claim has also produced a large amount of gold (to the value of over £10,000), and is said to contain payable gold under the water-level. Like Craig's, it is a series of beach runs, or leads, overlying each other, but also largely overlaid by the high terrace-formation at the back. Bottom has never been touched on the flat in front of the terraces, so that the depth is unknown. The whole of the ground in this neighbourhood, and right up to Lake Mahinapua, is now held, or applied for, as prospecting areas and claims. A new and improved dredging-plant is being erected on Mcintosh and party's claim on the Shanghai Lead, near the landing. Good returns having been obtained in the portion worked by the original shareholders, a new company was formed to work the ground—a beach lead—dry. The results of working our beach leads dry are looked forward to with considerable interest, as the large percentage of loss of gold by the ordinary method of dredging in the water is well known to dredging experts. Mr. Bishop, the engineer for the company, is fully satisfied of the feasibility of his method of thus dealing with our beach leads. Most experts estimate the loss at not less than 30 per cent, under the old or wet method. I fully indorse Mr. Bishop's method of dealing with our beach sand leads, and look for a rapid and marked advance in what may be called "drydredging" in connection with our beaches, whereby a much larger percentage of gold will be saved, and the cost of production in the shape of less costly plants be materially reduced. Following the line of the Shanghai Lead referred to, we come to a number of prospecting areas of 100 acres each, on what was known as the " Aylmer Lead." Only one party of miners are at work here (Sharp and Son's Extended Claim), working on face of terrace, and said to be making wages at sluicing. The prospecting areas extend to the mouth of the Totara Eiver and Kanieri. An attempt to drain Upper and Lower Commissioner's Flat was made by Main and party, and Singer and party, both being subsidised by the Government, but, so far, they have not succeeded. Within the last few months nearly the whole of the district has been applied for as prospecting areas and special claims, taking in both subsidised tunnels, with the consent of all parties concerned. The same applies to the Hokitika, the Kanieri, and Kokotahi Eivers. The Hokitika is applied for from*the boating-shed within the borough boundary to the junction of the Whitcomb Eiver. In some places where the river-bed is wide, claims are pegged three abreast. In connection with the dredging-claims held in the immediate neighbourhood of the Kanieri and Woodstock, a powerful company has been formed to acquire the Kanieri Lake Water-race, for the purpose of providing motive-power for the installation of a powerful electrical plant to operate their dredges, and furnish light and water for same. The matter has been eagerly taken up, and in a short time we hope to see the work started. Where there are ten or twelve powerful dredges to supply with power, light and water, there can be no question as to the economic value to be obtained. Owing to the continued success of dredging in Otago, and the arrival on the Coast of dredgeowners and experts from Alexandra and other well-known parts, our attention was called to the capabilities of the Coast as a dredging-field, with this result : that special claims were applied for, and options over well-known properties were eagerly taken up by our visitors; and from then until now the interest in our river-beds, flats, and beaches has so increased that a perfect dredging furore has set in, and every likely spot is pegged off and applied for. Many of the mining experts who have visited the Coast express themselves as highly satisfied with what they have seen and. learned, with this result: that speculation is already rife, and shares jump to a premium even before the promoters have obtained a permanent title to the ground they have applied for, and as often as not before a shilling has been spent in prospecting, or proving the value of the ground or the so-called gold-mine. The special claims and licenses applied for in connection with dredging cover approximately 24,000 acres. The applications for prospecting licenses are largely in excess of those for special claims, and may be accounted for by the fact that only a £5 deposit for a 100-acre area is required in applying for a prospecting area, whereas in special-claim applications from £20 to £60 is required ; hence the large number of prospecting licenses. Here I would call attention to a course of procedure that obtains in this district in connection with prospecting licenses, which is bound sooner or later to lead to serious trouble. Holders of prospecting licenses have formed and are floating companies without having secured a permanent title. When a special claim is applied for over the