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chance of machinery being landed at reasonable cost even where rich ground can be proved to exist, and this is a factor which will hamper the progress of the industry to a considerable extent; but it has been made manifest that black sand when mixed with a reasonable proportion of beach shingle can be dealt with in bulk by a bucket dredge of the ordinary type in a successful manner, and I am of opinion that where sufficient area is available to afford a dredge, say, ten years' work, and it is proven that there is a'reasonable proportion of gold existing, the beach claims will prove more profitable on the whole than the claims situated in creeks and watercourses, where work is liable to more frequent disturbance, and where the gold-deposits appear to be more patchy. Dredging. Table A (appended) gives the same information as Table A given in my report for last year, and enables a comparison to be drawn of the grants and expiry of prospecting licenses, and the grants and surrenders of special claims, whether reefing, dredging, or sluicing areas. The prospecting licenses which were reduced in number in 1901-2 by 441, and the areas granted by 31,996 acres, were in the year 1902-3 further reduced in number by ninety-four, and in area by 6,883 acres. The special dredging claims, which showed a balance in 1901-2 in numbers of grants over surrenders of sixty-one, and of areas of 4,920 acres, in 1902-3 showed an excess of surrenders over grants in number of fifty-two, and in area of 4,758 acres. The sluicing and dredging surrenders and new grants do not show so marked a difference, but both show a decline in number and area. I think it is clearly shown by the tables of this and last year that the industry has now entirely lost the impetus of the " boom," and is almost reduced to normal conditions. Table B (appended) is also in the same form as Table Bof my report of 1901-2. From this table it will be seen that there are thirty-four companies in esse, and seven in course of liquidation. The total capital in shares is £408,120, of which £338,120 is the share capital of companies in esse, and £70,000 of the companies in liquidation. Besides the £338,120 share capital, the thirty-four companies in esse have a debenture debt of £24,094 18s. 7d. Of all the thirty-four dredges in esse, only ten have paid dividends; and in these ten there is a large inequality of returns. The Nelson Creek dredge stands at the head of the dividend-payers, the percentage of dividends to capital being 115 per cent. No Town Creek stands next with 25 per cent., and North Beach with 20 per cent. The remaining eight dividend-paying dredges taken together paid 6-42 per cent. It must be observed that the directors of the Pactolus, instead of paying dividends, invested the profits in equipping a second dredge, a course which up to the 31st December last does not appear to have been profitable. But I have no figures as to the net earnings so invested. The total amount of gold got during the year was 23,579 oz., which, taken at £3 19s. per ounce, gives £93,137, which would show a percentage of gold won to the total share capital of all the dredges in esse and being wound up of slightly over 22 per cent. Turning to the non-dividend-paying dredges, we find that the percentage of gold won equals a little over 21 per cent, on their total share capital, and that the whole of that gold won has gone in expenses of some kind or another. This result is curious proof of the reasonableness of the estimate given in my report last year—that it would take £80,600 to pay the working and general expenses of thirty-one dredges. The twenty-four non-dividend-paying dredges alone expended £69,000, and if we take the expenses of the ten dividend-paying dredges at £2,600 each—as estimated in my last report —then the thirty-four dredges must have expended in working and maintenance £95,000, or an average of £2,500 per dredge—a difference of only £100 a year per dredge between the estimate and working result. It cannot be said that the results given by these tables are satisfactory, or that there is much ground for encouragement. There are so many elements of uncertainty involved in the problem of profitable dredging that it is most difficult to regard the enterprise otherwise than as speculative in a very high degree—at least, as worked under present conditions. No doubt the money spent has benefited a large number of persons—manufacturers, carriers, storekeepers, artisans, and labouringmen ; but the shareholders do not intentionally invest their money on altruistic principles, and the result to them cannot be anything but disastrous. The Alleged Oil-deposits at Kotuku. Messrs. Ormond, Cooper, and McLean hold 600 to 700 acres of the supposed oil lands at Kotuku on prospecting licenses, and have applied for mineral licenses covering 626 acres. They have also a right to bore on the Education Endowment Eeserve 131, containing 1,000 acres, and over two freehold sections containing 197 acres. They have had an experienced man engaged with labour in boring for several months, and found oil, but, as far as is at present known, not in quantities to justify any expectations of a payable field. Messrs. Wickes, Mortensen, and Dentella have taken up 539 acres on prospecting license, and have provided plant, but as yet have not actually done any boring. Mr. Eoberts has a prospecting license over 900 acres. The total of all these areas taken up is 3,939 acres. When the Harbour Board were boring for coal at Dobson they came across small quantities of oil. But the last bore went down 2,000 ft., and there was no sign of such an oilfield as those in the United States, in Baku, and in Burmah, which furnish the world with petroleum. Nor, having regard to the New Plymouth experiences and the general broken character of New Zealand strata, would it be wise to indulge in any sanguine expectations with regard to Kotuku. The Timber Industry. The exports of timber and railway-sleepers from the Port of Greymouth are as follows: — Timber : 16,154,556 ft.; value, £56,540 19s. Sleepers : Number of pieces, 127,873, equal to 2,983,703 ft.; value, £20,779 7s. 3d. Total, 19,138,259 ft.; value, £77,320 6s. 3d.