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deposit forming the divide between Gabriel's Gully and Munro's Gully. For many ) r ears the richest parts of the deposit were driven out and the material crushed in stamper-batteries. In 1881 the Blue Spur and Gabriel's Gully Sluicing Company (Limited) started operations in the bed of Gabriel's Gully, where there was an accumulation of tailings deposited from, the cement-workings. In order to treat these tailings profitably, the late Mr. J. R. Perry introduced from America and afterwards improved the system of hydraulic sluicing and elevating which became general in use on the Otago goldfieldsi This claim continued operations until 1888, when, as the result of the amalgamation of all the claims on the Gabriel's Gully side of the cement-deposit, the Blue Spur and Gabriel's Gully Consolidated Company was formed, having its headquarters in London. Mining operations were commenced in 1888, and have been carried on continuously ever since. All the available area of tailings was first worked, so as to carry up an underground drainage channel and also to have worked-out ground on which to dump tailings from the cement-workings. The company acquired valuable water-rights from Beaumont and Waipori watersheds, and was thus enabled to concentrate a large body of water under splendid pressure upon the deposit, with the result that part of the spur has been almost completely broken down and sluiced away, while Gabriel's Gully itself has been filled with tailings from the claim to a depth of from 90 ft. to 100 ft. Work in the claims continues to be carried on in the usual safe manner, the mine having been practically free from accident during recent years. The solid " cement "is shattered by heavy charges of roburite, being subsequently sluiced away from the face and further broken by the workmen with spalling hammers, thence conducted by lengthy paved races to the elevators, where final runs of boxes are in use with gold-saving appliances for recovery of the balance of fine gold which had not been retained by the paved sluicing-runs. Twenty-eight men are employed in and about the claims. Mr. J. Howard Jackson, general manager of the company, supplies the following interesting extracts from his annual report to the London board of directors : " The mean value of the gold per cubic yard of cement works out this year at 3-7 gr., a slight improvement on last year, and, I believe, a world's record for low-grade dirt worked without loss. The 1,722 oz. of gold saved would form 4-644 cubic inches, and 104 millionths of the volume of cement handled in getting it. The above reads uncommonly like a newspaper snippet, but it illustrates in a way the proportion of things at Blue Spur. The dirt is most undeniably low-grade, and requires cautious handling to be made to yield even the meagre margin of profit actually secured. Subjoined are details of the year's work and results : Total gold won, 1904-5, 1,524-8 oz., value £6,062 6s. 2d. ; total gold won, 1905-6, 1,721-9 oz., value, £6,836 ss. sd. :an increase of 197-1 oz., and £773 19s. 3d. Total expenditure, 1904-5, £4,558 10s. Id. ; 1905-6, £4,895 10s. 2d. :an increase of £337 os. Id. Deducting the amount referred to above, £200, leaves the actual increase £137 os. Id., which is accounted for by the larger number of hours worked. The mean value of the gold contents of the cement treated for 1904-5 was 3-603 gr., or 7'lld. per cubic yard ; for 1905-6, 3-717 gr., or 7'435d. per cubic yard : an increase of 0-114 gr., or 0"324 d. per cubic yard—a very slight difference of under Jd. per cubic yard. No. 1 Division was worth 3-331 gr., or 7'lld. per cubic yard ; No. 2 Division was worth 3-717 gr., or 7'434d. per cubic yard. One requires to be very familiar with low-grade dirt to be able to view these figures without a shudder, when the amount of heavy work necessary to save 1,722 oz. of gold from 333,500 tons of hard-cemented breccia, all of which lies below sluicing-level, is intelligently considered. The value of the cement worked last year was 16s. Bd. per hour (4 dwt. 5 gr.) ; this year the value is 17s. 9d. per hour (4 dwt. 11 gr.) :an improvement of 6 gr., or Is. Id. per hour. The cost of winning the gold has been £2 16s. 6Jd. per ounce, or 71 '61 per cent. ; last year the cost was £2 19s. 9|d. per ounce, or 75-19 per cent. : a decrease of 3-58 per cent. Thirty hours' less dumping were necessary this year than last, the cost of which has been, on the basis of what the water used for the purpose would have earned had it been possible to use it for sluicing : Pumping, 525 hours at 17s. 9d. per hour, £465 Bs. 9d. ; less 71-61 per cent., £333 6s. : cost of pumping, £132 2s. 9d. Cost last year, £115 16s. 6d. :an increase of £16 6s. 3d. The total quantity of water used for all purposes during 1904-5 was 626,321,300 cubic feet in 7,228 hours sluicing and 555 hours pumping—7,783 hours ; during 1905-6 613,879,000 cubic feet in 7,653-5 hours sluicing and 525 hours pumping—8,178-5 hours : being 12,442,300 cubic feet less, 4255 hours more for sluicing, 30 hours less for pumping, and 395-5 hours more altogether ; which exhibits a less water-supply more advantageously applied. In other words, the efficiency of both 'elevators and pump has been increased by remodelling them in such manner as to allow the use of smaller jets, with the result as shown above, that with millions of cubic feet less volume of water 395-5 hours more work has been done. The pump has worked very well and has given no trouble. It has maintained its previous efficiency. The ratio of sluicing and pumping water is shown by the following figures : Sluicing-water—No. 1 Division 317,520,000 cubic feet, No. 2 Division 275,569,000 cubic feet, total 593,089,000 cubic feet; pumping, 20,790,000 cubic feet : total 613,879,000 cubic feet, or 3-3866 per cent. Last year the percentage was 3-3910, a barely perceptible difference of 0-0044 per cent. The head-races furnished a water-supply for sluicing during 1904-5 of 903-5 eight-hour days ; 1905-6 9568 eight-hour days :an increase of 53-3 days. And this water was subdivided and applied as under : 1904-s—No. 1 565-6 days, No. 2 338 days, total 903-6 days ; 1905-6—No. 1 490 days, No. 2 466-8 days, total 9568 days :an increase of 533 days. The working and upkeep of the head-races for the year has cost —Ordinary wages, £605 16s. ; timber-cartage and wages extra, £38 16s. sd. : total, £644 12s. sd. Rather more roburite has been used this year than last, more hours have been worked, and consequently more blasting has been necessary. Explosives in 1904-5 cost £426 4s. Bd., in 1905-6, £597 3s. ; an increase of £170 18s. 4d. Blast fired in No. 1 face, 24th February, £90. The cost of this blast should really be debited to the current year as no gold has been won from the cement dislodged by it. Wages paid in 1904-5 amounted to £3,001 Is. 2d., in 1905-6, £3,175 9s. 2d., an increase, due to extra hours worked, of £174 Bs. The following is a statement of work and values for the year 1905-6 : —Sluicing : No. 1 Division, 3,9195 hours ; No. 2 Division, 3,734 hours : total, 7,6535 hours. Cement: No. 1 Division, 97,987-5 cubic yards ; No. 2 Division, 124,342-2 cubic yards : total,