NOKOMAI GOLD

Evening Star, Issue 21750, 19 June 1934, Page 7

NOKOMAI GOLD

ENGLISH COMPANY'S OPTION

CONFIRMED BY SHAREHOLDERS Considerable interest was manifested by shareholders in the Nokomai Gold Alining Company’ Ltd. at the annual meeting last night, when the directors’ proposal to grant an option over the property, plant, and claims of the company to an English trust came up for dismission. As explained by the Chairman, the effect of the option, if taken up, would be that shareholders would receive in the vicinity of 3s per share in cash and fnlly-paid-up shares in the now company, equivalent to the number of shares held by them in the Nokomai Company, the shares each having a face value of 2s. About fifty shareholders attended the meeting and confirmed the option.

FAILURE OF EXCAVATING AfACHINE.

Ibe report before the meeting advised shareholders that the excavating machine, by means of which it had been hoped the property would be profitably worked, had been found unsatisfactory and unsuitable, and that digging by this means had ceased on April 12. The partially-excavated _ paddock was being worked by means of hydraulic elevators. The directors added that they bad been in negotiation with the representatives of a London mining syndicate, and, at his request, they, had granted ah option to purchase the company’s property, plant, and claims, the terms of the option being £39,000 cash in New Zealand currency and £26,000 in fully-paid l -tip shares of the value of 2s each in the company. The granting of the option had been made conditional on the shareholders approving it. CHAIRMAN’S ADDRESS. In moving the adoption of the annual report and balance-sheet the Chairman of Directors (Air H. L. Gill) stated that from a perusal of the profit and loss account shareholders must feel that the results of the year’s working were far from satisfactory. The total realised value of the gold won had been £5,620 9s Sd, while wages for working the claim had amounted to £5,137 9s Id. With the addition of the other heavy charges shown in the account, the result was a loss of £6,659 17s 6d. The directors attributed this loss principally to the Fact that the drag line machine supplied by the Vulcan Com pa n v had been both uusatistactorv and unsuitable. In consequence of‘this, the directors had taken legal advice as to the company’s position regarding the contract with the Vulcan Company, and, while it was not desirable to enter into the details ot the opinion, they were advised that the Nokomai Company had a favourable chance of obtaining some redress. During the negotiations with representatives of the Vulcan Company and Industries Ltd., .with a view, if possible, to effecting a satisfactory compromise of the claim and all other matters in dispute, the. Cfiairman added, a request had been made by Air L. J. Stevens for an option over the claim, water rights, plant, and machinery The directors had been informed that Air Stevens had been approached by a representative of an English syndicate to obtain an option from the company. After consideration it had been decided. subject to the shareholders’.approval, to give an option. i

CONDITION OF OPTION. The Chairman then read to the meeting the terms of the option, which, it was shown, had been granted for a consideration of £250 and under the three following conditions:—(l) That it should be subject to the approval of the shareholders; (2) that the Vulcan Steel Corporation Company and Industries Ltd. should agree to postpone during the term of the option all rights, claims, and disputes between them and the Nokumai Company; (3) that if the option was not accepted the Nokomai Company reserved the right to take action or defend any action against or by the other companies with respect to all matters in dispute be-’ tween them. It was also agreed that the option should remain in force until September 1 next. . At the request of the Chairman, the company's solicitor (Air J. S. Sinclair) made an explanation ut the proposals to the shareholders. He stated that the option would be resold by Air Stevens to the Mineral and Mercantile Trust Ltd., for a price equivalent of £75,000. This showed a difference ol £IO,OOO on the price to be paid to the Nokomai Company, but as £5,000 of the £75,000 was to be paid in cash m London the vendor of the option would receive an additional £I,OOO by reason of the rate of exchange, sp that, in all, he would receive £II,OOO. This sum would be sufficient to liquidate the claims of the Vulcan Company and Industries Ltd. It was the directors’ suggestion that part of the purchase money should be treated as paid in fully-paid-up shares, as it was felt that many shareholders might still desire to retain some interest in the company’s valuable claim. So that the directors might be satisfied that the option holder was not overloading the option of the English syndicate, they had investigated matters further and had in their possession copies of documents which had satisfied them that this was not being done. He also read a letter received from Air Headley Williams, the English promoter, who had left lor England particularly with respect to the option. It would be seen, he stated, that Mr. Williams was optimistic that the option would be taken up. ' Since it expired on September .1. the company was not losing time' in cleaning up the present paddock which was being worked, In terms of the option, the Nokomai Company was entitled to all gold won before the option was accepted. The directors had not been disposed to give the option holder a longer time for accepting it, as it had been felt that a long-termed option might embarrass the company, as ■ it would be prevented during that period from working the claim. DISPUTED CLAIMS. Shareholders would also notice that one of the terms of the option was that if the option was taken up the disputed claims by the Vulcan Company and Industries Ltd., which amounted to approximately £II,OOO, were to bo written off. If the option was accepted these claims wnlcl be settled by the option holder. The condition and unsuitability of the drag line plant was

such that, if the option was not acI cepted, the directors could not recommend a continuance of the working of it upon the claim. Records taken had shown that it had not been able to function to anything like the capacity of yardage warranted by the Vulcan Company’, and to this was largely attributed the unsatisfactory result of the year’s operations. Accordingly, the directors recommended the shareholders to approve of tbe option. The motion was seconded by Air H. M'Dowell Smith. NUMEROUS QUESTIONS. Shareholders responded to the chairman’s invitation to ask questions. Dr Newlauds asked how many yards were taken out during the period covered by the balance-sheet. The chairman: Approximately’ between 100,000 and 120,000yds. A shareholder wanted to know what was going to happen to the gold won before September 1. The Chairman : That will belong to liny Nokomai Company, and will be repaid to shareholders. Dr Newlauds: What arc you going to do with the machinery? The Chairman : I don’t know. Part of it might be used again. A voice: Put it in the Pioneer Halt. Another shareholder wanted to know what was going to be the directors’ policy if the option was not taken up. The Chairman said he thought they would have a scheme. The directors had investigated the possibility of working the ground by driving ojt the principle employed by the King Solomon Company, and it was their opinion that the operations would be much more satisfactory. “ Could that be done on the present capital? ” queried Air A. APAlillan. The chairman explained that before the scheme was adopted tbe matter would be discussed by the shareholders. Jfc might be necessary to ask them to take up debentures in view of the financial position of the company. The advice which had been received indicated that 25 per cent, of the gold won would be, profit. Mr F. Y. Alilnes said that, with the chairman and the secretary, he had visited the .King Solomon mine, and had discovered that the ground there was similar to Nokomai. He pointed out several advantages in the working of Nokomai. including the elevating of the material. At King Solomon jhe material had to be elevated 185 ft, whereas at Nokomai there would be a straight pull out. “ In face of that evidence, do you still recommend giving an option?” asked a shareholder. Air M fines said that if the option were exercised the company’s disputes would be cleaned up, and shareholders would still retain an interest in Nokomai in addition, to ,haring 3s per share back into their pockets. He had no doubt that by dredging, which was the proposed method of working, the ground could be treated more cheaply than by driving. Another shareholder inquired what would happen to the £II,OOO in disputed accounts if the option were not exercised. . .. The Chairman: That raay_ end m litigation. That is a costly thing, and we want to avoid it. “ Have Industries Ltd. and the Aulcan Company, with whom the dispute concerns, agreed to the option? ” was another question, asked. The Chairman: Yes. The motion was carried.

OFFICERS AND REMUNERATION,

Mr H. M'Dowcll Smith was re-elected a director. , _ Messrs W. A. Alitson and Co. were re-elected auditors, their remuneration being reduced from £25 to £lo. The directors’ remuneration was fixed at the rate of £3OO per annum, the -ame as last year, the Chairman in reply'to a question, stating that he had not received a penny in fees since, ho joined the board. CONFIRMATION OF OPTION. Air R. Cuddie moved that the aetiftn of the directors in granting the options should be confirmed. . ~ Air L. Deans Ritchie asked whether any limit had been placed on the capital of the new company. He had been informed that no limit had been specified because the cost of the proposed dredge and the flotation of the non company was notlcnown. It '™s_btate( that the dredge might cost £130,1)1)1). and the capital might be m the vicinity of £300.000. r , .. .. Mr Milnes said that an English cornmany would not put £200,000 or £300,000 into the proposition and place'upon the "round a leviathan which would not pay 'll- dividend. (“ Hear, hear. ) Mr Harman Reeves, while supporting the resolution, claimed that the'capital of the new company should have been stipulated in the option. Ho did not believe that Nokomai could be worked bv driving, and the present proposal must be adopted because it was the best thing for the shareholders. He was strongly of the opinion, however that the capital 'should have been stipulated. Ho maintained that a register ot shareholders should be in Dunedin, ami that scrip should be given to shareholders in thfee months after the company’s flotation. He also maintained that if the option were renewed, a siim of from £3.000 to £5,000 should he asked. He knew of others who wanted the property., He described the option oc an extraordinary document. Mr W. G. M‘Donaid. who was present bv invitation as the representative of the Mineral and Mercantile Trust, said that there was no intention whatever of overloading the company. The English company had its reputation at stake.- It would be futile to overload the company. They would have to strike a happy medium. He felt confident that the option would bo exercised, and that the whole thing would be fixed up by the end of duly. The motion .was carried. A motion authorising the, directors, in the event of the option not being exercised, to negotiate for a compromise'in respect of the claims m dispute or take whatever action they thought fit was also carried. Mr M‘Donald assured Air Reeves that 'there would be no restriction on the sale of vendors’ shares, and that they would be open for dealing on the New Zealand Exchanges at the earnest possible moment. In conclusion. Air Al‘Dona Id announced that if any shareholder had any doubt about the option being exercised, he would purchase at par any of their shares at any time after the expiry of the option they cared to nominate. VOTES OF THANKS. A hearty vote of thanks was passed to the staff, to Mr Kum Poy ft he secretary), and to the directors for their services during the year.