D.—Xo. 14.

broken and precipitous a locality have been overlooked by me. This lease is the last that is taken up on the eastern side of the Scandinavian prospectors ; but the ground to the westward is occupied for nearly half a mile along the line of reef. Immediately adjoining the prospectors' is the leasehold of Murdock and Company, extending to Murdock's Creek; the hill falls abruptly to the gully, and a tunnel has been entered 150 feet along the line of reef just above the level of the creek. A considerable quantity of auriferous quartz was taken from the adit and now lies exposed at the creek. This leasehold is held, together with the next westward under the title of the Otago Quartz Mining Company, on the opposite side of the creek ; a long tunnel has been driven and a deep shaft sunk. I have seen some of the stone from this portion of the reef, equalling any that has been taken from the prospectors' ground. The length of these two leases is 1095 feet. Tho Company are erecting machinery very much after the principle of the North American Company. The excavation for the machinery site is a heavy piece of work, cut in tho solid rock. Two very extensive flumes and a tramway have been constructed entirely of timber, measuring together something like a mile in extent. The reef in the latter claim crops out at the surface, and is very rich ; it appears, in the drive entered below Murdock's Peak, to resemble an immense quarry of stone rather than a well defined reef, but has gold distributed more or less throughout it. This lease is joined by the Hibernian at the summit of the ridge of which Murdock's Peak is forming a part. I have seen no indication of a reef in tho last-mentioned claim, and nothing is done towards proving it. This is the most westerly ground at present occupied, but another Company is about being formed for the area between this and the Mount Aurum ground. The New Year's Gift, a lease taken up on the southern boundary of the British American Company, has been partially opened up by the prospectors', who have sunk a shaft 40 feet in depth under the impression that the Scandinavian Reef passes close by it. The work, however, was suddeuly discontinued, without anything having been proved. Very good specimens of auriferous quartz have from time to time been taken from the run of stone which here crops out, but it appears to me too far south for the main Scandinavian Reef (that is) supposing the prospecting leasehold and the ground of Perry, AVatt, and Company are on the same reef. It is most difficult to judge wiiether the Prince of Wales Reef is a continuation of the Scandinavian, owing to the absence of all trace of it between the Mount Aurum and the Hibernian Company's leasehold. It may, however, possibly have been overlooked by me, as the ground is nothing but a mass of rocks and precipices throughout it. The Prince of Wales Reef has been busily prospected by the Prince of AVales Company, and that almost without interruption since the time of its being discovered —eight or nine months since. They have, in my opinion, proved the reef quite sufficiently to warrant their placing machinery upon it without delay. This reef, wiiere first discovered, was cropping to the surface, at the eastern side of tho Prince of AVales Gully, presenting to view a clearly defined block of quartz, standing above the slate rock, and containing gold throughout it. The prospectors put a tunnel into the face of the hill and obtained some very rich stone, the peculiarity being that it appeared on the cap as a mere gilding, not showing beyond the surface. After further prospecting very good stone was found, with the gold running through it. The prospectors continued their drive a considerable distance into the hill till they lost the quartz. They were merely following out a band of tough blue clay, -which in this, as in all the other reefs forms a selvage. They at length returned to the portion of their drive from which the best stone had been taken, and commenced following out the dip of the reef, when they came upon some very rich quartz ; it has lime in its composition, is blue in color, and tho gold contained in it is exceedingly coarse. AVhcre the stone crops on the Prince of AVales ground is, to all appearance, the cap of the reef, and the adit appears to have gone beyond it. Should this be proved shafts will be sunk for permanent work. I believe this venture will prove a good one for the shareholders. It was originally the property of eight, but the shares of some of them have been sub-divided into sixteenths and forty-eights. It is the intention of the shareholders to form this into a Joint Stock Company, keeping the shares amongst the present proprietors. On the western side of the Prince of AVales is the Alexandra leasehold, which has been proved to contain auriferous quartz leaders. I have received good specimens from them. Little attempt has been made to trace the Prince of Wales Reef into this leasehold, for a heavy body of slip covers the surface, and makes prospecting expensive. AVhat has been done was in mid-winter, when the snow rendered work almost impossible. The reef will probably be faulted here as a cross reef. The Pactolus intersects it almost at right angles. From surface indications it will pass through the most westerly angle at the Prince of AVales, and the most easterly of the Alexandra ground. I have great faith in this locality turning out well, not only on account of the rich samples of stone that have been raised but from the generally acknowledged fact, that where two mineral lodes cross each other is found to be the richest portion of a vein. A Company has been formed for the purpose of prospecting and working this ground, and I am informed the shareholders arc taking the greater portion of the shares to themselves. The Company consisted of fourteen shareholders. Portions of shares have been sold at the rate of £60 to £80 per share. The shares that are to be sold will be by tender, and the proceeds lam informed are to be expended in prospecting. The eastern boundary cannot be much more than 150 feet from the outcrop on the Prince of AVales lease. The Victoria and Mount Aurum leaseholds for the same reef are on the eastward of the Prince of Wales ground, and have both the line of the reef clearly defined in them, but very little prospecting has been done in either; all surface indications disappear on the eastern side of the Mount Aurum grounds. The Pactolus, a newly discovered reef, was found by one of the shareholders of the Scandinavian Company, and was indicated by a crop of Milestone, containing a considerable amount of gold, and on being opened shewed a blue clayey flucan, and the walls of the reef most distinctly marked the course of this reef, which can be traced for one and a half miles, bearing tw-cnty-two degrees east of north.

Otago Company, No. 1.

Hibernian Company.

New Year's Gift,

Prince of Wales Reef.

Prince of Wales Beef,

Alexandra Company.

Victoria Company and llount Aurum.

Pactolus Reef.

6

REPORT BY MR. MIXING SURVEYOR WRIGHT.