PEAK DOWNS COPPER MINE.
ITS HISTORY - II
At the close of the fifth year the enormous richness of the mine had overcome all obstacles. Over £90,000 had now been expended in the cost of management and the production of copper, but the value of the copper produced amounted to £125,000, leaving nearly £34,000 to credit of profit, and, as most of the metal had been removed and shipped, the directors fully justified declaring a dividend. The sum of £28,750was appropriated in this way, being twenty eight and three quarters of the company's capital, the balance of £5,089 2s. 5d. being written off the book value of the mine. Seventy eight more South Australian miners were then on the way to the scene of operations. From this time work in every department was pushed forward with the greatest vigour, and prosperity waited on perseverance. The large accession of miners enabled the mining manager (Captain Dennis) to push forward his explorations, which in almost every instance were rewarded by the discovery of valuable deposits of ore. The mine was inspected in October by one of the directors (Mr. J. S. Mitchell), who, on his return to Sydney, furnished his co-directors with an interesting report, stating that only a very small portion of the company'' property had been touched and that its richness had in no way been exaggerated. Two dividends were declared in 1868, amounting to ten percent of the capital, and £5,418 19s. 9d. was written of the book value of the mine. The wisdom of paying these dividends was very doubtful as in both cases the money was advanced by the company's bankers at a high rate of interest, the overdraft standing in June at £13,000 and in December at £18,000.
Copperfied Store
The year 1869 came and went with but little alteration in the output of copper, prices continuing as low as £74 to £76 per ton, but, in many respects, this was an eventful year. Carriage difficulties again occurred and were at last overcome by entering into a contract for five years with the carrying firm of Woods, Shortland, Fox, and Co., of Sydney, which, it was hoped, would prevent any further troubles in this respect. During the year Mr. Christoe had been succeeded in the smelting department by Mr. Leyshon Jones, who made some slight alterations in the system of his predecessor. A coal seam, which had been discovered about twelve miles distant some time before, and secured by the company, was tested and found to be of a valuable nature, and the coal being described as "equal to the best New South Wales coal." Owing to the abundant supply of excellent timber for smelting purposes which existed close to the works, no attempt was made to utilise the coal, which was left until firewood should become more scarce. The sum of £5,000 was written of the book value this year and £12,500 was appropriated to the payment of dividends, though the bank overdraft stood in June at nearly £40,000. The amount was, however, much reduced by the end of the year owing to the energy of the new carriage contractors in removing the stock of copper to port. In the year additions were made to the machinery, thereby facilitating the work.
In 1870 operations were much retarded by extensive floods in the early months, but later on an improvement took place and the production in the latter half reached an average of forty-two tons of refined copper per week. The market was still depressed and the profits, therefore, were comparatively small, yet the year's dividends were £9,000, and £5,836 was written off book value. Mr. Mitchell again visited the works in September and October and reported on them in the most gratifying manner. The company had now (December, 1870), been in existence for eight years, and, notwithstanding difficulties, which, if foreseen at the outset, would probably have effectually deterred the promoters from their venture, had up this time paid in dividends no less than £60,250 on a subscribed capital of £33,334. But still better times were ahead. The year 1871 ushered in a period of the greatest prosperity. The price of copper commenced to harden, and in a little over twelve months rose from £70 to £110. Immense deposits of ore were opened out, and the smelting accommodation had to be largely increased. The department was now under the management of Mr. Maurice Thomas, who at once proceeded to construct a large number of additional furnaces and produced in the year 2490 tons of refined copper. At this time the deepest workings were at forty-five fathoms, where the ore was of a harder nature and poorer in quality than that nearer the surface. Under the advice of the mining manager, the directors decided to sink a new shaft to a depth of sixty fathoms vertical so as to have deeper ground opened and drained before the present workings were exhausted. A powerful engine, with all the necessary pumping and winding gear, was therefore, ordered, and which arrived on the ground early in 1872, when the sinking of the deep shaft was proceeded with. In 1871 the increased production of copper and the advancing prices both operated to give a good return. Large profits were made, and at each of the two half yearly general meetings correspondingly large dividends were declared, amounting in the aggregate for the year to £55,000, being fifty-five percent on the capital for that year. There was also in the same period written off the book value of the mine £25,186, thereby reducing it to £70,000. More miners being required the company through its London agents, engaged a number of men from the mining districts of Cornwall, defraying their passages to the colony under agreement. In this manner over 200 men, with their families, arrived at the mine in 1872-73. It was in the first half of 1872 that the company reached the zenith of its prosperity, and a species of mental intoxication appears to have been caused thereby. Shares rose to many times their nominal value, as might be expected when such dividends were paid, the price of copper was at its best, and the production then reached its highest point, namely 1449 tons for the half year. So elated were the directors that the values of the copper then en route and the ores at grass were calculated at a rate corresponding with the abnormal price that copper was at that time bringing in London. Instead of being content with another handsome dividend, at the rate of, say, fifty percent per annum, and carrying over a large balance of the estimated profits until such time as they should actually have accrued from the sales of copper, or, on the other hand, until the estimate had been proved erroneous by a fall in price as sudden as the rise had been, and which might naturally have been feared, the directors determined on a sensational dividend, and at the end of the half yearly general meeting held in July for the term ending the 30th of June, 1872, no less a sum than £100,000 was appropriated to the six month's dividend. It was not until a long time after that the disastrous effect of this became freely understood. At the end of the year, although serious falls in price had taken place, which left a large overdraft in London (the difference between the advances made by the banks in the copper and the price it realised when sold), the directors were still able to show a small apparent balance to credit of profit and loss in the new estimate; but the following year demonstrated that even this was an excessive one, and, in July, 1873, it became necessary to admit to the shareholders that the mistake had been made twelve months before of anticipating profits by overestimate to the extent of nearly £42,000. Had this amount not been paid away, no great harm would have accrued, as the mine was still making a fair profit, but as it was, the company was saddled with an extensive debt, the incubus of which effectually crippled all future operations. The state of elation which had existed in 1872 now gave place to one of corresponding depression, deepening, as time went on, into actual panic.
The company was not incorporated under the Limited Liability Act, and, therefore, many holders of shares, fearing that its losses would involve them in ruin, endeavoured to sell at any price, and to such an extent was this feeling of insecurity carried that in a comparatively short time shares, which had been looked upon as good value for £8 to £9 each, were changing hands at 2s. 6d. to 5s. each. As if in aggravation of the financial mistakes, things at the mine itself were beginning to assume a less favourable aspect. The mining manager's report was discouraging in so far as that he admitted a great falling-off both in the quantity and the quality of the ores raised. Some time before this he had strongly urged that exploration of new ground should be prosecuted with greater vigour; but, owing to adverse counsels, and somewhat to the scarcity of men, this had not been done, and as the ground already opened began to show signs of exhaustion, there was much difficulty in raising anything like the average quantity of ore. The new shaft, which, it was hoped, would have opened out quite a new mine, had been sunk to a great depth without discovering anything of importance. About thirty fathoms from the surface a very small quantity of poor ore had been passed through, and the opinion now became prevalent that this had been the lode itself and that no other would be found below it. Captain Dennis differed from this opinion; but, as all unproductive expenditure was now discountenanced, the smelting was before long entirely discontinued. Another mining expert (Captain Josiah Holman) was engaged to thoroughly inspect the mine and make a plan of the underground workings. His report was unfavourable to the system hitherto carried out, and especially so to the new shaft, which, he maintained, had, without doubt passed through the lode and was quite useless for the purpose it was designed for. No further attempt was, therefore made to sink it deeper. One result of Captain Holman's report was the resignation of Captain Dennis and his own appointment to the vacant post, which took place in the latter part of 1873. From the date of his taking charge almost all the energy of the department was directed to procuring ore for immediate wants at the smallest outlay. The lode outcrop was attacked all along its length wherever good indications were to be found, and tributes were let to parties of men. In this manner a considerable quantity of good ore was raised from small bunches near the surface. The great aim was to relieve the company from its load of indebtedness and everything else was sacrificed to that end. Indeed, it could hardly be otherwise. Captain Holman recommended the sinking of another shaft in a direct line north of the richest surface deposits and to intersect the lode at about seventy fathoms vertical depth, but this would be an expensive undertaking and was deferred indefinitely, all real exploration work being virtually abandoned until the company was in a better financial position. If there was an exception to this rule it was in the carrying down of a winze from the 45 level, which was for some time continued in the hope that below the belt of hard and poor ore existing in the lower levels would be found deposits of richer and kinder description. This hope was not, however, realised, nor had there been any very encouraging symptoms up till the time that work entirely ceased. Steadily, though by slow degrees, the company now began to emerge from its embarrassed position. Every succeeding six months showed a little improvement, and by the end of 1875 the whole of the debit against the profit and loss had been wiped out and the estimated assets of the company showed a surplus of £52,000, rather more than equal to half the capital. During the year another extensive property was acquired in the Western Peak Downs mine, situated about seven miles west of Copperfield. This mine had been taken up some time before by the Western Peak Downs Copper mining Company, Limited, which, having been floated on an altogether inadequate capital, had been obliged to succumb, after partially opening out its ground, and in its winding up the mine was disposed of for a few hundreds to the older proprietary, which hoped to largely supplement its supply of ores there from. This hope was, to a great extent, frustrated by the distance which the ore had to be carried to the furnaces, as well as by its comparatively small value, and the cost of a tramway to connect the two mines was too heavy for it to be undertaken. Although at this time the aspect of affairs were less gloomy than three years before, financial troubles had not ceased to harass the management. Ever since the big dividend the liabilities to outside creditors had maintained an average of nearly £50,000, most of which was bearing overdraft interest, nor was it until the end of 1876 that this heavy burden was appreciably reduced.