Gold mining situation at the outset of 1934

Title

Language

English

Year

1934

Rights

In Copyright - Educational Use Permitted

Abstract

Projects need the implementation of competent management under unassailable one-man control.

Fulltext

4 THE AMERICAN CHAMBER OF COMMERCE JOURNAL January, 1934 Gold Mining Situation at the Outset of 1934 Projects need the implementation of competent management under unassailable one-man control The mining share market in the Philippines has undergone material deflation, but new proj ects organizing find little hardship in raising capital. This is much as it should be. Pros pects deserve capital for their thorough explora tion, while stocks are a speculation until the mines behind them arc developed and regular dividends, warranted by the present and pro spective richness of the mines, are being paid. It is probably a delusion, even, to believe that • every mine of proved richness will pay share holders well. This because successful mining is an exacting business tiisk over which good management must have unquestioned control. Such a contract made Balatoc the world's prize dividend-yielding gold mine; such a con tract is starting a 150-ton mill at Ipo February 15, thus developing gold lands within 30 miles of Manila; and such a contract may redeem other projects from troubled desuetude. With 40 gold companies listed in November, and many more in the field now, it would seem that opport unities for 0]>erating companies should abound. But no one should toy with • such a company's offers unless its manage ment rested unassailably in a single man; and it would be far less essential to know this man was competent than to know that he was honest, with no personal concern in how your shares might rise or fall on the market while he gave himself to the task of mining your gold. There is now no doubt that’these islands can raise all needed capital for preempting and prospecting gold oroperties, if not for all needs of mining. Nevertheless, the industry stands in need of more adequate implementation. The implementation needed is competent, unassailable management: such management as operating companies could provide. .All other adjuncts to the industry abound, and some, such as shops in which to trade shares, perhaps abound too plentifully. However, the heyday of blind speculation seems to have passed; reference to the share prices as of December 29 shows a moderated interest among speculators at the close of the year. But for every new exploration, purses still open readily; on the whole the industry is in a healthy state. One of the better companies (with first rate mineral prospects, but without a mill) recently had this experience: The manager urged a certain policy, his shareholders voted it down and ordered a policy to be followed directly op posed to it. So there the manager is, unless he can right himself—ordered to carry out a policy his judgment doesn't approve. Such situations may cause many of the companies to come awful croppers, and it will be the misbelieving share holders that take the fall. Naturally, there must be a deal of learning from experience, the one way in which man seems able to learn anything. There will be good mines that should yield dividends but won’t— mines where the management is bothered by quibbling shareholders or meddling directors, Experience with such mines will be costly and effective; and it is therefore a reasonable expecta tion that more than one stock now far above par (on the volume and value of ore found) will slump more than once before reaching the regular, dependable dividend status of a really prime stock. Unassailable management is vital, This can't be impressed too firmly. Secondly, successful mining is a business art. This too can't be impressed too firmly. PHILIPPINE GOLI) STOCKS December 20, 1033 Ambassador.... Antamok.. .. At ok.............. Atok Central. . Baguio Gold............. Balatoc................... Benguet Consolidate Benguet Gord0.™'^1 Big Wedge.. . Fortuna." . .' . . Gold Coin.......... Gold Creek... Gold River......... Gold Wave....... Golden Eagle. Ipo........... Itogon....................... Midns Gold............. Mindoro........ Mountain Gold.. Madavmon. Padenl........................ Placer Mine... Sh"v)in’.\ Southern Cross.. . . States Group............ Suyoc Consolidated. Suyoc Mines___ Universal Exploratio Virac Exploration. Zamboanga.............. United I’aracalc.. .Selle >7 !1 1 3 For the effective implementation of manage ment, it is possible that the voting trust might be used. Groups of shareholders might form such trusts, which in turn could put through airtight contracts with operating companies. For anxious shareholders the device of the voting trust is worth looking into. In every company it should be possible to vote a controlling number of shares as a block: this is what is meant by unassailable management, and the voting trust used to procure it in other corporations could also procure it in mining. Another odd thing heard of, affecting the share market, is the exploitation of names. Men who have built up names for themselves in the mining industry associate themselves with new enter prises. This is good, it will surely benefit the industry. It is better than good if the expe rienced men so employed are given carte blanche and have the business ability to discharge their responsibilities well. But it would be best to let these men be known by their works in the good old biblical fashion. Instead of this, their names are often touted in the market; and this advertising, at a period prior to actual production at the mines, boosts the stock—just as if that might the real purpose of it. In all cases where claims made on the names of these men arc not fulfilled by the event, their professional repute will suffer. Another constant factor in the share market ought to have the effect of inclining the public to subscribe for stocks of development and ex ploration companies as a more conservative speculation than shares actively traded in, shares of companies that have not, or have hardly, reached a definite producing status, 'l'his factor is the inside information about the real facts behind stock flurries, information only obtained by men who follow the market closely; who obtain it ahead of the public, and purchase or sell all the time in zones of safety. Thus when there was a favorable turn in the fortune of a company in the development stage, in the first week of January, men following the market closely knew and took advantage of this before the general public could possibly do so. What seems badly needed in the daily press is a mining gossip column where tips on actualities could be published hot. Such a column ought to balk many unloading schemes, and at the same time keep the public more nearly in step with the market. It is mining that needs encouragement here, the backing of projects with subscriptions to their capital, while the share-traders can well paddle their own canoes. There are now a great many people in the Philippines who own mining shares they have bought more as invest ments than to gamble with. If this comment assists them in any way in protecting their interests it will serve its purpose. Of course, when a man can, he ought to ascertain what may be behind a stock he is inclined to buy. Sometimes he can't, sometimes he can. If, for instance, any reader will turn back to our own description of the mineralized zone of the Philip pines, he will find that it excludes definite dis tricts ivhere gold projects have been floated, where others are contemplated. It was based on the best scientific information obtainable; if you followed it, you could hardly lose much by omitting to back projects in other places in the islands, since even if these places do turn up some recoverable gold they can hardly turn up much of it. More specifically, the mineralized zone is definitely traceable; deposits far outside of it arc accidental. Old miners also go much on whether a mining field was anciently worked or is still being go phered, and whether there were ancient or recent placers; for modern mining is mainly the going over of old workings with better tools, going deeper and milling cleaner. If canny miners prefer projects covering old workings, green horns should prefer them exclusively. So at the outset of 1934 there are at least a few guide posts in Philippine gold mining. As they increase, money is bound to flow more freely into the industry.

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