REPORT BY THE DIRECTORS OF THE Tharsis Sulphur & Copper Co. LIMITED, TO THE SECOND ORDINARY GENERAL MEETING OF SHAREHOLDERS APPOINTED TO BE HELD WITHIN M’LEAN’S HOTEL, St. Vincent Street, Glasgow, ON THURSDAY THE 27TH AUGUST, 1868, AT ONE O’CLOCK AFTERNOON.
BOARD OF DIRECTORS. JOHN TENNANT, Esq. St. Rollox. CHARLES TENNANT, Esq. The Glen. WILLIAM HENDERSON, Esq. Glasgow. ARCHIBALD S. SCHAW, Esq. Glasgow. LOUIS LEISLER, Esq. Glasgow. ALEXANDER HARVEY, Esq. Glasgow. JOHN WILLIAMSON, Esq. South Shields. HUGH L. PATTINSON, Esq. Newcastle. HENRY DEACON, Esq. Widnes. DAVID GAMBLE, Esq. St. Helens.
CHARLES TENNANT, Esq. CHAIRMAN. WM. A. VÉREL, MANAGER. | JONATHAN THOMSON, SECY.
REPORT BY THE DIRECTORS.
IT affords us much pleasure to lay before the Shareholders the result of our operations during the 17 months ending with the 30th April last.
It may not be out of place here, to recall some of the changes which have occurred, since this Company was formed, in relation to the two principal ingredients which your Mines supply. Sulphur, in Pyrites, was then realising 1s. per unit, and Copper £90 per ton. These products have not been exempt from the reaction which has taken place in business generally, and during the period under review, Sulphur has touched 8d. per unit, and Copper £71 per ton. Many rich Copper Mines in various countries have suffered severe losses in consequence; some which formerly divided large profits among their partners have been shut up altogether. It is, therefore, with no little satisfaction that we announce to you, that notwithstanding those very adverse circumstances, and the difficulties which attend the organisation of a large and intricate business, this first period of our operations has culminated in results which we regard as very satisfactory, and as a pleasing earnest of better things yet to come.
As you are aware, the two great streams into which your business divides itself are:—
1. THE EXPORT OF THE CRUDE MINERAL.
2. THE PRODUCTION OF COPPER. With your leave we shall follow them in their order.
1st. EXPORT OF MINERAL. This has been carried on under limited and arduous means of transport. No one who has not seen the country, can form any adequate idea of the difficulty which attends the conveyance of large quantities from the Mine to the Shipping Port. Expecting to have railway communication quickly established, your Directors were desirous of forming a connection among the principal consumers of Pyrites in this country, so as to be in a position to go on with large exports when cheaper and more convenient conveyance was available. As announced to you at the last General Meeting, the sending of the poor Ore then referred to, as having been imported by an inadvertent mistake, arose in a great measure from the piercing of the tunnel through which the Railway enters the Mine, a great part of which is in solid Ore of low produce for Copper, and which was sent off to the Shipping Port as the readiest and most available means for its disposal. There was at one time a loss on that Account, but we are happy to inform you that it has now been converted into a profit, amounting to £9,262: 18s. 10d. This is a very insignificant sum for the quantity sold, and forms no criterion from which to judge of future results. For the present the exports are limited to 3,000 tons a month, of an average of 3 to 4 per cent. of Copper, which yields a fair profit. So soon as the Railway is opened, these exports will be largely increased, but for the present this could not be done advantageously.,
The shipments to the 30th April last have amounted to 47,630 tons, containing an average of Copper of 2.53 per cent., and of Sulphur of 48 per cent.
We shall now ask you to glance for a little at—
2d. THE PRODUCTION OF COPPER.—It is worthy of note that notwithstanding the comparative poverty of the Mineral from which your Copper is extracted (all the richest Ore being selected for export), you can still produce this metal at a price which we believe to be lower than that from almost any Mine in the world. This is owing to the small expense at which the Ore is obtained.
To the 30th April there have been Teleras heaps constructed for the calcination of 103,200 tons of Mineral. This operation is slow, occupying six months from the date of kindling, until the calcination is complete and the Ore ready for washing. One of the greatest difficulties connected therewith, is that arising from the fumes emitted by these miniature volcanoes, consisting of 100 tons each. To diminish this obstacle has for some time occupied our serious attention, and we hope, when we meet you again, to be in a position to inform you that our earnest endeavours in that direction, have not been altogether without success. It is very important, as these fumes render an indefinite extension impracticable, so long as they remain unmitigated.
There have been washed at Tharsis, during the period under review, 78,735 tons of the thus Calcined Mineral, yielding 1,725 tons of slab Copper, and at Calanas, another of your Mines further in the interior, 23,677 tons of Mineral, yielding 394 tons of slab Copper. It affords us great satisfaction to inform you that the Tharsis Ore has yielded an average of above 2 per cent. of Copper, leaving still a considerable quantity to be extracted from the washed Ore in future years. It is always the poorest Mineral that is taken for calcination. The quantity presently under treatment is sufficient to yield an average of about 250 tons of slab Copper a month from this time forward. A very serious obstacle to increased production, during this summer, has arisen from the severe and long continued drought. Measures have been taken to guard against a similar calamity in future years, by providing reservoirs for fresh water, to supply steam boilers, and also by sinking a shaft in the Ore, to draw water from a greater depth, and at the same time explore the Mine more perfectly. When these improved appliances are at work, we hope to see production steadily increasing. The Calanas Mine, not being so favourably situated for transports as Tharsis, we have not deemed it advisable to lay out any considerable amount in its development, preferring to devote our energies to Tharsis first; it is, however, capable of great extension with a moderate outlay, and, with the Railway, it will be brought much nearer the Shipping Port, and be more favourably situated than Tharsis is at present.,
The profit realised from the production of Copper at both Mines, during the period under review, has been £36,262: 17s. 11d.
Manganese exists extensively all over your Calanas District. Only a few tons have yet been imported, which have proved of good quality, and yielded a very fair return; as soon as the Railway is in operation, this Mineral may be exported to some extent at remunerative prices.
Your Directors were at one time in hopes of announcing to you that the Tharsis Railway was at work. The Contractor had engaged to hand it over on the 8th inst., but has now intimated that, from a combination of adverse circumstances, it will be delayed until the 20th September, but we are not sanguine of his ability to complete it by that date. You are all aware of the great advantages it will confer on the Company; we are therefore urging it on as far as lays in our power. Had we had the benefit of it during the period under consideration, the Company would have been saved upwards of £50,000 in the carriage of the Pyrites and Copper imported.
The Report of our Engineer, who is presently on the spot, and which we hope to receive in time for this Meeting, will furnish you with the latest information as to the progress of the Works. The cost of this undertaking will very considerably exceed our anticipations. Being still so far from completion, we cannot accurately fix the precise amount, but we believe that, with Stations, Rolling Stock, and a substantial permanent Shipping Pier, the cost for the whole will not fall very much short of £190,000. This is greatly in excess of the original Estimates, but the Line and its adjuncts are very superior to what was at first contemplated, and which the Government would not allow us to construct. The first cost, although higher, will ultimately be made up by cheaper working, the Line being so much better, and the tear and wear proportionately less.
You will find, at the end of this Report, Abstracts of the Balance Sheet and of the Profit and Loss Account. From these you will observe that the Gross Profits amount to £46,845: 15s. 11d., which, after deducting Expenses of Management, Interest on Debentures, &c., amounting to £6,732: 16s. 6d., leave an available surplus of £40,112: 19s. 5d., or nearly 17 per cent. on the Capital from the dates at which it was called up, to the 30th April, 1868.
It must not be overlooked that the expenditure on account of the Railway, to the 30th April, has amounted to £92,426: 18s. 8d., from which no benefit whatever has been obtained; not only so, but this sum having been withdrawn from the available Capital employed, has not, in any way, contributed to earn any portion of these profits.
In our last Report we made special reference to the Capital of the Company, as having been found inadequate, and then obtained powers from you to create Debentures to the extent of £100,000; of these only £55,000 have yet been issued. In addition to the causes then assigned, which referred more especially to the increased cost of the Railway, there have since arisen others, which have rendered necessary a larger Capital than originally contemplated, and to which we must direct your attention; among these we would instance the large outlay caused by the varied and valuable extensions and improvements carried out on the Mine, the formation of the exit tunnel, and the practice already partially introduced into the trade of selling the Sulphur contents only, which latter, of itself, renders a further and permanent increase of the Capital indispensable.
The consideration of this subject has brought the whole position and prospects of the Company, under the frequent and anxious attention of your Directors, and circumstances have arisen which have induced us to examine, whether some practicable plan could not be devised, whereby the Shareholders of this Company could be made to participate in the large profits obtained from the Burnt Cinders produced by your Pyrites, which, at present, pass over to the several Companies formed for the working of Mr. HENDERSON’S Patents.
We believe that this can be done only by an amalgamation with these Companies. During the few months this Company has been in operation, it has become very evident that the interests of both are somewhat conflicting, and that, by being thoroughly one in interest and aim, great advantages to both would be obtained for the future.
The necessity of creating additional Capital for the Tharsis Company, and the approach of the time when large exports of Ore by means of your Railway must commence, all combine in forcing upon us the importance of removing every obstacle to the large and free outflow of your produce, and none appears to us so likely to accomplish this as a union of the interests now referred to.
We therefore ask you to appoint three of your number to co-operate with as many of your Directors, who, aided by the Manager, Secretary, and Auditor, will meet with the Boards of these Companies, carefully consider the whole question, and negotiate the terms on which amalgamation would be fair and equitable to all parties, and may be carried out.
We commend this matter with the greatest confidence to your consideration, believing it to be most important to this Company; and as it is desirable that there should be as little delay as possible, we propose to adjourn this Meeting till Thursday, 10th September, then to receive the Committee’s Report, and take such further steps as may be deemed desirable and necessary. Under these circumstances, your Directors have deemed it advisable to postpone the declaration of a Dividend at present, leaving that to be regulated as to amount, and date of payment, at the Meeting to be held on 10th September.
It affords us much pleasure to state that Monsieur A. LE BOURG, your Manager in Spain, and Mr. THOMAS Down, your Mining Superintendent, have reported very fully to us on the state of the Works, and of all the operations carried out at the Mines, and that these reports are most satisfactory. The piercing and arching of the Tunnel (by which the Mine is entered), although a work of engineering difficulty, and attended with no little danger, has been, under the able and careful direction of Mr. Down, brought to completion without the loss of a single life, or any serious accident. We continue to feel the greatest confidence in the energy and ability of these gentlemen.
In terms of the Articles of Association, the whole of the Directors retire from office at this Meeting, but are all eligible for re-election.
It falls to this Meeting to fix the remuneration of the Directors for their past services, and to appoint an Auditor for the current year.
BY ORDER OF THE DIRECTORS, CHARLES TENNANT, Chairman. WILLIAM A. VÉREL, Manager. JONATHAN THOMSON, Secretary.
GLASGOW, 24th August, 1868.
