REPORT BY THE DIRECTORS OF THE Tharsis Sulphur & Copper Co. (LIMITED,) TO THE EXTRAORDINARY GENERAL MEETING OF SHAREHOLDERS, APPOINTED TO BE HELD WITHIN THE HALL of the CHAMBER of COMMERCE, VIRGINIA STREET, GLASGOW, ON WEDNESDAY, 27TH APRIL, 1870, 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. DAVID WILSON, Esq. Glasgow. HENRY DEACON, Esq. Widnes. DAVID GAMBLE, Esq. St. Helens. ARCHIBALD ARROL, Esq. Glasgow. JOHN MOFFAT, Esq. Ardrossan.
CHARLES TENNANT, ESQ. CHAIRMAN. WM. A. VÉREL, MANAGER. | JONATHAN THOMSON, SECY..
REPORT BY THE DIRECTORS. ON this occasion it affords us pleasure to place our Report in your hands at an earlier date than was anticipated.
The past year has been characterised by a general depreciation in the market value of both Copper and Sulphur, which has unfavourably influenced the results of our operations.
Certain anticipatory estimates for the year now closed, were brought before you by our Chairman at the last Annual Meeting of the Company. The results brought out in the Balance Sheet appended hereto may, at first sight, appear to you at variance with those estimates, and we feel that some explanations are called for.
The mineral available for export was estimated at 98,000 tons; the quantity actually conveyed for shipment has been upwards of 101,000 tons. Of this, however, only 74,759 could be placed, arising from the fact that, after all uncertainty as to the completion of our Railway had been removed, most of the larger consumers were supplied. Contracts for Pyrites are generally entered into during the last three months of the year, and at that time in 1868, it would have been very hazardous to have bound ourselves for larger quantities than those actually undertaken. By the time the Line was in good working order there were few buyers, but preparations were made by depositing stocks at various points, for more extensive operations this year. These stocks have been taken at cost, and therefore contribute nothing to the profits of 1869.
For 1870 we have already sold 140,000 tons, which are in process of delivery.
The production of Copper in Spain was estimated at 2,500 tons, but has come short to the extent of about 400 tons. This has been occasioned, in a great measure, by the interruptions caused by the change of Guage over most of the Tramways on the Mine, in order to harmonise them with that of the Railway.
The quantity of material treated at your various Extracting works in this country, has considerably exceeded the estimate, and the amount of gross profits realised has gone beyond it to the extent of £4,717 : 6/1.
In valuing the Stocks, all Pyrites in Spain, afloat, and in this country, and all Copper in Spain, and afloat, have been taken at prime cost; all Copper in process at your various Works, at Swansea ticketing prices; and all manufactured and ready for delivery, at 5 per cent. under net contract or market price.
As you are aware, all Copper produced by us in this country is extracted under a Patent process, of which you are now the sole Proprietors. As this process will be a monopoly only so long as the Patents endure, and as they gradually expire, we have deemed it safe to put on the Copper produced, a tax equal to what you would have had to pay had you been merely Licensees. This would have been £5 per ton of Copper, and, therefore, the sales have been debited with £12,975, and the amount has been credited to Patent Rights’ Account.
Besides all repairs, which have been charged to revenue, 5% has been written off two of the Metal Works, on account of being comparatively new, while 7 1/2% has been taken off the three older Works; in addition to which, Experiments’ Account, Preliminary Expenses, Bonus, Premium, and Cinder Rights’ Account, and Railway Deposit, have been reduced to the extent of £7,755 : 11/2; while £4,679 : 11/ have been added to the Depreciation of Fixed Property on the Mines, raising the total Depreciation of Tharsis Property and Waste Heap Accounts to £6,195 : 15/4.
The mineral exported to the end of the year has been charged with 5/ per ton for Railway carriage, and the difference between that and Traffic cost has been placed to the credit of a Railway Sinking Fund Account, to which has also been debited the amount paid as Interest on Debentures, viz., £5,338 : 1/7, leaving a credit balance of £4,960 : 19/2.
The outlay on permanent works during the year has again been considerable, and has absorbed £37,121 : 17/11, exclusive of the Railway and Pier. The construction of the Pier, and of the new Extracting Works here, will still occasion some additions during this year.
To prepare for a larger output of mineral, it has been found necessary to spend a further sum of £16,407 : 1/8 in the removal of overburden. Of this, £5,838 : 11/4 have been charged to extraction during the year, and the balance on this account is now £43,042 : 3/4, which will be amply covered by the debit against the mineral as extracted, the quantity exposed being much in excess of what is required to extinguish that sum. This is altogether exclusive of the enormous amount spent by the French Company in uncovering the Mine, of which we enjoy the full benefit.
There have been extracted during the year 187,093 tons of mineral at Tharsis, and 30,758 tons at Calanas. In the latter Mine the whole Mineral is devoted to the production of Copper; at the former the quantity extracted has been divided, 101,729 having been taken for exportation, and 83,500 tons for calcination on the Mine, the balance being in Stock existing there.
This year finds us still short of our obligatory export, but if our Pier is completed by September, we shall be able to ship our minimum quantity of Ore in 1870; and as consumption is increasing, and we have abundance of mineral and the means of transport, we shall soon overtake these arrears, and be in a position to supply the whole requirements of the trade.
Your Railway is now in good working order and well equipped; a little more rolling stock may be required as the traffic increases; and the revenue now bears all costs of maintenance.
As most of you are aware, we have been very reluctantly drawn into a question by our Railway Contractor, whose claims were such as we could not for a moment entertain, and we have been advised to resist them to the utmost. Both parties are fortunate in the selection made by the Court of the Hon. George Denman as Arbitrator, with Mr. Brunlees as Assessor on Engineering points. The evidence is now in course of being led, and it is inexpedient, for obvious reasons, to enter into details in this Report.
The net profits earned during the year amount to £53,509 : 10/6. From this we are prepared to recommend that a dividend at the rate of five per cent. per annum, free of Income-Tax, amounting to £36,994 : 18/7 be paid to the Partners, on the 13th day of May next; and that the balance of £16,514 : 11/11 be carried forward, from which will fall to be deducted Income-Tax, and Directors’ and Auditor’s remuneration for 1869.
Looking to the operations of the current year, and to the fact that already our deliveries of Pyrites to this date reach 35,981 tons, while our production of Copper has also been satisfactory, we feel quite justified, in order to comply with a prevailing desire on the part of numerous Shareholders for Half-Yearly Dividends, in recommending to you further, that an interim dividend of five per cent., also free of Income-Tax, be paid on the 10th day of November next, as against the profits of 1870.
The Annual General Meeting of the Company will fall to be held in June next, as provided by the Articles of Association, at which Directors and the Company’s Auditor will require to be elected.
At that Meeting it is intended to propose a Special Resolution, altering the Articles of Association to the extent of holding the Annual General Meetings for the future in April, instead of in June, as presently provided by the Constitution of the Company.
BY ORDER OF THE DIRECTORS. CHARLES TENNANT, Chairman..
