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Appendix II.

REPORT AND RECOMMENDATIONS REGARDING EXISTING MINES.

(i) HONG KONG CLAYS & KAOLIN CO., LTD.

An opencast mine situated at Cha Kwo Ling and held under a 3 year lease over 3.12 acres from Government which expired six months ago, at a rent of $4,000 per annum and $393 rent for area outside the lease occupied by drying beds and godowns. Twelve to thirty coolies are employed on daily wage and the average output amounts to approximately 2,500 tons per annum. The clay, which is of good quality kaolin, is mined in a primitive fashion and after drying is bagged in the raw state and exported mostly to Japan. The output, which is regulated according to demand, has dropped from 500 tons to 20-30 tons per month since that country's war activities. Although the mine is awkwardly situated and cramped for space, there is room for considerable improvement in the method of treatment and there is no doubt that a clay of a more refined quality could be produced which would have a wider market and fetch a relatively higher price.

RECOMMENDATIONS.

The high rent and short term lease of this property are definitely a hindrance to expansion, in that no company is likely to instal plant etc. when security of tenure is limited to 3 years. It is recommended that the lease due for issue be issued for 10 years according to form, premium and rent as provided for in Appendix I, and that royalty for the next 3 years be based on the average output for the last 3 years for a minimum return of $1,000 per annum. The regulations provide for cancellation of lease if insufficient work is being done. This is the only mine working for kaolin

and every encouragement should be given to a new industry.

The supervision of the mine is satisfactory. The ground stands up well and the faces of the mine are in good condition, but as work advances there may be a tendency to their becoming too steep and dangerous. It is recommended that the following code of rules in Chinese be posted in conspicuous places on the mine.

(i) Where the working faces of the mine exceed 20 feet in height, benches

of a minimum width of 10 feet must be maintained at such intervals. (ii) Where the working face of the mine exceeds 10 feet in height, it shall be worked in a series of steps sufficiently wide to afford secure foothold. (iii) No undercutting of a face is permitted.

(iv) Any person committing a breach of these rules shall be liable to a fine

of 3 days' pay.

Needle Hill Mine.

(ii) MARSMAN HONG KONG CHINA LTD.

An underground mine worked for wolfram, with which a small quantity of molybdenite is associated, on the adit system with narrow stopes and held under a 21 years' lease over 540 acres from Government at a rent of $2 per acre. Approxi- mately 500 coolies, women and children on the surface and men underground, and plant of 50 H.P. operated by electricity are employed. Some 1,640 piculs of wolfram has been recovered to date, which is exported to England and royalty of $8,645 has been paid up to May, 1938. The ore is purchased from the sub-contractors on a sliding scale from $82.50 to $95.00 per picul, the company supplying all facilities such as plant, power, transport, accommodation, etc. The cost of production is approximately $120 per picul and the company has sustained a loss of some $71,000 to date. Original investigations indicated the possibility of large ore deposits, and with a view to proving them the company carried out a considerable amount of development which has since proved to be dead work. Adits 1 and 2 were driven 556 and 590 feet and connected by a drift of 800 feet, and another adit 315 feet below was driven 1,110 feet to prove any ore in depth, but without success. This development work, which cost $80,000, proved that the ore bodies were limited to