Dr. Hector to the Hon. The Minister for Public Works.

Reverting to the application from the legal manager of the Collingwood Coal Mining Company, dated 18th November last, for a further grant of £250 to enable the directors to make arrangements for completing the prospecting tunnel now in progress, I have the honour to recommend that this additional assistance should be given. The work is being most satisfactorily executed, and at a cost still considerably below the original estimate. If it is merely looked on as work towards the exploration of the field, I consider the data obtained by the tunnel to be far more satisfactory, and, I believe, less costly, than could be got by boring. A slight change for the better in the character of the coal-measures between the outcrop and where they are cut in the tunnel, has already been found, so that the prospect of the venture being a commercial success is better than when the work was commenced. Even if the coal seams should not be worked for coal alone, as pointed out in my memorandum of 10th May, it is probable that they will be worked profitably in conjunction with the ironstone beds that are in contact with them. I do not think that the work could be more economically or rapidly pushed on than it is at present under the management of the company; and in the event of the tunnel proving the value of the mine to be satisfactory, the company will find no difficulty in increasing their capital, and repaying the advance, if required. This additional advance is made contingent upon the company being able to raise the balance page 38 necessary to complete the work. The best way to effect this will be to reduce the proportional payments made by Government from 75 per cent, to 30 per cent, of the amounts due from time to time under the contract.