C—No. 4a.

On the southern bank of the Kawarau at its junction with the Clutha, and immediately opposite Cromwell Township, sluicing operations have shown that a great extent of river terrace is exceedingly valuable, so that I have no doubt of the whole of this ground being worked with profit; the underlying bed rock, which is found to stand at a considerable height above the river surface, affording great facilities for satisfactorily conducting sluicing operations. At Quartz Reef Point, mining operations have continued to progress rapidly, and this locality now presents one of the busiest scenes throughout the district. The bank claims of Novello, Harris, and McLean and parties still continue to be most systematically worked on the hydraulic principle, and are, beyond a do,ubt, the most perfectly conducted mining operations which I have seen. The Nil Desperandum-Company are still actively engaged in the construction of their dams, and the main volume of the Clutha at this point is fast leaving the eastern for the western channel, and should they succeed in satisfactorily accomplishing the draining of the immense extent of river which they propose, viz., sixty (60) chains, their undertaking deserves to be attended with success. In the vicinity of the Lindis Junction, the old worked ground of Bendigo and Tipperary Gullies has recently been^taken up by a large number of miners, who have either already completed, or are engaged in cutting water races from the Ardgour Creek, (the main source of supply), or from some minor creeks draining the western slope of the Dunstan Eange, immediately south of these gullies. Eecent mining operations in this locality have proved the existence of payable sluicing ground throughout a great extent of terrace drift, and already portions of it have presented greater attraction than that of the main gully trough ; claimholders upon the latter having fcaind it more profitable to sluice the drift of an adjacent terrace thereon. The points in the terrace drift at which payable gold has been struck, are nearly all at about the same level above the gully surface, and in section, present the appearance of long continued auriferous layers of uniform depth, generally resting upon drift strata containing a sufficient admixture of clay to render their compactness favourable to the retention of gold. Such circumstances, considered geologically, and in connection with the physical aspect of the locality and its proximity to the main range slope, leave but little doubt of the fact that the ground here is payably auriferous throughout a vast area. In the main and already well-worked gullies of the Bannockburn Basin, mining operations have been principally transferred from their troughs to the terraces forming their immediate sides. As excavation proceeds into these terraces, the stratigraphical arrangement of the gravel and boulder drifts which mainly constitute the ground, is found to assume the form of a series of ancient river beds of ever varying gradations of levels, and in almost all cases taking a direction transverse or oblique to the courses of the present gullies. I have constructed Section I. from a survey of the terrace between Smith's, Pipeclay, and the Forked Burn Gullies, from which will be seen the great extent of such ground. Mining operations in the Upper Manuherikia District have not been of that lively and extensive character which the immense area of highly auriferous ground known to exist in the several digging localities would warrant; this circumstance is, however, alone attributable to a deficiency of water supply. At Dunstan Creek, the workings generally have become of a settled character, and sluicing the recognized method of working ; these operations, however, although conducted by an economically divided water supply, are in but a small degree commensurate with the amount of payable sluicing ground known to exist in the locality. All the gullies in the vicinity of Dunstan Creek may be divided into two classes, viz., those which trend in a southerly and south-westerly direction as tributaries of the Dunstan Creek proper, and those which bear in easterly and south-easterly directions as tributaries to the Manuherikia River— the sources of all existing in and divided by the most easterly spur of Mount St. Bathan's Range. Since the date of my last Report the investigations of prospectors have very considerably augmented the previously known extent of auriferous ground. These discoveries are entirely confined to the terraces formed by the junction of Spectacle, Stewart's, and Long Gullies, with the main stream which I have named Lagoon Creek, and which bears principally in a north-east and south-westerly direction. The amount of terrace-ground so situated, is about forty (40) acres, the greater part of which has had its auriferous capabilities tested either by the sinking of shafts, cutting of tail races, or by open fall sluicing. I forward you a section which I number 11., from which it will be seen that terraces descend in I the form of gradatory steps from the top of Stewart's Gully to the extreme base of the range in the immediate vicinity of the Manuherikia River. In the Dunstan Creek District a great scarcity of water for mining purposes prevailed for a considerable time, the only supply available being derived from the tributaries on the southern side of the range spur referred to, and distributed among the lower gullies circumscribing Kildaro Hill. This supply, however, was further augmented by a race carrying some eight (8) sluice heads cut by the Mountain Race Company from some tributaries of the Manuherikia upon the eastern slope of Mount St. Bathan's Range, between five and seven (5 and 7) miles above the township. Some time after another race was cut from and beyond the same sources of supply, and, like the Mountain Company's race, was thence conducted along the slope of the Mount St. Bathan's Range to its main spur standing over the township, which spur, from its great altitude, enabled these races to command the entire of the then known auriferous ground. Previous to the completion of the second principal race the Mountain Company supplied miners with what they termed a "head" of water (about three-fourths of the present sluice head) at rates varying from ten to fourteen pounds (£lO to £14) per week, the water flowing only for twelve (12) hours, the supply for the remaining twelve (12) hours being eagerly taken up by night workers. Bearing in mind the difficulties under which mining operations were hitherto conducted in the Dunstan Creek District, we must naturally conclude that the auriferous ground was of a very valuable 3

See Diagram A., (Section 1.)

See Diagram A., (Section 2.)

9

THE OTAGO GOLD FIELDS.