= wa 11th ost., 26. rH MRE THR ARAGUEDA AMARA PROPERS'TES AND GSHEI 9 + 10S _GUICOCHEA + ‘The firm of Aoharan Goicochea was established 68 years ago in Trujillo with a total capital of £20,000. On the death of Acharan Mp. Pinillos took over his shares which were the controlling shares 4n the Company and, therefore, from that period onwards Mr. Pinillos took over the management and the absolute control of the firm. the Company was formed not as « limited Company but a partnership and was constituted by the following shareholders:- Heirs of Alfredo Pinillos . £15,044 " Enrique Blondet . 3,518. ’ Mes. Elvira @. de Pintllos " Angela G. de Goicoohea - a “ Bivira @. de Flores . a p rs " Carolina G. de Mureua... 909; £20,000 \about four years ago Mrs. Dalmau, who was a share holder in Acharan Golcochea & Company rejoined the new firm and invested in the Company £5,000 whereby the capital was amplified to £25,000. The Yusiness was renaméd Pinillos Goicochea % Company and has been operat- ing extensively in the Departsent of La Libertad as merchants and importera of every description of goods both in the hardware and soft- ware lines, timber and machinery having also a very considerable‘. a \ebnnection as exporter of produce of the country, such as sugar, cotton coca, hides and minerals. * Pinillos Goicochea & Company extended their radius of action and gradually developed very extensive connections both in Trujillo, where they have three or four shops,in the Sierra or highlanda of the interior of Trujillo where thoy forced very good business connections. Amongst other devolopusnts, they obtained Frechold possession of the famous “ines and Plantations kmown as Algasaroa and Araqueda respectively, situated cloxe to the important towns Cajamarca and Cajabaxba. The Company seoured their fresholds, but tho ownership of same under special agreenents waa vested in the shareholders of Pinillos Goicochee & Co., tut in the proportions indicated hereafter. Heirs of Alfredo Pinilloa . 14.09 part: Enrique Blondet 1.38" ire. umilia G. de Dalzau a2 0" Elvira G. de Pinillos . oo ° "angela G. de Hoisochea 206 “ Elvire G. de Flores -. “2” " Carolina G. de Rureua . 2 There has never been a precise valuation made of the Estates or Mines, but the property figures on the books at £100,000 which certain- ly 1s a very conservative figure, for its value is undoubtedly very mush greater. . Within the last fow years an American Company - The Northern Peri Mining & Smelting Company - actually made an offer of $500,000 gold for the Algamarca =ining properties. The Hacienda or Katate on which these mines are situated, which is the "Hacienda Araqueda”, extends to approximately 176,000 acres. It can therefore be appreciated that the valuation figure above referred to and at which the wholewl ase property appears on the Pinillos Goicochea & Cots books is extremely conservative. For an undertalking of this magnitude,which required the development of both agricultural and mineral interest, the capitals of Pinillos Gotcochea % Co., were too small to permit their working. Different Lawsuits which took place between certain partners of the firm made it impossible fo them to come together or to an agreement with regard the sale of the Mines to the Northern Pert Mining #% Smelting Company. As the firm of Pinillos Gotcochea extended their coumercial pursuits they had to obtain a very considerable amount of extra capital; they developed the Banking side of the business which, at deisguts the time of writing, has impositions to the amount of £55,000 on current account. At the same tine, owing to the after war situation they were obliged to extend cradits to thelr merchant :olients who were carrying on a brisk retail business in the neighbouring provinces for them. Shortly after tho War when the boom period ended, a terrible depression came over the country and prices of all products collapsed; the monetary conditions of the firm became very bad and Xr. Pinillos, The Managing Director, was obliged to seek financial assistance = wherever he could find it to keep the firm solvent especially as Banks had closed down practically all credits. Under these conditions Xr. Pintllos obtained a mortgage guaranteed by the Mining properties of "Alganarca" from Mr, L.J. de Orbegoso for the sum of £25,000 Peruvian Currency at a time when the Peruvian exchange and the British ——=— Exchange stood at par. Mr. Orbegoso anticipated, apparently, the drop— in the exchange and insisted upon the deal being carried through, interest and repayments to be made on a Sterling besis. Yherefore, this advance to-day instead of representing £25,01) to the firm, it is actually about £052,500 due to the 30% depreoiation that the Peruvian currency has suffered. ‘he interest rate that Mr. Orbegoso demanded and obtained was 12% p.a. Under the above conditions the rate of interest being paid to-day works out at 15.6% p. + 80 it is easily realised that there are very few businesses that could stand for such heavy interest services. Mr. Pinillos, instead of curtailing his expansion and making his postition secure with the assistance of this money, extended and continued to anplify the busin and it may have gone through satisfactorily had the improvements in the country's trade that commenced Just about this time continued, but the reverse took place and we find that about two years ago the situation of Pinillos Goicochea & Co., was again becoming very serious with the addition that debtors who owed the firm by this time somewhere around £65,000 were also giving a great deal of trouble by not paying on tine and Pinillos Goicochea & Co., in any case, could not collect the interest due to them and therefore defeuited with their payments. The situation grew extremely serious, 80 mich so that it affected ifr. Pinillos’ health and, as a rosult, ho died two years ago. The business in accordance with previous agreenents made betwecn My. Pinillos and hia Sons who, as heirs, hold the majority of shares, Passed into thoir administration; Alfredo Pinillos, junr., becoming ianaging Direator assisted by threo brothers. These young fellows without any real comercial experience, without any organising abilities, nuve tried to carry on the business and perhaps could havemicoeeded in good times, but in the difficult situation they found themselves in with the new spell of bad tines due to the produce of the istrict having slumped in price again, they find themselves in a very difficult situation even worse than that into which their Father had brought the business. With this added difficulty, Peruvian woney has depreciated by 30 to 55) and they have got the £25,000 mortgage and its services hanging around their necks paying £p3,000 interest thereon per annum; it seems vory doubtful whether they will be able to weather the present orisis. If they do not met their obligations on this mortgage before April it mill vory likely mean a foreclosing by L.J. de Orbegoso on the “ining property and this, no doubt, would bring about the failure of the concern. * Under these circumstances, partners of the firm have written to us to learn whether it would be possible to organize a Company to take over the business giving the Pinillos interests © holding pro- portionate to their share holdings in their original Company, paying off all creditors in paid up shares and by introducing « fresh supply of capital and paying orf the mortgage on the mines the Coupany could carry on and make a very large business of 1b. These are general remarks with regard the business up to the Present tine. we will now give a brief outline of Araqueda, the : agricultural Estate followed by a desoription of the mineral property with their estimated approximate valuations, and then will endeavour to outline a scheme which we believe would be effective in getting over the difficulties and giving the British inveator a first-class investment.=¢- ARAQUEDA - Araqueda is situated in North Peru in the vicinity of Cajamarca; as we have indicated before, it covers an area of 24,000 Panegadas or, approximately 172,800 acres. The altitudes vary between 2,000 metres and 3,800 metres above sea level and,therefore, the Estate can produce practically every type of product from that grown in the tropics to the praduce of very cold cliates. The Bstates can be considered as divided into four zones; the nountainous zone or puna which is unproductive and comprises approximately 30% of the Estate. ‘Tho onttle breeding zone between the puna and tesperate ons covers about 20%. The teperate gone covers 50% of the property and 1s extrenely well adapted for the growing of all norts of grain, maize, alfalfa and produce and plants of a similar kind. ‘The extremely good productive and rich tropical lands extend over 207 of the croperty and are partioularly uitable for sugar, cotton, coffee, fruit and other tropical produce. At present tho cultivation 1s carried on by native colonisers under the present tennanta of the Estate. Sugar-cane and cotton are the prinoipal products to-day. A certain amount of cattle rearing is carried on and the Estate has some very good samples of equine and bovine cattle. The possibilities offered by these Es tea are very great for on the plantations thenselves a very groat anount of timber is obtain- able: coal is available; sites for water pover are present in —_ ————— different places which gould be devdoped at 4 comparatively small cost. The markets for the produce Cajamarca and surrounding villages are close at hand and practically everything would be grown for con= sumption in the neighbouring districta. There are available on these lands, approxinately 2,500“T= laborers, of thesé 500 are peones; the remainder are colonizers who, work the lands on a sharing basis and are obliged,at the same tine, to give a certain proportion of their tine every week for the working of the Estate. A rough valuation of the property which we consider extrevely low is given on the at i Schedule (A). We may say thet Mr. Jean Ceresole, a Swiss Agricultural Engincer of very high revitation and well imown to us, who has visited these Estates end made a lengthy report on then, has done 20 in extrenely favourable teras. He considers the property of" Arequeda’ as one of the best in the very fertile Yorth Peruvien Sierra Districts. Mining Interests - ‘The mining property is situated on the Aracueda Estate ond it is to be found on the higher lying lands 3,000 metres above the sea and level (which are, from an agricultural standpoint, unproductive). Six principal veins have been worked on @ mall scale and have proven extremely profitable, but it will require more extensive capitals than available at present to work them on a large scale. The minerals obtainable are copper, silver and «ls lead silver with certain percentages of gold as will be seen trom the attached Schedule (B). “The nature of this ore is very similar to the ores ofthe quizavtiea mines which have been bought by the Horthem Feri Mining. & Smelting Company and which are situated about 69 alles South of Araqueda- 80 far work hae only been carried on by native labour on a very small scale, but the amount of minerals that are visible at the present tine, over 50,000 tons, at the valuation of the ore on~~ site before extraction which, on the basis of the average acsays is about £6 per ton, shewa that over £300,000 worth of mineral are already in sight and no doubt a careful study of the property will shew that the foregoing are extromely conservative figures. The working of these mines dates back to the time of the inoss in 1770 or thereabouts; tho reason for then not having been developad has beon the lack of enterprise on the part of the previous native owners and lack of capital on the latter part of Pinillos Goicochea & Co., coupled to their ignorance and inexperience in mining matters. The roads from the mining district to the Rails inna at Quirinuec is approximately 140 miles and thence 20 milea to the port, but the minerals need not be brought as far as at a point called Shorey; The Northern Peri ining % Smelting Company 1s putting up a large central snelting plant where Algamarca Ores would be smelted: this will reduce the trensport distance to somewhere in the neighbour hood of 50 miles. The above Amertoan Company omed by the Ougenheiner interests ~ offered in 1923, Dollars 500,000 for Algamaros on a three year's option agreement on the property under conditions which are indio~ted in the attached copy of the original letter from the Northern Pert Mining & Smelting Co., to i. Pinillos. Owing to Legal questions at that tine this offer could not be accepted by Pinillos Gofcuchea % Co., and the American Company bought instead of Algasarca, the Quiruvilca mines for £200,000. Reports by Mining Engineers whom ve know end can rely on, who have visited both these regions. state that quiruvilca doos not present as powerful a formation nor doos it give as good average ores as those obtainable in Algararca. 83700 Representing a total of actu 598,600 Debdti to Pinillos doicoche 65,000 Pinillos Goicochea's stock in tra + 50,000 Buildings and other property ...-.-+ + 20,000 Making a total of approximately ... +£380,500 The writer believes that it would be possible to arrange with | Pinillos Gotoochea & Co., to transfer their properties for a holding ir @ New Company of £160,000 total capitel; of which possibly £50,000 in shares would be allotted to Pinillos Gofcochea & Co., and £38,600 in shares to creditors in payments of their credita (See schedule "C"). There 1s no doubt that most of the creditors to-day wouldoll. willingly take shares in exchange for their credits which amount to £p85,000 or Eat33,500. The Company would require an additional amount of approximately £80,000 to pay off outstandings and allow for developrent purposes. They would then be in a position to buy up the LJ. de Orbegoso mortgage of £25,000 with arrears and start the whole concorn on a first class footing with these valuable assets entirely free. ®ne merchandising side of the firm of Pinillos Goicochea & Go., has developed very considerably snd, until very recently, the turnover has shew a minizun average of betwsen £6,000 and £8,000 per month with a net profit of sonewhere in the neighbourhood of 15% to 205 ané this side of the tusineas if properly conducted should shew a renariebly handsome return on any investments uaco. ‘The fact that Pinillos Goicochea has beon obtaining monies for their cyerations in Peri, paying over 12% interest and even between 8 and 10% on Bank advances is another point which has to be taken into consideration when judging the possibilities of the busine: yaa, if any onncern or British Company would take it over the finance coulc be secured at about 5 to 6% interest per annum. In other words, a clear 5% saving would result from this source alone. The above outline ia no more thon a brief indiextion based on ths facts and figures I have before me, tut in the event of any pert- ies being interested in a venture of this description the writer would be pleased to go very mch further into the matter, give any explanations possible, and even if required, under a suitable arranges: ment contribute to the expenses of the sending of a commission of ay a Mining Engineer and a business man to examine the property and re-12 port thereon. It would be very necessary before the Commission is sent to Per, to be able to affirm that,if reported on favourably, See the entities interested were financially strong enough to carry out satisfactorily business of this magnitude and had the means of secur- ing the necessary funds. We also attach hereto the following:~ A small photostat shewing the extent of the Araqueda and Algamrce properties and a copy of the letter offering $600,000 for the mining zone. Should there be any further interest in securing details the writer would be pleased to obtain then as quickly as possible. As the Orbegoso mortgage 18 due for paywent about the month of March or April, time 1s very short to carry things through, but there ia no doubt that arrangements can be made to prop up the situation to allow for the completion of any negotiations that may be atarted under good auspices. ‘The writer knowa,personally,the sone of Araqueda and Alganarce, has lived many years in Trujillo end mows the Pinillos Goicochea business thoroughly well; related by marriage to Mra. Eailia Delos one of the partners in the firm, it would be possible to obtain all information and assistance and to have the benefit of irs. Dalmau's influence in coming to a satisfactory arrangsrent with the remaining partners. : Although the present time in Peri is bad owing to the low price of all staple products of the country and the very great difficulties into which the Government has brought trade due to its activities 1n connection with the acne and Arica effeir which, re- quiring for the carrying out of the plebiseite in the district, very~13- heavy expenditure, the Government has not hesiteted in taxing yusinesses and every industry to the utmost capacity causing « very serious condition in the country, but this ia.only a passing phase and a situation of this kind 4s the only one in which it would be possible to seoure a business such as the one described above for @ reasonable figure. LONDOM - 11th October, 192SCHEWILE "A". Eatinated valuation of the "Aragueda” Estate: Cattle rearing zone covering 20% of total aroa $4,300 acres = 4,900 Fanegadas at 4/- per acre « £8,700: 0: 08 Venparate Zone covering 30:5 of total ares 51,450 acres = 7,360 Panegadas at £1:5:0d per acre.. 58,800: 0: Od Rich tropical zone covering 20% of total area 34,500 acres = 4,900 Fanegadas at £3:0:0d per acre ses 98,000: 0: Od £165,500: 0: 0a No value is laid on the renaining 30% of the lands as it is constituted by the mountainous zone and where the Mining interests are. gPadRon GENERAL de Mwas M08 SCHEDULE "B"_. PAE 12 ALGAMARCA MINING PROPERTY= Includes following veins La Cascada Puma Sahuindo Descubridora El Cobre San Blas Trinidad Yonserrate No.1 San Vicento Yonseratte No.2 Providencia La Tapada Miraflores San Antonio Marfa de la Merced 1 Plomo San Jose and a few others. "Descubridora" end San Blas have been worked the most. Whese veins lie on the sountain Algamarca and run normally to the auticlinical axis. Whe oxidized zone of these veins ts very small, the usual contents of these minerals include:~ pyrites, chalcopyrites, grey copper or tetrahedrites and mespeckel the gangue being quartz. The veins with the exception of El Cobre are cupro-Argentifer~ ous. The Puma Latmindo vein has yielded up to 600 oz. silver per ton and San Jose and Z1 Plomo are all copper and Silver lead respectively bl Silver Gold. Descubridora ...- 12% 60 on. 10 gras. San Blas - 14% 40° . Trinidad . 10% 220 ° a0; per 2000 Ibfton pr.2000 Lby ton, A small s-elter is located on the properties and ores have been satisfactorily reduced - lixiviation and amalgamation have been also employed as processes of extraction of the values of the ore with success. Mr. Ramon Ponce de Leon, the ‘ining Engineer who lately reported on these mines states that the present dumps about 11,000 tons can be valued at u minigua of £6:0:0d por tone ‘She ones from the threo above-naned aines renpesent sn average: price of £10 per ton and that at a level of 250 metres below presént levels over 4,000 tons of ore are visible. the i. SCHEULE "C' TOPAL CAPITAL = £at.160,000 in £1 Shares. of which Pintllos Goicochea & Co. partners would receive fat.50,000.- Creditors £p.55,900 : fat. 7 Shares to be issued (Und) "81,50 £ 150,000.- Now Capital........ sei tre £81,500 Leas amount of Mortgage and Arrea: Less Underwriting & other Exp.10% Portion available of capital . P60. % Co. recoverable dubr. + 29,000 Punds Available .. £68,600 If Alganarea Mines aro sold for £p.100,000 = £st.66,000 P.O. & Co., would receive . «£at13,200 Creditors ...... New Shareholders . £at-66,000 Proportion of value of Algamarca corresponding to new Shareholders ...... swale wwe £ 35,860 Deduoting this figure from amount of invested capital £81,500 - give actual capital 45,640 | For this investment Shareholders would have BBS value Araqueda £165,000 = 90,760 "" Stock in Trade ..... 27,500 " Freeholds etc. . 22,000 Shewing assets of a value of ... sesees £229,250 Besides 55% Ovnerships in the P.G. & Co., businosn which, as has been pointed out has a turnover varying between £6,000 to £8,000 per month.hues ener Pa mute ae TRE del ee ar corny cot poe ee Ce) gee Ce eC ee te tts CC Pets r CM eer e rent ie PCr. i aCe Ce Soe ecm UR Ott Confimande y emplificande maa Ae Eat epg Ce ae? Oey ast orem cy thr arr edo ofrecerie, y que serd sudeta fis Panter os PaO SS Cw cto oS eC aL) peererevers reed = Un arrendamieito al partir de zrutos por el plezo CC eee me scree tere rer et ty mrt de Algamaroa, inoluyenio las de Ud., del ir,Ponce de Leon, et al, de los Sres.Velesmoro y Dalmau, y . 98 denunoies de aguaa y todo lo dem@s terreno que on ol jricie de nusstros Ingenieros serdn necesarios. La Compafida se ebligard de Prareae er Care mrrs sty mrrye err ieetae mr paren opt Paris y de las minas pare su explotacién, psra instalaciones de Plenta de fuerse-uotriz y de deneficio ¢ fundicién, feallidades’ de ee a eis i ar Te ree Tea er Tes ry Betti ie be metoc tr eT my Mra ses como adelantos devengando intereses 4 razon de °% al afio, y 80 oargae ran, lo mismo que todos los gastos ae ose rt ees Oe tresporte, refinacién, vente,etc., 4 una Cusnte Tea e @ 1a cual’ se abonaré 2 1a ver ol produato BFate oe ee Mott CE Ls CC Me Ti errr intr a Pe CLY a Cuenta Suspensiva a» dividirerdn lee Liceterun Mint eat tr we Lire ts cok yar cr erat conceptom de merced conductive, y 70% (Setenta Poroiente) & peer tery Le Compulife tendrf 1a epoién de compre de todas las propiedades arriba enumeredas por 61 plaze de tres afios en lo suma de $500,000 (Ore Americano), pagablea en tres armadas * iguales, RSC R CR LSet ery rt Lies meee ra re pS et art yeaa i eee eon dol primer pigospO) Salad M/S eras Sae- 12 meses despues del segrndo pago. bert Me ers ee a CCC CM Mare b ny Pry Caged hn Se uma tarifa de merced coniuctiva, sobre le SO Cet tesk Cae LUC. ees a eat por medio de planta de benefiecio, de fundicién, ‘tro que podamos emplesr, encontramos qu hay tantos facteres que son todavia desconocidos por nosotros (tales cre ee eC TCT CM tea teeCc Tm OME TS. werd ed fe operacién bajo condiciones que no fe han probado,etc) en lo cual no es posipie obrar con justicia 1i para nosotros ni para Ud. en determinar tal poreentaje, lo cual, ciertamente, debe variar, en justicia @ ambos, con cada diferente metédo de atamiento que se emplea, 6 por cada clase ‘\e producte entregaio oe ee ee Se Ce ee ee sey invertide en el producto hasta el punto de entrega & Ude y lo que teniré Ud, que gastar adends 1 traaporte, refinacién, y venta de au producto camo metales, seré di:tinta. ESOT Ser So meray @ que en caso de recibir Ua. algo de tal producte como mereed conductive, tendré Ud.,siemprey Bo ty ar los gestos del tresporte, comisién, refineacién, Ot ear ate en mercado, y adem4s soportar por su misma ere Peter m sm Seer EC MTCC rC y las multas é que le ser sujetos, mientras ePaper tory Oe ee ae te ee Ce us eec lt ie hk ay de deducir todo gasto, com’ esté indicado en esta propue rte or Cr sony aes @ su de los minerales, exactamente como ser aplicados Par eee me tT ST tet) eet yc mT Oe nuestra orgenizacién grande en suf mismo beneficio; y tengo le Seguridad de que Ude, como embarcador de pequefios lotes de minerales nunes podrfa obtener ventejes am comparables de ningun Comprador de minerales ¢ Fundicidn, Adems, solo estes ventajes le re Od tarfa @ Uds un valor equivalente 2 un cumento Cee ry Coreepet ett tm Ce eset hy tes, fijado come Pt CM TO ka Pom hy ry) ten seguro, que incluirémos para su Peery ity AN ae Te oe rene emer eT fundir, refinar, movilizer, rs vender les minerales de Algamarca, Ce ee Oe recor ‘ led Le oe on en ° = Att Fig este modo eer terme ree Cm] Pere) psa ed Fs Libres ry | bien, Pay ie proteecidén en tal convenio de erie prtiee te to re eee TCR een Pos ast Ce re acoeso de su representar:te accreditada 4 peer ee ere et my tC ee ect) a eg 3: ‘opa x eee cién de estas minas, SSeS ERR ar Sati cer nig Eg ¥ los x ee ea bes lt Boom la explot: cere ere ty i Be ee Ce Cm TCs mC) sy . € ne, nosotros necesitariamos garantfas fe amplias facilidsdes ee OO Oo ee OS peed ro CO ti meres ee ‘Provisienes,setos,/4 precios rasonables, Pa Oe eC at eS oaeyy les Minas de Le rete demuestra: bien clare que en vista del x bets a Pees: PY by eta relativamente lejos, Ta jesarrelle y explo a considerable, le 08 Cet - Cty OEY Ae en le boca Ll dire Ree eC Ort eey eT ae eT) Tes, que debe: resultarse en utilie dades, Pye ye metaliirgicas anormale, y en gastos excesivos de explotaci: Con mi més distinguids consideracién, me es grate suscribirme ae ae ary Ra