Exploration Firm Sees Good Gold Reserves

Atul Prakash, Mumbai, Financial Express, 13 April 2004 :

BOMBAY – Deccan Gold Mines Ltd said on Monday its exploration work in India, the world’s largest gold importer, has yielded encouraging results and brightened prospects for commercially viable mining in the country.

India’s leading private exploration firm has started drilling in the Dharwad Shimoga basin in the southern state of Karnataka after testing soil and rock samples for about two years.

“This is a new virgin discovery by us after starting a major drilling programme in India,” chairman Charles Devenish said in a telephone interview.

India, the world’s largest gold consumer, imports 70 per cent of its needs of about 800 tonnes a year, with most of the remainder coming from recycling of gold. India produced just 9.02 tonnes of gold between April 2003 and February, up from 7.59 tonnes in the corresponding period of the previous year, according to government figures.

State-run Hutti Gold Mines Ltd, the only firm processing gold in India from the ore stage, produced 2.79 tonnes during the period. Copper makers Hindalco Industries Ltd. and Hindustan Copper Ltd., which get gold as a by-product of refining, produced 6.04 tonnes and 195 kgs of gold, respectively.

Industry experts say annual gold output in India could grow to between 200 and 300 tonnes in a decade as the government has liberalised the sector. It opened mining to the domestic private sector in 1993 and by 1999, it had allowed foreign investment.

Devenish said preliminary drilling results showed that the Dharwad basin could yield an average 3.9 grams of gold per tonne of ore after mining. Open-pittable mines with gold of more than 2.9 grams per tonne could be recoverable, he said.

“Our aim is to produce 100,000 ounces of gold a year (around 3.1 tonnes) for a minimum of five years from Dharwad mines, subject to a programme of deep drilling,” Devenish said. The company also plans to undertake drilling operations in the Hutti basin, which is also in Karnataka. “Hutti basin has a good potential for gold mining and we plan to start drilling in the area in a couple of months,” he said. Deccan was established in India about 10 years ago, but it seriously started exploration around two years ago.

“Though we have aimed to produce about one million ounces of gold every year in India, we will be happy if we get 200,000 to 300,000 ounces a year after starting mining operations,” he said.