Economic Times, 16 June 2003, ADITYA CHATTERJEE & VINOD KUMAR SHUKLA / AN ECONOMICTIMES.COM EXCLUSIVE :
TIMES NEWS NETWORK[ MONDAY, JUNE 16, 2003 12:43:00 PM ]
NEW DELHI: “I’m absolutely distressed at the way mining and metallurgy have been ignored in India for centuries. Do you know the Hatti gold mines in southern India predate the Ashokan times? Or, that complex metallurgy like extracting zinc was mastered by Indian craftsmen 2,000 years back?”
If you thought these are words spoken by an Indian geologist or perhaps an archaeologist, then you are mistaken.
Actually, Charles Devenish, chairman of Australian Indian Resources PTY, has an unusual mind. Opportunistic and passionate at the same time.
He first visited India in 1958 and started making regular visits since 1994, before making Delhi his home in 2002.
He actually has ample reasons to be in India.
At stake is the future of Deccan Gold Mines, the only listed gold mining company in India, and Geomysore Services Ltd.
While Deccan Gold Mines is engaged in later stage exploration and drilling, Geomysore is involved in early stage exploration.
In fact, the genesis of these companies is pretty unusual too.
Australian Indian Resources PTY is a privately owned company by a group of individuals engaged in the mining business in Australia. That company, through its Mauritius-based 100 per cent subsidiary Rama Mines, acquired Bombay Stock Exchange-listed Wimper Trading, which was subsequently renamed Deccan Gold Mines. Geomysore, on the other hand, is directly owned by Australian Indian Resources PTY.
According to Devenish, Deccan Gold Mines is starting to apply for prospecting permits in four areas. Of these, there is one undisclosed place in Maharashtra, two in Hatti and a site near Kolar region — in Karnataka, and Ramagiri in Andhra Pradesh.
“We have spent close to $9 million in these projects so far, and we are in the process of raising another $2 million through a rights issue in August/September”, says a very bullish Devenish.
On the issue of starting commercial production, he says that the company has set a timeline of 2005-06 for mass mining of gold.
“There are some people, who asks me about the viability of this venture. I tell them that all this talk of India having less gold in its mines is bogus. Actually, certain statements by a visiting Russian team in the Kolar mines of Karnataka were misreported to give a feeling that India does not have enough gold in its rocks. The fact is quite the contrary”, Devenish says.
“I would reckon that India has the potential to mine about 300 to 400 tonnes of gold every year — up from the current levels of 2 tonnes. Even an idiot can tell you what a huge opportunity these figures mean… “, he adds.
But, are there enough buyers for the yellow metal? And, more importantly, what’s the kind of profits that Deccan Gold Mines hopes to post when commercial production starts?
Devenish assures that consumption of gold is also moving up. “As it is, we in India consume about 800 tonnes of gold annually through legal and other avenues, while the global level is about 3,000 tonnes. One must also see how consumption is growing in south-east Asia and China”.
On the subject of profits, he was rather cagey. “Profits in this business would be more or less along the same lines of other metals – which is around 15 per cent of revenues” – is all that the Australian miner says.
Since exploration and specifically drilling are capital intensive businesses (each site costs about $200,000 to explore intensively), the company is planning to approach the primary markets.
“Currently, we have 245,000 equity shares of Rs 10 each. Along with the rights offer, we plan to go in for a stock split and double the number of shares. Once we do this, we will be accessing the capital market again. We plan to raise about $5 million through this issue.”
According to Devenish, there are ample reasons to be bullish on the future of gold mining in India. “I believe the next big economic boom in India would come from the mining sector. Indian will experience a massive mining boom and should become the dominant mining country in the world within 20 years.