Times of India, 4 July 2003 :

Charles Devenish, chairman, Australian Indian Resources PTY, is opportunistic, passionate and an Indophile to boot. He is in the gold mining business and believes that India offers the possibility of strong growth in this sector. Excerpts from an interview by Aditya Chatterjee:

What makes you so bullish on India’s gold mining prospects?

I feel India is going to experience a major mining boom and should – in the next 20 years – be the dominant mining country in the world. To start with, on the supply side, India possesses virgin, unexplored mineral resources. On the demand side, it has a population that spends $7 billion on gold each year.

There are some people here, who ask me about the viability of gold mining business in India. I tell them that all this talk of India having little gold in its mines is bogus. Actually, the misreporting of certain statements made by a Russian team that visited the Kolar mines of Karnataka gave the impression that India does not have enough gold in its rocks. The fact is quite the contrary.

I’d reckon that India has the potential to mine about 300 to 400 tonnes of gold every year – up from the current two tonnes. Even an idiot can tell you what a huge opportunity that offers. Then, there is the issue of local talent and expertise. Here, highly-trained geologists, on the government’s pay roll, sit idle and do nothing. All this has to change.

I’m not just bullish on India’s mining prospects. The economic impact of it will be even more interesting. Take the example of Australia. Today, western Australia is a mining power house. But all this started in I969 with a major discovery of nickel, which led to an enormous mining boom.

Small investors there invested heavily in small start-up nickel exploration companies. Many of these companies failed over the next 30 years, but many succeeded – and grew into medium and large-sized companies. The same events took place in Canada a few years later.

Today, Australian and Canadian companies compete all over the world on mineral projects. India’s advantages are actually much greater than Australia or Canada because it has such a large potential retail investor base.

It’s my feeling that the path to successful mining in India will be through the listing of a number of junior exploration companies on the bourses. Some regulations will have to change to allow this to happen. The government and the stock exchanges also must go out of their way to encourage the Indian investor to invest in the country’s resources. Once that happens, these listed companies will surely get the support of small investors. Remember, your stock exchanges at times have up to 40 million traders, and that’s a phenomenal number.

Your company – Deccan Gold Mines – is apparently the only listed gold mining company in India. What are its activities?

I’m the chairman of Australian Indian Resources PTY, which is owned by a group of individuals engaged in the mining business in Australia. That company, through its Mauritius-based subsidiary, Rama Mines, acquired BSE-listed Wimper Trading, whose name was subsequently changed to Deccan Gold Mines. Deccan is engaged in later stage exploration and drilling. Another group company – Geomysore Services – directly owned by Australian Indian Resources PTY, is involved in early stage exploration.

Deccan is applying for prospecting permits in four areas. Of these, there’s one location in Maharashtra, two – Hatti and a site near Kolar region – in Karnataka, and Ramagiri in Andhra Pradesh. We’ve spent close to $9 million in these projects so far, and are in the process of raising another $7 million through a rights issue in the next couple of months and a public issue next year.

You see, exploration and intensive drilling are capital intensive businesses with each site costing about $200,000. So, it’s imperative that we approach the primary markets. The company has set a timeline of 2005-06 for commencing commercial production of gold.

What can the government do to facilitate a gold rush?

Central and state governments have to assist and encourage mining exploration and development. They should realise that exploration is high risk and requires considerable risk capital and expertise. I also feel that the government mustn’t unfairly compete through state-owned enterprises… there must be a level playing field. The Central government can help by rewriting the Mining Act and making it investor friendly. Removing many of the discretionary powers of the ministry concerned is another good idea. It should also look at introducing tax incentives for high-risk exploration.

I also feel that bringing the research data of Geological Survey of India (GSI) out of the closet and making it available to exploration companies is a must. The GSI has done a very good job over the past 100 years. Now is the time for this good work to be capitalised on.

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? It’s time that India pays back the debt of those ancient scientists by investing in the mining sector.