It could be a rush for gold in Deccan Plateau

The Hindu Businessline, 17 May 2003, Amit Mitra :

THE base metals mining sector may acquire a fresh coat of glitter in the coming years, as Indian and foreign mining companies are increasingly eyeing the vast untapped wealth of gold lying beneath the Deccan Plateau.

Despite being the largest global consumer of gold, the country’s gold production has stagnated at a measly two tonnes per annum, while Australia, with similar geological characteristics, produces over 280 tonnes of the yellow metal. Experts say India has a vast untapped potential in gold mining, with this sector lying dormant largely due to the earlier closed-door policy of the Government.

The gold rush is expected to register a spurt when Deccan Gold Mines Ltd (DGML), India’s first and largest listed gold exploration company, brings out the feasibility of mining in the Huti region in Karnataka, about 480 km north of Bangalore.

Currently, the Huti gold mine is the only operating mine, with the Karnataka Government-controlled Huti Gold Mines Ltd engaged in the mining activity.

Mr Sandeep Lakhwara, Director of DGML, told Business Line that preliminary drilling operations, up to a depth of 200-300 metres, were on in the Huti region and soon the next phase of drilling operation, up to a depth of about 700 metres, would begin. “We will come out with the full feasibility report by January or February next year. The initial reports are quite encouraging,” he said.

DGML, controlled by the Mauritius-based Rama Mines Ltd, a wholly-owned subsidiary of Australian Indian Resources Pty Ltd, with over 80 per cent equity, is currently engaged in exploration for gold in about 817 sq km of area. The company has invested $0.5 million for the North Huti exploration operation.

“We are sure of striking a feasible deposit of gold there, as the area we are mining is a geological extension of the mine being operated by HGML. We intend to dig deeper during our exploration to assess the precise size of the deposit,” Mr Lakhwara said.

The South Huti mines, which were revived by HGML in 1980, produce high grade gold, the yield being 3.67 gm per tonne of ore mined.

The company is investing another $0.5 million for prospecting in South Huti, Ramgiri in Anantapur district of Andhra Pradesh and Mangalore regions, where the initial drilling operations are expected to be launched in 2-3 months. The Ramgiri mines, operated by the British between 1910 and 1927, with a production of 5,670 kg of the yellow metal, is estimated to have a deposit of 10 tonnes.

Depending on the outcome of the internationally-certified feasibility report on the North Huti deposits, DGML will be participating in the mining activity also. “We are looking for a minimum deposit of about 31 million gm to consider taking up mining activity. The capital costs for gold mining roughly work out to about $50 million, while the operating costs vary from $120 to $150 per tonne,” according to Mr Lakhwara.

The outcome of the Huti exploration operation is being closely watched by several Indian and foreign mining companies, which may join the gold rush. Since this sector was opened up some years ago, with 27 blocks, covering a total of about 33,000 sq km in Andhra Pradesh, Karnataka, Chhattisgarh, Jharkhand, Goa and Uttar Pradesh, given exploration permits, about 30 to 35 mining companies started prospecting for base metals and diamond deposits.

Says Mr Charles Devenish, Chairman of the Australian Indian Resources Pty Ltd, “I see no reason why India cannot match Australia in gold production, especially as the two have very similar geological characteristics such as the rock formations and the soil beneath the surface.”