CAN DECCAN GOLD BECOME A MAJOR GOLD PRODUCER?

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CAN DECCAN GOLD BECOME A MAJOR GOLD PRODUCER?
SANDEEP LAKHWARA Managing Director DECCAN GOLD
MINES LTD.
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Comparison of Australia, India China Gold
Production

• AUSTRALIA
• In 1980 Australia produced a modest 17 tons of
  gold
• Between 1980 2000, it produced 3700 tons valued
  at US46billion
• In 1980, identified gold reserves in Australia
  were 400 tons by 2000 the identified reserves
  soared to 8300 tons out of which 3700 tons have
  been exploited, leaving the remaining 4600 tons
  of reserves in the ground to sustain the industry
  over the next 20 to 25 years at the least.
• More than 500 listed exploration and mining
  companies on the ASX

• INDIA
• Between 1967 and 1998 about 19 tons of gold has
  been mined from the KGF, 2 tons from Ramagiri
  about 20 tons from Hutti Gold Mines a total of
  about 41 tons
• Indias current production is only3 tons/annum
  from its only producing mine at Hutti and about 6
  tons as a by product of copper mining
• Only one listed gold exploration Company (DGML)
  and a few mining companies

• CHINA
• China adopted a liberalised policy in gold
  exploration and mining more or less at the same
  time as India
• China has now had a decade of reform in the gold
  mining sector allowing private investment into
  gold exploration mining
• In 1995 China produced 108 tons of gold which
  increased to 120 tons in 1996. Most production
  came from small medium scale operations
  totalling 1200 in all. Chinas gold production
  reached a record of 213 tons in 2003. China has
  about 1000 gold mining operations.
• Statistics show that about 36 exploration
  companies are operating in China, which in 2003
  awarded 11,717 prospecting mining rights

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The growth of gold mining industry in Australia

• Understanding of Australias prospectivity
• Technological developments
• Government of Australias investor friendly
  policies
• Quantum of exploration expenditure
• Access to capital from the public via listings of
  exploration and mining companies on the Stock
  Exchange

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The growth of gold mining industry in Australia

• Government of Australias investor friendly
  policies
• Mineral and Petroleum Resources Policy statement
  of 1998 - a commitment to provide investors
  with positive, stable framework of relevant
  Government policies which to a large extent
  remove uncertainty and promote increased
  investment.
• Tenement system and legal framework is investment
  friendly has therefore attracted large foreign
  investment
• Grants for reconnaissance exploration and
  prospecting are made within a short duration of 2
  to 6 months as against 12-24 months of delay in
  India. Consider a time limit for disposal of
  applications failing which deemed approval
  process applies.
• There are no lengthy procedures of clearances
  from various organisations such as revenue
  authorities and the like at exploration
  prospecting stages. Consider removing certain
  stages at the state Government level.
• Government guarantees award of prospecting
  mining rights to those who invest in grass roots
  exploration. In India, the law speaks of only
  preferences but no guarantees. Security of
  tenure is a must have when upgrading the
  prospect from RP to PL or PL to ML to attract
  large investments.
• There are no limits on the extent of area to be
  granted on prospecting licence unlike India where
  a limit of 25sqkm is placed, with grant of larger
  areas subject to discretion of the State
  Governments

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The growth of gold mining industry in Australia

• Quantum of exploration expenditure
• In the recent past smaller exploration companies
  in Australia have raised between US 150-200
  million for exploration purposes every year.
  Canada has provided a substantially higher amount
  of US 3.3 billion in the same period inclusive
  of capital expenditure on mining.
• In India, estimates suggest that the total amount
  spent on precious metals exploration over the
  past 20 years has averaged a low US 35m per
  annum

• A study of Western Australia Department of
  Treasury and Finance indicates that if mineral
  exploration investment were to increase by US
  100m and be maintained for 5 years, projected
  cumulative benefits over next 20 years for the
  State would be 10.4 billion in investment,
  45.8 billion in export revenue, 32 billion in
  gross state product and 1.7 billion in State
  Government revenue. All these, in addition to
  creation of several thousand new jobs and
  development of ancillary industrial units.

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Gold potential of the Indian terrain

• Gold was known to Indians 8000 years ago.
  Ancient India witnessed extensive prospecting
  mining for gold. There are more than 800 old
  workings recorded.
• Geologically, the Indian terrain is largely
  comprised of precambrian rocks. Similar rocks
  are known to contain large quantities of gold in
  parts of Western Australia, Canada, Africa, South
  America China

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Gold potential of the Indian terrain

• There were over a hundred gold mining centres in
  the early part of the last century these were
  mostly operated by the Britishers. The mines
  were located in parts of Kolar, Hutti, Gadag,
  Chitradurga Shimoga in Karnataka Wynad
  Nilambur in Kerala Kotagiri Dharmapuri in
  Tamil Nadu, Ramagiri Jonnagiri in AP State
  Kunderkocha, Lawa, Mayisara Sonapet in
  Jharkand Sonadehi in Chhattisgarh Parsori
  Pular in Maharashtra. Gold panning by local
  people is a prominent activity in many parts of
  India.
• From a total of 127,242 tons of gold metal
  produced in the world, 76,500 tons came from
  precambrian terrains (Archaen proterzoic). A
  major portion of India, barring the Indogangetic
  alluvial tract Deccan lavas, is composed of
  precambrian rocks yet our contribution to the
  precambrian gold resource is a meagre 1.17 (900
  tons of which has come from a single precambrian
  belt ie Kolar)
• Gold-bearing potentiality of a geological terrain
  can be expressed in terms of kilograms of gold
  per sqkm area comprising gold metal already
  produced gold reserve in the ground identified
  by exploration available for mining in the
  future. For Western Australia this index works
  out 50kg/sqkm, for Canada 55kg/sqkm and for S.
  Africa it is 80kg/sqkm. In comparison the index
  for India is a mere 1.6kg/sqkm (excluding Kolar)
  inspite of the fact that India has been known for
  wide spread gold mining in the past. Surely
  there is much scope for finding new mineable gold
  resources in the country.

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How Deccan Gold can become a major Gold Producer?

• Factors favouring Deccan Gold
• Geological terrain with potential to deliver
  Mines (Ganajur, Hirenaganur and others)
• Excellent results from exploration
• Depth of technical expertise available to the
  Company both Indian and International
• Strategic investment by Sun Mining Exploration
  Ltd into Deccan Gold - provides funding, access
  to gold prospects internationally , additional
  expertise
• Capacity and commitment to accelerate our spend
  rate on exploration
• Several Prospecting Licence applications lodged
  with the Government awaiting approval

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How Deccan Gold can become a major Gold Producer?

• How the government can help us
• Create mining Industry regulations and offer tax
  incentives that foster favourable investment
  into exploration companies
• Fast track the conversion of RPs into PLs, grant
  of larger areas under PLs, matters relating to
  forest clearances, deletion of some of the time
  consuming unnecessary steps for grant of PLs,
  upgrading of the guidelines and rules to remove
  anomalies and security of tenure are some of the
  key issues that need addressing.
• Encourage more research and development through
  grants, 150 write offs

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How Deccan Gold can become a major gold producer?

• There have been several representations made to
  the Government by various organisations including
  FIMI on what improvements are required to the
  Mining regulations and the Act. The Government
  should act on these suggestions.
• I believe training of appropriate government
  personnel in the understanding and execution of
  the Mining regulations is a must
• Government agencies (GSI MECL) become more
  actively involved with the private explorers to
  exchange information that could lead to
  discoveries.
• THANK YOU.