Deccan Gold Mines to receive govt license in 2-3 mths

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Deccan Gold Mines to receive govt license in 2-3 mths

Sandeep Lakhwara, managing director of Deccan Gold Mines, in an interview with CNBC-TV18’s Latha Venkatesh and Gautam Broker, said that the company expects to get an approval for the mining license in the next two-three months by the centre and state government.

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Sandeep Lakhwara, managing director of Deccan Gold Mines , in an interview with CNBC-TV18's Latha Venkatesh and Gautam Broker, said that the company expects to get an approval for the mining license in the next two-three months by the centre and state government.

He said, "We have made an application for a mining license at Ganajur in Dharwar-Shimoga basin. It has been approved by the government of Karnataka and now the Ministry of Mines has taken up the file in Delhi. We hope the Ministry of Mines to send the file back with an approval to Karnataka in the next two-three months."

Below is the verbatim transcript of the interview. Also watch the accompanying video.

Q: The company had organised a press conference 13 years ago in late 90s. You had raised an IPO soon after that, but have not reported profits from 2001 onwards. What is happening?

A: The press conference could not have been 13 years ago. It probably must be about eight years ago. Deccan was floated around 2004. The industry that we are in is an exploration industry.

By its very nature, from the time that you start your exploration to the time that you find your deposit, it is a number of years. Traditionally, it would take up to nine-ten years. We are well within that range.

The profits will only be reported when we commence mining which we have not for several reasons. It has partly to do with our licensing issues, exploration and development within the projects.

We have been getting close to a mining license being granted by the government. Hopefully, in the next 18-24 months, we will be generating revenues from gold production.

Q: It is a 2001 listing on Bombay Stock Exchange which doesn't report much by way of total income which is about Rs 8 lakh or thereabouts. Haven't you been filing with the BSE from 2001?

A: We did a reverse takeover of an existing company, but the projects in Deccan actually got vended-in in about 2004. The exploration companies are not about income generation. It only happens when you commence mining operations. We are yet to commence mining operations.

Q: When will you be able to start the mining operations? It has been a long wait from 2004. It has been almost seven years. When do you expect to get a mining license?

A: One particular area in Dharwar-Shimoga basin called as Ganajur where we have made an application for a mining license. It has been approved by the government of Karnataka. The file is sitting in Delhi with the Ministry of Mines.

We are very hopeful that the Ministry of Mines will send the file back with an approval to Karnataka in the next two-three months. Once that happens, we are undertaking some further feasibility studies in that region. We have appointed SRK Consultants to prepare that feasibility study.

We have also entered into an MoU with the government of Karnataka to acquire land so that we can set up processing facilities once the mining license is granted. The hold up in India has been the slowness within which the licenses get granted. In the next 18-24 months, Ganajur will be at a stage where we could commence production.

Q: This is very slow. A February 2005 report quoting you says, "Deccan Gold Mines set today (February 9, 2005) that the search for gold in the country has identified 217,000 ounces of gold in the Dharwar-Shimoga basin". You identified it in 2005 February and nothing has happened. How can you be sure that you will get the license in the next six-eighteen months?

A: The license process in India is three-fold. First you have to make an application for a reconnaissance permit. After you work under that permit, you move on to your prospecting license. And after that, you apply for your mining license. It is a stage-by-stage category.

In the last six-seven years, we have progressed from a reconnaissance prospective stage to a mining license stage. We are now in the final stages of approval. We are hopeful to get an approval for the mining license by the centre and state government in the next two-three months.