India's only primary gold producer, Hutti Gold Mines Limited (HGML), is planning to ramp up gold production in Karnataka.
The Karnataka government-owned HGML is planning to conduct a feasibility study at four mining sites, with the goal of boosting gold production and increasing profitability amidst a surge in gold prices.
HGML Managing Director Shilpa R told Moneycontrol that the company is focused on expansion to capitalise on favourable market conditions. “We aim to enhance profits, considering the rise in gold prices. A final decision will be taken based on the outcomes of the feasibility studies, economic viability and profitability,” she said.
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Among the sites identified for potential mining operations is Wondalli gold mine, which spans 388.7 hectares and is located 10 km east of the Hutti gold mine in Raichur district. Another, the Ajjanahalli gold mine in Tumakuru district, covers 38 hectares. This mine was shut down in 2002-03 due to the financial non-viability of extracting gold from the facility. The Mangulur gold mine, spread over 55.7 hectares in Yadgir district, was suspended in 1993-94. Apart from the gold mines, also on the list is Ingaldhal Copper Mine in Chitradurga, which covers an area of 259 hectares.
“Technical evaluation of these tenders is completed and financial bids will be opened soon. We will issue work orders to the lowest bidder for each package. Mining operations at Wondalli and Ingaldhal will begin only after statutory clearances and the completion of feasibility studies,” said a state government official.
The selected firms will be tasked with reviewing geological data, resource and reserve status, and previous in-house feasibility reports. “They will also estimate capital and production costs, evaluate manpower requirements, and conduct financial analyses to assess investment returns, payback periods and profitability. A comprehensive SWOT and risk analysis will also be part of the feasibility study,” the official added.
HGML's financial performance over recent years has been remarkable despite a decline in gold production. Profit increased from Rs 175.2 crore in 2019-20 to Rs 239.4 crore in 2023-24, while its revenue rose from Rs 769.6 crore to Rs 1,052.4 crore during the same period. This growth is largely attributed to a sharp increase in gold prices, which rose from Rs 6,300 per gram last year to around Rs 7,300 per gram now.
In 2023-24, HGML produced 2.1 grams of gold per tonne of ore extracted, a decrease from 2.7 grams in 2019-20. However, the higher selling price of gold offset the decline in production, helping to maintain financial growth.
Gold mining in Hutti dates back to ancient times, with modern operations beginning in 1902 under the Nizam of Hyderabad. The mine was closed in 1920 due to lack of funds but reopened in 1948. In 1956, it was transferred to the Karnataka government and renamed HGML. In 1985, HGML expanded into copper production by merging two loss-making copper units: Chitradurga Copper Company and Karnataka Copper Consortium Limited.
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