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Cogencis, Friday, Aug 11
[C] INTERVIEW:Australia co says slow licensing hurting India gold mining
By Darshan Rane and Shrikant Kuwalekar
PANAJI (GOA) - A complicated procedure to secure a licence is a big hurdle in developing gold mine projects in India, said Nick Spencer, managing director of Australia-based Galaxy Gold Mines. This delay could push back India's gold production target for 2025, he said.
The government has set an ambitious target to increase the country's gold production to 100 tn per annum by the year 2025. India currently produces around 1 tn gold per annum.
India has at least 20 potential gold mine projects that could be developed but all are stuck, awaiting licences. It takes over 120 steps to secure permits from the Centre and states.
Some of these steps take months or even years, Spencer said in an exclusive interview with Cogencis on the eve of India International Gold Convention 2017.
Galaxy Gold Mines is an Australia-India mining consortium, whose experts have been working on exploration, resource verification, and project development. It has invested over 1 bln rupees over the past 12 years. The company claims to have already identified 600 tn of gold reserves.
Following are the edited excerpts from his interview:
Q. What are your projections with respect to the start of mines and gold
production in India by 2020? A. Galaxy plans to produce 200,000 ounces or 6 tn gold by 2025, subject to
speedy approvals from the government. If the government tells us
tomorrow, here are your licences, then it would be possible for us to
produce gold in 2-3 years. But the more important thing is we hope to
have three or four gold mines under development with our partners by
2020. As a company, Galaxy has plans to joint venture projects with
existing lease holders with defined resources ready for development, some
of which have been stuck or are lying defunct for years. Most of the
potential gold mines are in Karnataka and Andhra Pradesh.
Q. What is Galaxy's capital expenditure and funding plan for India? A. Average capital expenditure to build an average-sized mine is $50 mln-$100
mln. We are planning to build three to four mines over the next 3-5 years
and, therefore, infuse $200 mln-$300 mln into India over 5 years.
Developing gold mines are huge rural projects employing 300-800 people per
mine plus thousands more employed to supply and service each mine. As a
corporate entity, we also have a plan to list on BSE by early next
year, and thereby raise funds to develop and build mines.
Q. What are Galaxy's plans post listing on the BSE? A. We are presently looking at about half-a-dozen gold projects in India, but
we have also got a project in Tanzania, which we are about to start
building and plan to bring it wholly under the listed company in India. We
are negotiating gold projects in Africa with mining rights, lower risk,
ready to build and this first mine is going to produce 30,000 ounces a
year in Tanzania for 10-15 years. We will bring that gold into India with
our partners for refiners and jewellers. We will be predominantly in
India but we are going to balance operational risk with early cash flow
from Africa.
Q. What is the scope of gold mining in India? A. In the last 10 years, we've been looking at all the large gold projects
and have defined gold resources in India. We believe there should be at
least 20 gold mines built here. That is our expert view based on what we
have done in Australia where we have 50 gold mines in the same geological
setting called Archean Greenstone Gold Belts. India has had some famous
gold mines and there are more tier-1 mines that could come-up here and a
number of companies are looking to develop these properly, but
unfortunately none of them have progressed with licences.
Q. What are the challenges in mining gold in India? And solutions? A. A country that imports 900 tn of gold (per year), produces only 1.5 tn from
a single mine that is government-owned at Hutti. So, there is a huge need
for local production and there are willing parties. But unfortunately, the
licensing system is very arduous and difficult. It took six years for a
joint venture partner to obtain a mining licence to mine from Andhra
Pradesh, which will be the first private gold mine in India. It is time
for collaboration on the 20 gold mines to produce the targeted 100 tn gold
per annum by 2025. A new gold mining policy, together with single window
clearances and assistance, with some incentives is required.
Q. Is Make in India not encouraging gold mining? A. Make in India is a very good initiative but unfortunately there are still
120 steps and many years to get a permit. They have set some very good
goals, for example, the mines ministry has set a goal to produce 100 tn
of gold a year by 2025. If the government really wants to produce 100 tn a
year, which is $4 bln a year revenue, and cut the current account
deficit, then we all need to agree to execution plans and prioritise
with the government, as to how India is going to build those 20 mines, and
where are they stuck. It needs to be measured, monitored and the government
needs to commit and push those 20 projects.
Q. What will be the cost of gold production in India? A. The operational cost would approximately be $700-$800 an ounce. We call
it all-in sustainable cash cost. It is very feasible to produce gold in
India if you combine gold expertise and technology with local affordable
mining skills. There are some very deep underground mines like Kolar,
there's some very shallow open-pit mines like Bhukia. So a lot of further
resource drilling and feasibility studies have to be done to detail mine
plans and justify high investment costs.End

Edited by Akul Nishant Akhoury

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