Shares of Deccan Gold Mines Ltd. rose the most in about 19 months after the Supreme Court asked Karnataka to consider the miner’s case for a prospecting licence in the Hutti reserves in the state.
The stock jumped as much as 20 percent, the highest since September 2016, as the company sees a huge potential from these reserves. It has gained 54 percent in the last two weeks compared with a 2.16 percent rise in the benchmark S&P BSE Sensex.
The Supreme Court ruling paves the way for us to additionally explore around 11 odd prospecting licenses, Managing Director Sandeep Lakhwara told BloombergQuint in an interview. “Potential for gold discovery in Hutti runs into several hundreds of thousands of ounces.” The Karnataka government had recommended reserving Hutti fields for state-owned companies.
India is the world’s largest consumer of gold after China, importing about 800 tonnes a year. That adds to the nation’s trade and current account deficits. Local production has fallen to its lowest since 1970s to less than 1.5 tonnes after the iconic Kolar fields were shut in 2001, according to a January 2017 report by the World Gold Council.
Deccan Gold also expects to start mining from the Ganajur very soon. The approval for Ganajur is now awaiting state Commerce and Industries Department approval, said Lakhwara. “Meaningful earnings from these mines will only kick in after 12-18 months.”