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Gold Mining in India

Gold mining in India is really quite small and hardly ever gets talked about. For a

country that consumes so much gold, it is a pity that there arent more gold mines in

India.

During 2008-09, the value of gold mining production in India stood at Rs. 312 crores

which is 0.99% of the total metallic mineral production in the country at Rs. 31,533.97

crores.

The gold production stood at 2,464 kgs, and decreased by 17% compared to the

previous year with Karnataka accounting for 99% of the total production.

I always assumed that the low gold production is due to the fact that we dont have

much gold reserves, so I was a little surprised to read that the Ministry of Mines

estimates the total gold ore resources at 390,289,237 tonnes (pdf). However, this

number is so high because the actual gold which can be extracted from the ore is very

low. It can be as low as 2.5 grams of gold per tonne of gold ore, but I couldnt find what

the estimated number for Indias gold ore deposits is likely to be.

For reference, India holds 557.7 tonnes of gold as reserves.

Gold Mining in India

http://mines.nic.in/writereaddata/Contentlinks/1253355704dd4dbeb0e14691be7f9cae.pdfhttp://en.wikipedia.org/wiki/Gold_reserve#Officially_reported_gold_holdingshttp://www.onemint.com/wp-content/uploads/2010/10/Gold-Mining-Key-Facts.001.jpghttp://en.wikipedia.org/wiki/Gold_reserve#Officially_reported_gold_holdingshttp://mines.nic.in/writereaddata/Contentlinks/1253355704dd4dbeb0e14691be7f9cae.pdf

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Gold Mining Companies in India

Deccan Gold Mines Limited: There is only one gold mining company that is listed in

the stock exchange in India. This is Deccan Gold Mines Limited, which is listed in the

BSE. The company made a loss last year, and since it was established in 2003 that is

probably not a surprise as the gestation period in these type of industries is usuallylong. The company has revenues based on gold exploration, and other income.

In their annual report I found an interesting piece of data where they write that India is

estimated to have about 9% of the global gold reserves, and about a century ago there

were more than 100 big and small gold mines in the country. (Source: Annual Report of

Deccan Gold Mines (pdf)

Hutti Gold Mines Company Ltd: It is the only company in India that mines gold. It is

owned by the Karnataka government and mined about 2.5 tonnes of gold last year, and

generated a profit of Rs. 95 crores in 2009-10.

Fund of funds that can give you exposure to global gold mining companies

The original idea for this post came from a comment asking about gold mining

companies in India to invest in, but as you can see there arent many options for those.

If youre really interested in getting exposure to gold mining companies then there is a

fund of fund called the DSP BlackRock World Gold Fund which can get you exposure in

global mining companies. 78.30% of its net assets are exposed to gold, and 10.3% to

silver among other asset classes.

Conclusion

Theres hardly any gold mining activity in the country, and consequently there arent

many companies that are engaged in it that investors can get exposure to. This might

change in the future because of the untapped potential and scorching gold prices but

until then your options are fairly limited.

http://www.deccangoldmines.com/http://deccangoldmines.com/pdf/annuealreports/annrep2010/DGML%20AR%202010.pdfhttp://www.hindu.com/2010/04/17/stories/2010041763601000.htmhttp://www.dspblackrock.com/product/world_gold_features.asphttp://www.dspblackrock.com/product/world_gold_features.asphttp://www.hindu.com/2010/04/17/stories/2010041763601000.htmhttp://deccangoldmines.com/pdf/annuealreports/annrep2010/DGML%20AR%202010.pdfhttp://www.deccangoldmines.com/