DGML CAN DECCAN GOLD BECOME A MAJOR GOLD PRODUCER? SANDEEP LAKHWARA Managing Director DECCAN GOLD MINES LTD.

DGML Comparison of Australia, India & China – Gold Production AUSTRALIA In 1980 Australia produced a modest 17 tons of gold Between 1980 & 2000, it produced 3700 tons valued at US$46billion In 1980, identified gold reserves in Australia were 400 tons; by 2000 the identified reserves soared to 8300 tons out of which 3700 tons have been exploited, leaving the remaining 4600 tons of reserves in the ground to sustain the industry over the next 20 to 25 years at the least. More than 500 listed exploration and mining companies on the ASX INDIA Between 1967 and 1998 about 19 tons of gold has been mined from the KGF, 2 tons from Ramagiri & about 20 tons from Hutti Gold Mines – a total of about 41 tons India’s current production is only3 tons/annum from its only producing mine at Hutti and about 6 tons as a by product of copper mining Only one listed gold exploration Company (DGML) and a few mining companies CHINA China adopted a liberalised policy in gold exploration and mining more or less at the same time as India China has now had a decade of reform in the gold mining sector allowing private investment into gold exploration & mining In 1995 China produced 108 tons of gold which increased to 120 tons in Most production came from small & medium scale operations totalling ~1200 in all. China’s gold production reached a record of 213 tons in China has about 1000 gold mining operations. Statistics show that about 36 exploration companies are operating in China, which in 2003 awarded 11,717 prospecting & mining rights

DGML The growth of gold mining industry in Australia Understanding of Australia’s prospectivity Technological developments Government of Australia’s investor friendly policies Quantum of exploration expenditure Access to capital from the public via listings of exploration and mining companies on the Stock Exchange

DGML The growth of gold mining industry in Australia Government of Australia’s investor friendly policies Mineral and Petroleum Resources Policy statement of a commitment to provide investors with positive, stable framework of relevant Government policies which to a large extent remove uncertainty and promote increased investment. Tenement system and legal framework is investment friendly; has therefore attracted large foreign investment -Grants for reconnaissance exploration and prospecting are made within a short duration of 2 to 6 months as against months of delay in India. Consider a time limit for disposal of applications failing which “deemed approval” process applies. -There are no lengthy procedures of clearances from various organisations such as revenue authorities and the like at exploration & prospecting stages. Consider removing certain stages at the state Government level. -Government guarantees award of prospecting & mining rights to those who invest in grass roots exploration. In India, the law speaks of only preferences but no guarantees. Security of tenure is a “must have” when upgrading the prospect from RP to PL or PL to ML to attract large investments. -There are no limits on the extent of area to be granted on prospecting licence unlike India where a limit of 25sqkm is placed, with grant of larger areas subject to discretion of the State Governments

DGML The growth of gold mining industry in Australia Quantum of exploration expenditure In the recent past smaller exploration companies in Australia have raised between US $ million for exploration purposes every year. Canada has provided a substantially higher amount of US $ 3.3 billion in the same period inclusive of capital expenditure on mining. In India, estimates suggest that the total amount spent on precious metals exploration over the past 20 years has averaged a low US $ 35m per annum A study of Western Australia Department of Treasury and Finance indicates that if mineral exploration investment were to increase by US $100m and be maintained for 5 years, projected cumulative benefits over next 20 years for the State would be $10.4 billion in investment, $45.8 billion in export revenue, $32 billion in gross state product and $1.7 billion in State Government revenue. All these, in addition to creation of several thousand new jobs and development of ancillary industrial units.

DGML Gold potential of the Indian terrain Gold was known to Indians 8000 years ago. Ancient India witnessed extensive prospecting & mining for gold. There are more than 800 old workings recorded. Geologically, the Indian terrain is largely comprised of precambrian rocks. Similar rocks are known to contain large quantities of gold in parts of Western Australia, Canada, Africa, South America & China

DGML Gold potential of the Indian terrain There were over a hundred gold mining centres in the early part of the last century & these were mostly operated by the Britishers. The mines were located in parts of Kolar, Hutti, Gadag, Chitradurga & Shimoga in Karnataka; Wynad & Nilambur in Kerala; Kotagiri & Dharmapuri in Tamil Nadu, Ramagiri & Jonnagiri in AP State; Kunderkocha, Lawa, Mayisara & Sonapet in Jharkand; Sonadehi in Chhattisgarh; Parsori & Pular in Maharashtra. Gold panning by local people is a prominent activity in many parts of India. From a total of 127,242 tons of gold metal produced in the world, 76,500 tons came from precambrian terrains (Archaen & proterzoic). A major portion of India, barring the Indogangetic alluvial tract & Deccan lavas, is composed of precambrian rocks – yet our contribution to the precambrian gold resource is a meagre 1.17% (900 tons of which has come from a single precambrian belt ie Kolar) Gold-bearing potentiality of a geological terrain can be expressed in terms of kilograms of gold per sqkm area comprising gold metal already produced + gold reserve in the ground identified by exploration & available for mining in the future. For Western Australia this index works out 50kg/sqkm, for Canada 55kg/sqkm and for S. Africa it is 80kg/sqkm. In comparison the index for India is a mere 1.6kg/sqkm (excluding Kolar) inspite of the fact that India has been known for wide spread gold mining in the past. Surely there is much scope for finding new mineable gold resources in the country.

DGML How Deccan Gold can become a major Gold Producer? Factors favouring Deccan Gold Geological terrain with potential to deliver Mines (Ganajur, Hirenaganur and others) Excellent results from exploration Depth of technical expertise available to the Company both Indian and International Strategic investment by Sun Mining & Exploration Ltd into Deccan Gold - provides funding, access to gold prospects internationally, additional expertise Capacity and commitment to accelerate our spend rate on exploration Several Prospecting Licence applications lodged with the Government awaiting approval

DGML How Deccan Gold can become a major Gold Producer? How the government can help us Create mining Industry regulations and offer tax incentives that foster favourable investment into exploration companies Fast track the conversion of RPs into PLs, grant of larger areas under PLs, matters relating to forest clearances, deletion of some of the time consuming unnecessary steps for grant of PLs, upgrading of the guidelines and rules to remove anomalies and security of tenure are some of the key issues that need addressing. Encourage more research and development through grants, 150% write offs

DGML How Deccan Gold can become a major gold producer? There have been several representations made to the Government by various organisations including FIMI on what improvements are required to the Mining regulations and the Act. The Government should act on these suggestions. I believe training of appropriate government personnel in the understanding and execution of the Mining regulations is a must Government agencies (GSI & MECL) become more actively involved with the private explorers to exchange information that could lead to discoveries. THANK YOU.