Australia-India consortium wants to restart historic gold mine

Citigold

11/04/2016 09:50

By James Regan 
    SYDNEY, April 11 (Reuters) - An Australian-Indian consortium 
wants to restart gold mining in a district that helped symbolise 
former British rule in India and produced some 25 million ounces 
over 150 years before being abandoned due to low bullion prices. 
    Mining in the Kolar gold field in Karnataka state in 
Southern India ended in 2001 as gold prices slumped. But a 
government tender could lead to mining leases held by Bharat 
Gold Mines Ltd sold to the highest bidder and operations resume. 
    A restart would come amid resurgent gold prices and steps by 
India to monetise some of the estimated 20,000 tonnes of gold 
held by its citizens and slow imports to free up capital to 
strengthen its economy.  
    India is one of the world's largest importers of gold, but 
mines only a pittance on its own. National demand reached 654.3 
tonnes in the second half of last year, the third highest year 
on record, according to the World Gold Council  
    Australian miner Citigold Corp  CTO.AX , which has been 
conducting field visits to the Kolar sites since 2006, has 
agreed to partner with Indian conglomerate Essel Group to tender 
for the assets from the government. 
    "India can be a challenging place to work and partnering up 
with a solid local partner is key to making this happen," 
Citigold Executive Chairman Mark Lynch told Reuters. "We made 
sure we did our homework." 
    In the early years, the gold mine, sported a sprawling  
estate for its operators, with its own golf course and tennis 
courts. British engineers also constructed the world's longest 
transmission line with the highest voltage at the time to meet 
the hydro power needs of the mine. 
    By the 1920s 24,000 workers were employed, with Europeans 
holding most of the top jobs. The mines were nationalised in 
1956 - nine years after the end of British rule - and by 1980 
were running at a loss, though it would be two decades before 
operations ceased. 
    India last year launched a "Gold Monetisation Scheme" to 
mobilise gold hoardings. The scheme has so far collected about 
three tonnes of gold in four months. 
    India plans to auction at least three gold mines this year, 
including Kolar, Mines Secretary Balvinder Kumar told Reuters on 
February 17. Kumar said several local and multinational 
companies had shown interest in the mines, without naming them. 
 urn:newsml:reuters.com:*:nL3N15W23J 
    Lynch said the Bharat project would require new 
infrastructure and mine equipment but that potential existed to 
get an early leg up by processing 32 million tonnnes of mine 
waste at the site, as well as open pit and shallow underground 
extraction. 
     Gold prices  XAU=  rose by 17 percent in the first quarter, 
the best performance in almost three decades. 
    "At today's prices, this project would be making money," 
Lynch said. 
 
 (Editing by Ed Davies) 
 ((jim.regan@thomsonreuters.com; +612 9373-1814; Reuters 
Messaging: jim.regan.reuters.com@reuters.net)) 
 
Keywords: GOLD AUSTRALIA/INDIA