DECNGOLD

Deccan Gold Mines has successfully commissioned its Jonnagiri gold plant, completing all trials, with full-scale production expected to commence soon. The initial production forecast for Jonnagiri is 400 kilos per year, projected to increase to 500 kilos in FY2027 and eventually 800 kilos. Similarly, the Kyrgyzstan project is in its final stages, with trial production anticipated within a couple of weeks, aiming for 350 kilos in FY2027 and a peak potential of 800 kilos within three to four years. The Finland project is expected to produce 276 kilos per annum by 2029, contributing to a total gold production target of around 2 tons as Deccan's share.

The company is actively pursuing a strategy of diversification into critical minerals, identifying strong evidence of copper-gold mineralization in Mozambique and nickel-copper-PGM mineralization in the Bhalukona project in India. Drilling operations for these projects, along with lithium-tantalum exploration in Mozambique, are planned to commence from January onwards. The goal is to increase the resource potential, with Mozambique lithium-tantalum aiming for over 3 million tons of ore, and to become a supplier of critical minerals by 2030.

Deccan Gold Mines plans a rights issue to raise approximately Rs.315 Crores, primarily to repay its existing debt of Rs.200 Crores, which currently carries a cost of about 12%. This move is aimed at making the company a debt-free entity by the end of 2025 or upon the completion of the rights issue. The remaining funds will be allocated to initial stage exploration and drilling programs across four other projects, which management believes will create significant value for the company.

The call revealed significant shareholder concerns regarding project delays, the dilution of Deccan's stake in the Jonnagiri project from 42% to 27%, and the timing and pricing of the rights issue. Management defended its strategy, explaining that the stake reduction in Jonnagiri was a deliberate prioritization of investment into the majority-owned Kyrgyzstan project. They asserted that the rights issue is intended to benefit existing shareholders by clearing debt and funding future growth, refuting claims of ulterior motives or a 'backdoor' entry for new investors.

Deccan Gold Mines emphasized its strong commitment to ESG standards, particularly in community development and environmental responsibility. The company highlighted its positive social impact, employing 600-700 people in Jonnagiri and 200 people in Kyrgyzstan, significantly benefiting these thinly populated and backward areas. Management stated its intention to be fully ESG compliant from next year onwards and to hold 100% physical AGMs from next year.

The company's long-term strategy focuses on continuous resource expansion, with Jonnagiri having the potential to go beyond 20 tons of gold and Kyrgyzstan aiming for over 8 tons. Finland's Kuikka project is targeted to prove 4 tons of resource within the next year. This pipeline of projects, including Mozambique and Bhalukona, is expected to drive the company's growth and value creation, with the aim of converting these resources into mineable projects sequentially.

The Ganajur and Hatti licenses, representing significant historical assets, remain under a legal and regulatory impasse related to the 10A(2)(b) policy. Management acknowledged the bottleneck and stated that it is actively engaging with the Supreme Court, state authorities, and the central government to resolve this issue. They expressed hope that a policy change could facilitate the commercialization of these projects, which are considered crucial for the company's long-term asset base.