Deccan Gold, De Beers form mining JV

Deccan Gold Mines and De Beers India Private Limited, the Indian subsidiary of the world's largest diamond mining company, have entered into a joint venture agreement whereby Deccan Gold has granted De Beers the right to explore for diamonds in all its exploration areas.

In return Deccan will obtain the right to explore for gold and other minerals in the De Beers exploration areas in India.

The joint venture can earn a 95 per cent interest in their commodities of interest on each others ground by meeting expenditure targets proportional to the size of individual permit areas covered by the agreement.

Exploration data will also be exchanged between the companies on areas that have been relinquished by the other.

Each company is to receive from the other a 1.5 per cent gross revenue royalty from any production derived from the areas, which have been relinquished and over which the data has been supplied. This is capped at $10 million.

If the exploration activities are successful, and a decision is made to mine diamonds in Deccan's area of exploration or gold and other minerals in De Beers area of exploration, a new joint venture will be formed between the companies giving the other a 5 per cent interest in the mine.

On the signing of the agreement, Sandeep Lakhwara, managing director of Deccan Gold Mines, said, "Significant benefits will accrue to both the companies as a result of this agreement in the form of larger areas of exploration, a free carried interest to the other up to the decision to mine, utilization of each company's area of expertise and facilities for exploration, and eventually the opportunity to participate in the other's gold or diamond mine. The JV is good for the development of India's minerals industry"

While there is no restriction on the marketing of gold or other minerals produced by the joint venture, all diamonds produced must be marketed through De Beers.

Deccan Gold has also been offered the right of first refusal, subject to certain terms, over diamond deposits which on the basis of pre-feasibility studies appear likely.