Hutti Gold to invest Rs 67 crore in plant modernisation

In an effort to stabilise production of gold, the Karnataka-based Hutti Gold Mines Ltd (HGML) has firmed up plans to modernise its existing plant and machinery at a cost of Rs 67 crore. Subsequently, it intends to raise Rs 400 crore from the capital market to fund expansion activities.

The sole gold producer in the country, HGML, a public sector undertaking which owns and operates underground gold mines near Raichur-Maski in north-east Karnataka, is awaiting the state government's nod for its initial public offer (IPO).

Company executives expressed confidence that the IPO launch may happen during the next fiscal. "Worldwide, the prospects of gold mining are growing. We are undertaking modernisation on a massive scale. Post modernisation, HGML will be on par with any renowned gold producing company," they added.

The company will be in a position to produce 3 tonnes of gold consistently on an annual basis after modernisation. "At present, we are mining and milling 1,800 tonnes of gold ore per day. After modernisation, it will go up to 2,400 tonnes per day," they pointed out.

HGML may appoint McNelly Bharat Engineering Company Ltd as consultants for the plant modernisation work. The funding for modernisation will come from banking institutions and internal accruals. While banks will provide Rs 40 crore, the company will mobilise the remaining Rs 17 crore on its own.

During the last fiscal, the company recorded Rs 210 crore revenue, an increase of 8 per cent over the previous fiscal. The operating profits went up by 11 per cent to Rs 95 crore over the previous year. It reported a net profit of Rs 81 crore, a growth of 11.86 per cent over the corresponding year.

The century-old company has produced 66 tonnes of gold so far. The proven gold ore reserves in the existing mines are 7.07 million tonnes, which can yield 45 tonnes of gold. The grade averages at 6.62 grams of gold for every tonne of gold ore. The grade was as high as 19.49 grams per tonne between 1902 and 1918.

The Hutti gold deposits extends for about 2.40 kilometre. At present, the HGML has covered 1.3 kilometres and has reached a depth of 781 metres.

The company is awaiting approval of prospecting licence for gold in 14 locations in the Raichur-Maski belt traversing Tumkur and Dharwad districts.