The Indian Supreme Court has instructed India’s Government to proceed with the tender sale of the historic Bharat Gold Mines (BGML), which paves the way for acquisition of the project by AIM-listed Kolar Gold.
Acquisition of the property, in partnership with the majority of cooperative societies of BGML ex-employees, is the centre-piece of the explorer’s strategy. The cooperative societies have first refusal and counter offer rights on BGML, which puts them in an incredibly strong bargaining position once the process gets under way. The next step is finalization of the draft tender document, followed by the formal four-month bidding process.
BGML is at the heart of the old Kolar Gold Fields that give the company its name. The area has produced 25 million ounces of gold at 15.9 grams/tonne over 120 years of operation until their closure in 2001.
Kolar’s chief executive Nick Spencer says, “This long awaited BGML mine sale tender and revival is an enormous step and huge opportunity for the Kolar community and, if successful, Kolar Gold to re-start operations on one of the world's great gold belts and create significant employment and economic development in an area of poverty, ill health and unemployment.
“We are very close to this community and ex-workforce and have been working closely with them to bring prosperity to the area,” he says.
The directors believe that the company and its local partner, SUN Mining, have the relevant expertise and skill set for all aspects of the tender. In addition, the company’s other activities, which are the exploration and development of gold projects adjacent to and surrounding the BGML gold mines in the Kolar Gold Fields, demonstrate its commitment to gold exploration and mine development in this region.
Broker N+1 Singer said, in its opinion, Kolar and SUN Mining have the required expertise to run the mine. “In our view, should Kolar succeed in the acquisition of the BGML mine it is likely to increase the company’s JORC-compliant resource, thereby positively impacting the valuation of the company. This is indicative of further upside potential to our current valuation of Kolar,” N+1 Singer analyst Shamin Mansoor says.
SUN Mining’s affiliate SUN Gold is an Indian gold mining and exploration company, which is developing two large gold mines.