Kolar Gold is changing its name to Lionsgold in a move it believes will be more reflective of its future direction as a revenue-generating, mine-to-market business. The rehabilitated company now offers three investment opportunities for the price of one.
It comes after Kolar spent several largely unsuccessful years trying to rehabilitate a gold mine in India.
As Lionsgold the company will present three plausible investment opportunities – a mining partnership that draws on its historic ties to India; a joint-venture in Finland; and a fintech opportunity that allows people to invest in precious metals.
The new look company is now led by Cameron Parry, founder of AIM-quoted mining investment company Metal Tiger and co-counder of Coinsilium. He is joined by Luke Cairns, former managing partner of City broker Northland Capital.
The only non-executive on the new Board is geologist Hanuma Prasad, boss of Australian company India Resources, a fellow shareholder in Geomysore Services (India) Private Limited. Kolar has 20.5% of Geomysore, which former management acquired for £3 million.
At the time of purchase the investment was very much secondary to the company’s main ambition, which was to restart production at the historic Kolar Mine in India. That proved an impossible undertaking mired in local and national politics.
All the while Geomysore, which has a portfolio of assets dotted around the country, was working towards developing India’s first privately-held gold mine.
This could be a reality by the end of 2018 for it has been granted a 30-year licence to mine 365,000 tonnes of ore a year from the Jonnagiri deposit, in Andhra Pradesh state.
An economic feasibility study, which it is hoped will piece together a case for developing a mining operation, is expected to be published in April. It should also provide a more up-to-date valuation of the asset and by extension hopefully an upgrade to the carrying value of Kolar’s stake in Geomysore.
A boost is also expected to Jonnagiri’s resource, which sits at 351,000 ounces of gold in the indicated and inferred categories. Analysts put the cost of building a mine annually producing 30,000 ounces at a comparatively modest US$25 million.
Chief executive Cameron Parry believes there are ‘alternative’ ways of funding the development that would avoid diluting Kolar investors.
The company’s other major mining investment is designed to provide geographic diversity, although the geology is similar to that seen in India.
In Finland, it is paying US$530,000 in cash and US$160,000 in shares to acquire 28.7% of exploration licences 600km north of Helsinki, with an option to take that stake to 50%.
Some of the drill results have been impressive with gold grades up to 27 g/t. The plan is very simple - to bulk sample enough ore to generate just shy of US$4 million at today’s spot prices.
Cameron Parry said, “We may decide to drill further high-grade targets and there are two other project areas to the south and we might commit to adding them.”
The third leg to the investment is a 50-50 joint venture with TRAC Technology in India. It also owns a 27.3% direct stake in TRAC.
TRAC has developed a trading platform called The Real Asset Co that allows investors to acquire and store physical gold and silver rather than buying into exchange traded funds.
Kolar and TRAC aim to tap into India’s borderline obsession with the yellow metal with a platform that should be immediately revenue-generative.
“We are not developing something from scratch; it is revenue ready,” said Cameron Parry. “We like the entry point and it is something we can contribute to. We want to help build it into a valuable business.”
Geomysore is a leading Indian mineral exploration group based in Bangalore. It has a significant portfolio of licences and applications for targets throughout India with priority rights covering in excess of 900sqkm.