Dec 10 Kolar Gold Ltd, which aims to
develop the historic Indian gold fields after which it is named,
is considering a complex deal that could give it a slice of an
enlarged Mumbai-listed exploration and development company.
The Kolar district, about 100 km (60 miles) from the
southern Indian city of Bangalore, has been a gold mining centre
for centuries. However, the Kolar mine has been at a standstill
for the past decade.
Under a deal between its 30 percent-held Indian partner
Geomysore Services India (GMSI) and Mumbai-listed Deccan Gold
Mines Ltd, Kolar could end up with a stake in Deccan,
which it says would give it access to more projects.
"Should we agree to the share exchange ratio with GMSI and
DGM, indirectly that gives us a listing in India," Chief
Executive Nick Spencer said.
"India is unfortunately a very, very difficult country to
develop gold projects but this would diversify and spread that
project risk because it is a larger portfolio," he added.
Kolar said on Tuesday that GMSI's key shareholder,
Australian Indian Resources, had received an offer from Deccan,
a smaller exploration firm, which was also considering buying
out other GMSI shareholders with an all-paper offer.
Kolar would end up with a substantial stake in the enlarged
company, which would have more than 100 gold licence
applications, if the deal goes through.
Colonial-era operations at the Kolar mine were taken over by
the Indian state after independence closed in 2001, leaving
thousands unemployed, following years of underinvestment and
A Supreme Court decision this summer approved plans for
global tenders to revive the Kolar mine, and investors including
Kolar Gold are preparing to bid.
Earlier this month the company said it expected the Indian
government to finalise details for the tender to run the mine
before the end of the year.