Sandeep Garg led Sandeep Gold Resources SARL, acquired seven exploration permits for $4.4 million from another miner, Golden Rim Resources.
NEW DELHI: The raging eleven month conflict in the north of Mali has far from destroyed the west African nation's allure for gold. The country was a model democracy till April last year when a coup was followed by an Islamist takeover. Subsequently, France deployed its troops in the region.
Last month, Indian entrepreneur Sandeep Garg, through his company Sandeep Gold Resources SARL, acquired seven exploration permits for $4.4 million from another miner, Golden Rim Resources , in western and southern Mali. One of these projects has confirmed reserves of seven tonnes of gold along with other discoveries, claims Sandeep Garg. The gold deal has been structured in such a way that Garg makes payments in three instalments. He plans to raise the $4.4 million from banks. "We planned to raise these funds internally and by way of debt from local banks in Mali. We also have plans to invest $15 million in the next one year and start producing gold in a year. On an average, we expect production costs to be $600 an ounce," he told ET.
The Malian government will hold 10-20 % equity in the project. The country has seven gold mines and two iron-ore mines in operation. Garg, established his business in the west African nation a few years ago with a committed investment of over $300 million and a small integrated steel and power plant. He employs about 40 Indians in Mali and Senegal . Earlier, in 2002, he bought cheap scrap from Gambia, Senegal and Mali that he imported for western Indian steel mills before moving on to mining. In April last year, Mali, which is Africa's third largest gold producer, was swept into a fullfledged war after Islamists linked to Al-Qaeda took over the north. France, along with Mali's neighbours, has since intervened in a war that has largely been contained to the north of the country, says Garg who spends fifteen days of the month in Mali. Despite the war, there has been a 15% increase in production in 2012 to 50 tonnes of gold ore.
The metal accounts for nearly 20% of Mali's GDP and as far as gold mining is concerned it is business as usual. In fact, Mali registered a 15% increase in production with 50 tonnes of gold mined in 2012 despite the unrest in the north. Investors such as Nasdaq and London Stock Exchange-listed Randgold Resources, that operates in west and central Africa, and South Africa's Anglo Gold Ashanti have said that business in the south and west, where most deposits lie, continues almost undisturbed.