Deccan Gold Mines Ltd Q1 FY27 Earnings Call Summary

Event Participants

Executives

1. Hanuma Prasad - Managing Director

Analysts

4. Ankit Gupta - CRK Research
5. Kunal Shah - Heartwood Financial Services
6. Shaswat Vijay - SIC Wealth Management (as Unidentified Participant)
7. Tanay Soni - KTPL (as Unidentified Participant)

Financials & KPIs

Table Rules:

• Order metrics logically: Deposits → Assets → Asset Quality → Profitability → Margins → Capital
• Always include units (₹ crores, %, bps, count)
• Commentary: YoY/QoQ changes first, then brief context/driver
• Use "+/-" for changes, "bps" for basis points
• Be precise: "₹2.69 lakh crores" not "2.69L cr"

Geographic & Segment Commentary

Gold - Jonagiri (India): Officially inaugurated in June 2026 by state Chief Minister; first gold mine in India in 80 years. Production stabilized at 1 kg/day (90 kg bullion in Q1), with 40 kg gold and 60 kg dore in stock. State government support for land acquisition and expansion. Expansion from 1,000 to 2,500 tons per day processing capacity targeted, which could take production to 1-2 tons of gold per annum by FY29-30. Target resource of 40 tons of gold for a 25+ year mine life. Created 1,000 direct jobs and significant indirect employment in a backward area. EBITDA margins expected to stabilize at 65-70% in next 1-2 quarters once gold in stock is sold.

Gold - Altyn Tor Gold Mines (Kyrgyzstan): Devdorad production commenced via Merrill Crowe system; gravity circuit commissioned and leaching circuit added. Full-scale production imminent, with MD personally visiting site next week to finalize commissioning and announce inauguration date. Total investment of ₹300+ crores made. Production initially from 0.6 million tons of tailings (containing ~780 kg of gold at 1.3 g/t) and ~1 million ton low-grade stockpile, providing 4-5 years of feed. First phase production guidance: 150-160 kg for FY27 (September-March) and 300-350 kg for FY28. Underground resource expected to be 5+ tons, extending project life by 6-7 years. Construction of new tailings dam (10-year capacity) underway. Creation of ~350 jobs (200 existing + 100 new including 30 engineers from India).

Gold - Kalevala Gold Project (Finland): 27.36 sq km license area in Archean greenstone belt, eastern Finland. Two deposits: Kuika (high-grade ~5 g/t, 1 ton gold inventory) with small open-pit potential and Pahkalampi (historical resources ~2 tons at 3.5 g/t). Drilling to validate and increase resources to 4+ tons targeted; feasibility study planned for 2027. Investment of $1-2 million planned to take stake to 51%. Drilling to start September 15 (1,500 meters). Plan for centrally located ~800 tpd flotation plant, with concentrates to be refined in India. Production timeline beyond 2028-29.

Critical Minerals - Balukona Nickel-Copper-PGE (Chhattisgarh): 30 sq km composite license acquired in 2025; 15th drill hole underway with 2,500 meters completed. 1.3 km mineralized zone identified containing nickel, copper, and palladium. ~700 meters of mineralization proved; resource estimate to be announced soon. Composite license allows direct application for mining lease (planned next year). ~3,000 tpd processing plant envisaged (larger than Vatagan), requiring ₹650-700 crores CapEx. Next-door neighbor includes Vedanta exploring the area.

Critical Minerals - Logrosan Tungsten (Spain): 37 sq km license granted plus 30 sq km under consideration; also acquired Maria project bringing total to 107 sq km. 7 drill holes completed (3,000 meters), all intersecting tungsten/tungsten-tin mineralization. Highest intersections: 0.88% and 1.21% WO3 at depth of 535 meters; widths up to 7.5 meters. Mineralization continues to 600 meters depth. Tungsten prices up 622% in past year. Full assay results expected by mid-September 2026; preliminary resource model by early October. ~1,000 tpd processing plant planned requiring ~3 million tons resource for 10-year life. Deeper drilling supports underground mining approach.

Critical Minerals - Mozambique Lithium-Cesium-Tantalum: 150 sq km across 3 contiguous licenses. 4-5 pegmatite zones identified with lithium-tantalum-cesium-rubidium mineralization; area 2 has 8 parallel pegmatites with high tantalum values. Tantalum critical for semiconductors; prices up 196%; lithium prices up 108%. Drilling of 1,500-2,000 meters to start September 2026. Target: 200 tpd concentrate plant by end of 2027 or Q1 FY28. Further drilling to expand resource to 3 million tons allowing 2,000 tpd expansion. Potential first critical minerals production and revenue in 2028.

Tanzanian Gold Assets: Under review; results not fully satisfactory compared to other projects. Two areas with potential hope; currently deprioritized in favor of other projects.

Hutti Gold Project: Prospecting license (not mining lease); strategic focus on Ganajur first. If legal precedent from similar cases is established, Hutti would stand a good chance too.

Ganajur Project: Awaiting court decision; hearings expected after summer vacation. Recent judgments in similar cases (e.g., KutchSiroli) have restored pre-2015 rights, strengthening legal position. If mining lease granted, production of ~1 ton gold per annum possible within 2-3 years.

Company-Specific & Strategic Commentary

Explorer-to-Producer Transition: Q1 FY27 established Deccan as producers with production from Jonagiri and commencement at Altyn Tor (Kyrgyzstan). This represents the biggest milestone for the company, which has historically been an explorer. Management emphasized that this transition provides confidence and validates the end-to-end capability from greenfield exploration to final metal production.

Two-Vertical Growth Strategy: Company has clearly defined two verticals - Gold and Critical Minerals (battery metals focus). Each vertical has its own value proposition, growth trajectory, and expansion plans. Gold vertical is production-oriented, while critical minerals vertical is resource-driven at present. Batteries require nickel, lithium, and graphite (50% of every battery is graphite for anode). Company holds nickel and lithium assets and evaluating flake graphite project in Africa.

Fundraising: ₹137 crores approved by board via CCDs, equity shares, and equity warrants. HNIs and management participating, showing confidence. Funds primarily for drilling operations across projects in next 3-4 months. Temporary funding until larger QIP; timing allows better planning of larger raise based on drill results.

Board Changes: Chairman Kailasam retired after 5 years; Ilango (ex-CEO of Cairn Energy, founder of HOEC) appointed as Chairman. Jade Devanish (former MD of GeoMysore Services from 2012-2022, 16 years with group) joined as non-executive, non-independent director. She has hands-on experience in developing Jonagiri and is assisting with European projects in Spain and Finland.

Offtake Arrangements: For critical mineral projects, exploring offtake arrangements where end-users (battery makers, defense companies, smelters) fund projects in exchange for long-term supply agreements at discounted prices. Examples cited: Elon Musk funding graphite projects in Africa for battery supply; smelters owned by Adani, Vedanta, Birla as potential buyers. Not applicable for gold projects where equity-debt mix (40:60) will be used.

National Critical Mineral Mission: Government has allocated ₹44,000 crores under this mission. Key supportive changes: no public hearing required for critical mineral projects, no additional state taxes on these industries, ₹16,000 crore National Mineral Exploration Trust funding for overseas exploration (cap around $1 million per project), and tax incentives for lithium and nickel. Funds contingent on bringing critical minerals back to India.

CECRI MOU: Agreement with CSIR-CECRI (Karaikudi) for lithium-ion battery research. Company will supply lithium, nickel, and graphite concentrates; partially fund research; eventual technology transfer agreement for downstream battery production.

Acquisition Strategy: Due diligence on 3 new gold assets to fill production gap in 2028. Strategy: acquire near-production assets that can come online by end of 2027 or 2028. In Kyrgyzstan, government offered additional gold project (~10 tons) as partner after successful community engagement at Altyn Tor. Chinese companies make competitive counteroffers for mineral assets, making license acquisition difficult.

Community Relations: 1,000 direct jobs at Jonagiri + similar indirect employment in backward, drought-prone area - helped secure state government support. In Kyrgyzstan, company succeeded in getting community approval for leaching circuit that previous government company could not obtain. Kyrgyz government has offered additional projects as a result of positive local relations.

Gold Sales Strategy: Company deliberately holds gold in stock to sell when prices are favorable. Q1 sold only 59 of ~170 kg available; ~80 kg in stock (40 kg bullion + 60 kg dore converting to ~40 kg gold). Gold price at ~₹1.5 lakh per 10 grams gives arbitrage opportunity; sales will be timed to maximize revenue and margins.

Guidance & Outlook

Risks & Constraints

Q&A Highlights

Cash Flows and Dividends from Jonagiri

• Question: Since we are an associate in the Jonagiri project, how will we receive cash flows? Is there any commitment to receive dividends? (Nikunj Devpura, individual investor)
• Answer: Profits are booked in our accounts, but cash flows will only come as dividends declared by GeoMysore's board. Given the ongoing expansion (processing plant built, land acquisition), I doubt we'll receive dividends this financial year. It might happen next year, but I cannot guarantee - it's a decision of the GeoMysore board. (Hanuma Prasad)

Jonagiri Margins and PAT

• Question: Revenue and PAT from Jonagiri are substantially lower than expected - around 30% PAT vs 65% EBITDA previously guided. Can you provide guidance on revenues and profits going forward? (Hitesh Gupta, individual investor)
• Answer: The numbers look low because we only sold 59 kg of gold in Q1, but at end of Q1 there was ~80 kg of gold in stock (40 kg bullion + 60 kg dore = ~42 kg gold). Sales will happen at higher prices in Q2. Also, there were initial expenses. It will take another quarter or two to stabilize at 65-70% EBITDA. So next quarter should clearly give us the PAT margins for the entire year. (Hanuma Prasad)

Altyn Tor Production and Refinery

• Question: What can we expect to produce from Altyn Tor this year and next? Do we need a separate refinery to convert dore to gold bars? What's the total capex across all projects - can we assume ₹2,000-2,200 crores with 50:50 debt-equity funding? (Ankit Gupta, CRK Research)
• Answer: Production guidance: 150-160 kg for FY27 (starting September) and 300-350 kg for FY28, primarily from tailings. In Kyrgyzstan, by law we must give dore to the government refinery - we cannot have our own. There, settlement happens at LBMA price. In Jonagiri, we set up a small refinery (₹4-5 crores) to produce bullion for jewelers. For total capex: each 1,000 tpd plant costs ₹400-500 crores (like Jonagiri); Balukona (3,000 tpd) needs ₹650-700 crores. Total ~₹2,000 crores. Funding via combination of debt-equity and offtake arrangements, especially for critical minerals. (Hanuma Prasad)

Funding Strategy and Rights Issue

• Question: For Balukona, you mentioned funding based on shareholder agreements - can we assume another rights issue like the one at ₹80 per share? (Tanay Soni, KTPL)
• Answer: I cannot confirm any specific instrument at this point. We're exploring multiple options including offtake arrangements where end-users fund projects in exchange for long-term supply agreements. For critical minerals, this is likely the primary route. For gold projects, we'll look at equity-debt mix of around 40:60. (Hanuma Prasad)

Production Guidance Validation

• Question: Previously you guided for 600 kgs production FY27 and ₹1,000 crores top line for Jonagiri, 160 kgs FY27 and 300-350 kgs FY28 for Kyrgyzstan. Does this guidance remain the same? (Hardik Jain, Whitestone PMS)
• Answer: For Jonagiri, we stick to 500-600 kg for FY27 and 750-800 kg for FY28. The next quarter will clearly validate whether we achieve this - currently we have 80 kg in stock plus Q2 production will add another 90 kg, so ~170 kg produced by end of Q2. For Altyn Tor, we're confident on 150-160 kg for FY27 (Sept-March) and 300-350 kg for FY28. By end of next quarter, I'll be able to give clearer guidance for the fiscal year. (Hanuma Prasad)

Funding Strategy and Promoter Stake

• Question: Given the huge project pipeline, will you identify a large group as promoter, or continue as professionally managed? What sense are you getting on Ganajur production timelines? (Pranay Jain, Deal Wealth Capital)
• Answer: We haven't decided on the promoter question - as long as we're developing projects well, professional management works fine. We're open to strategic partnerships if someone shows interest, but that's for the future. On Ganajur: hearings started in May before summer vacation; still awaiting regular hearing. Recent judgments in similar cases (Katchisiroli) have restored pre-2015 rights, giving us a strong legal position. If granted, 2-3 years to production at ~1 ton/year. (Hanuma Prasad)

Inventory Realization

• Question: As per FY26 consolidated balance sheet, inventory was ₹522 million. By when will this be realized? There was no change in inventory in Q1 P&L. (Shaswat Vijay, SIC Wealth Management)
• Answer: Cost of materials consumed against available is only 5.2 million. The metal will be realized through sales in the current quarter - we have ~80 kg of gold in stock which we will sell at current good prices. (Hanuma Prasad)

Government Funding and Uzbekistan Projects

• Question: How much is Government of India supporting funding for these projects? Is there news on Uzbekistan offering critical mineral mining to Indian government? (Sundar Padmanaban)
• Answer: For gold projects, no government funding as of now - we've raised money and invested ourselves. But for critical minerals, the government has announced ₹44,000 crore National Critical Mineral Mission, eliminating public hearings for critical mineral projects, no additional state taxes, ₹16,000 crore National Mineral Exploration Trust funding for overseas exploration (cap ~$1 million per project), and tax incentives for lithium and nickel contingent on bringing minerals back to India. On Uzbekistan: we visited Tashkent as part of discussion groups; still in initial stages, no significant data exchanged. We're also looking at Kazakhstan. But nothing concrete yet. (Hanuma Prasad)

Underground Mining Capex Requirement

• Question: How does the CAPEX requirement change if we proceed into underground mining? (Ankit Gupta, CRK Research)
• Answer: For Altyn Tor, the open pit is currently 170m deep. We'll start a decline (tunnel) to develop the mine at lower levels. Capital requirement around ₹150-200 crores in 3-4 years, which we believe can be funded from internal accruals. For Jonagiri next block, we'll sink shafts up to 500-600m deep; that could require upwards of ₹400 crores in 4-5 years, also planned to be funded internally. (Hanuma Prasad)

Key Takeaway

Deccan Gold Mines transitioned from explorer to producer in Q1 FY27, with Jonagiri achieving 1 kg/day production rate (112 kg dore/90 kg bullion) and selling 59 kg of gold for ₹87 crores, contributing ₹6.35 crores to Deccan's PAT. The company established two clear verticals - gold (two mines producing, Finland advanced exploration, Ganajur awaiting court verdict) and critical minerals (four drilling programs across nickel-copper-PGE, tungsten, lithium-tantalum, plus graphite project under evaluation). With ₹137 crores approved to fund drilling and project development, management maintains FY27 production guidance of 500-600 kg from Jonagiri and 150-160 kg from Kyrgyzstan's Altyn Tor (starting September), scaling to 750-800 kg and 300-350 kg respectively in FY28. The company plans ~₹2,000 crores total capex for four development-stage projects, pursuing offtake arrangements for critical minerals and equity-debt mix for gold, with new acquisitions targeted for production by 2028. Strategic focus on battery metals aligns with ₹44,000 crore National Critical Mineral Mission support and rising commodity prices (tungsten +622%, tantalum +196%, lithium +108%). Key watch points: Ganajur legal outcome, Altyn Tor commissioning timelines, Kyrgyzstan government relationship, and ability to secure offtake agreements before large capital commitments.