Did India Really Strike Gold?

Indian media is going crazy about India having discovered a major mine in UP. India has claimed to have found a mine containing 3,500 tonnes of gold. This would be, by a massive margin, the biggest gold mine in the world, in a country where there is today only one small gold mine. This gold would be worth US$185 billion, or more than half of the total yearly revenue of the Indian government. No wonder, UP CM Yogi Adityanath visited the “mine” recently.

In reality, this news is utterly baseless, is an outrageous propaganda, and shows how clueless Indian journalists and those who prepared the news release in the Geological Survey of India and the UP Mining Department are.

I have been analysing, investing in, and helping others invest in gold mining companies around the world for the last sixteen years. I have never seen such a news on a gold project, which has no data, no real work done, and is based on nothing more than arm-waving. It cannot even be called a speculation at this stage.

Finding a gold mine is an extremely long and arduous process. It takes years, often decades, to define resources to put a gold project into production. It is then that it is called a mine.

You have to do several years of survey of the project, accompanied by a massive amount of drilling. All this costs ten of millions of dollars, often with nothing to show at the end of it.

After years, often a decade or much more, of work and massive investments, what you have is what looks like the typical rock. There is no gold sitting in the ground, as the news seems to suggest. There is often about a gram of gold in tonne of rock, and barely economic, the reason why most gold mines never make money.

To extract that one gram of gold from a tonne, you need to put hundreds of millions of dollars worth of equipment, to put it into production. Then when you run the equipment, the cost of extracting gold often exceeds the price of gold, making the project uneconomical.

In short, what Indian geologist have is a project, which if it really has a lot of gold in it, will take a decade or more just to define a resource on it. Then they have to do economics on it. The probability of this ever becoming a mine based on what they have done so far is miniscule.

For now, the news is nothing but an outrageous propaganda.

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