Deccan gold mine is the only listed company engaged in the gold exploration sector.Deccan gold has got close to about 10,000 square kilometer of prospective blocks in different states.India produces just 3 tonne of gold per annum as compared to 300 tonne, produced by Australia.
Gold mining business is just like the oil exploration business, where there is a high degree of uncertainty involved. Nobody knows whether the amount that is being spent for the exploration process will really yield any results or will have to be written off.But these company is something which can yield windfalls of gains in the long run.
Even if deccan gold gets no mines people would always look at it to be the proxy play.The management has guided a revenue figure of around 300-400crs for 10-11.
As the industry has got a very high operating margin even if deccan gold delivers half of that revenue it would attract tremendous buying attention from all sorts of investors fraternity.So a company which would reward you on hope and if its gets any gold mines,be rest assured this would be your next multibagger then.
Despite all these one can still prefer to stay away from this stock.
Saivenkat