Dec.Gold MinesQ3 FY23
Dec.Gold Mines Q3 FY23 Earnings Call Analysis
Revenue, margin, capex, fundraise and order book outlook from management commentary.
Price: ₹230Market Cap: ₹4.6K CrSector: Non - Ferrous Metals
Management growth scorecard
Revenue
Category 2
Margin
Category 1
Fundraise
Yes
Order
N/A
Capex
Yes
3 of 4 growth signals are positive.
Full analysisRevenue guidance
Category 2- Deccan Gold Mines aims to produce 1 tonne of gold per year by 2026, primarily from Jonnagiri (49% stake), Tanzania, and Kyrgyzstan projects.
- Beyond 2026, production is expected to potentially double to 2 tonnes by 2027-28.
- By 2030, the company targets production of 5 tonnes per year of gold or gold equivalent, including projects in Finland and Ganajur.
- EBITDA margins on gold projects like Jonnagiri are estimated at around 60%, with operational costs around 35-40%.
- Initial revenue is expected to start post-2024 as projects like Jonnagiri reach production.
- Consultancy vertical revenues are expected to begin from Q2 2023, supporting operational sustainability.
- Significant fundraises (Rs. 72 crores initially, followed by Rs. 250-300 crores) will support ramp-up and new project acquisitions.
- Non-gold projects (nickel, PGE) have similar profitability but longer timelines (2-4 years before revenue).
See what Dec.Gold Mines management said on margin guidance — free account, 30 seconds.
Fundraise plans
Yes- Deccan Gold Mines Limited is planning an initial fundraising of Rs. 72 crores (~$9 million) primarily through equity (preferential allotment) to acquire stakes in key projects like Jonnagiri (up to 49%), Altyn Tor (10%), and Tanzania project (initial 18-26%).
- Following this, an additional Rs. 250-300 crores is targeted for further project development, potentially split 50:50 between equity and debt, depending on progress with the initial round.
- Smaller amounts like Rs. 5 crores for nickel-chromium-PGE exploration and Rs. 10 crores for the Finland and Kyrgyzstan projects are included in early funding phases.
- Discussions are ongoing with strategic investors in India, Singapore, and Dubai to raise these funds.
- Debt funding is arranged for infrastructure (Rs. 150-170 crores for Geomysore) mainly through partners like Triveni, which will service the debt.
- Further rounds of funding may be needed as projects like Tanzania mature and require more capital.
See what Dec.Gold Mines management said on order book — free account, 30 seconds.
Capex plans
Yes- Rs. 72 crores ($9 million) planned as the first stage of funding primarily for:
- - Increasing stake in Geomysore from 42% to 49%
- - Investing about Rs. 10 crores in the Altyn Tor gold project expansion
- - Acquiring 18% stake (first tranche) in Tanzania project via cash infusion and share swap
- - Prospecting work in nickel, chromium, and associated minerals in Chhattisgarh composite license
- - Prospecting and working capital for Finland and Kyrgyzstan projects
- Additional Rs. 250-300 crores expected later (about 50:50 equity and debt) for further development, especially Tanzania project after plant construction matures
- Rs. 3-4 crores potential seed government funding for critical minerals exploration (platinum-palladium-nickel)
- Land acquisition ongoing: 80 acres completed (pit area), 50 acres targeted this month (processing plant), about 200 acres planned (tailings dump)
- Equipment orders placed including long lead items like ball mill (8-9 months delivery) for Jonnagiri project
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Margin guidance
Category 1- By 2026, Deccan Gold Mines Limited (DGML) targets producing 1 tonne of gold annually, mainly from Jonnagiri (49% stake), Tanzania, and Kyrgyzstan projects.
- EBITDA margins on gold projects like Jonnagiri are projected around 60%, with operating costs about 35-40%. For example, production costing ~Rs. 500-550 crores could yield Rs. 300 crore EBITDA per tonne annually.
- Beyond 2026, production can potentially double by 2027-28, reaching about 2 tonnes/year.
- By 2030, DGML aims for 5 tonnes annual gold (or equivalent in other metals), expanding to a junior to mid-tier producer.
- Non-gold projects (nickel, PGE, etc.) expected to have profitability comparable to gold projects due to multiple metal credits, but revenue for these may start beyond 2-4 years following exploration.
- Consultancy vertical starting Q2 2023 will generate continuous revenue supporting operations.
- Future earnings growth depends on successful funding rounds and project ramp-ups.
Order book
The transcript provided does not explicitly mention the current or expected order book or pending orders for Deccan Gold Mines Limited. However, relevant information related to projects and investments includes:
- Fundraising of Rs. 72 crores (~$9 million) planned for key projects including increasing stake in Geomysore to 49%, investing Rs. 10 crores in Altyn Tor gold project, and acquiring stakes in Tanzania project (18% initially, planned to increase to 26% and later 51%).
- Some share swaps and funding planned for projects in nickel, chromium, composite license, Finland prospecting, and Kyrgyzstan project.
- Discussions with strategic investors and funds in India, Singapore, and Dubai for the initial Rs. 72 crore infusion.
- Additional funding of Rs. 250-300 crores contemplated beyond this first phase, partially through equity and debt.
- Orders expected to be placed for equipment and plant construction upon funding completion, particularly for Tanzania project.
No specific order book or pending order value is stated in the transcript.
How does Dec.Gold Mines rank vs peers in Non - Ferrous Metals?
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