October 27 2017 Dear Shareholder The past year has been one of positive progresswith the completion of the Joint Ore Resources Committee Australia (JORC) compliantFeasibility Study by Snowden and reporting a robust project and positive decision todevelop the Ganajur Gold Project . On the other hand the delay in receiving the Letter ofIntent (LoI) has understandably caused much anxiety for shareholders but owing to theclear legal standing I remain confident that the LoI will ultimately be issued. In themeanwhile significant progress has been made in regards to the required preparation tobuild the Ganajur mine.
Feasibility studies have increased the level of confidence in the Ganajur goldmineralisation with bulk of the resource being upgraded to mineable proved categoryreserves as per JORC Standards.
The financial model has indicated net cash flows of USD 133 million before tax over thelife of the mine. The Net Present Value (NPV) at 5% DCF is USD 91.6 M and USD 61.4 Mbefore and after tax respectively at a gold price of USD 1250 per ounce. The Internal Rateof Return (IRR) is a very healthy 39.1% and 29.6% before and after tax respectively andthe payback period for the Project is 2.7 years. Financial analysis has also indicatedthat Ganajur Project can break even at a price of just 700 USD per ounce.
These numbers are very exciting for any gold project and as Chairman of the Company Iwould like to remind shareholders that Ganajur is a robust gold mining project that wouldoften be referred to as a company maker'. Most successful gold mining companies injurisdictions such as Australia started with an open pit mine similar in size to Ganajur.It is the engine that will drive the subsequent development of our other valuable assetsin the Hutti Greenstone Belt and other areas. The Ganajur cash flows will enable us todrill and prove up these other world-class gold targets I would also like to inform theshareholders that Deccan has made serious progress in the field of infrastructure whichwill be critical in commissioning of the project. We have progressed in land acquisitionprocess water power and getting permission from Railways. We are also in the process ofgetting environmental clearance for the processing plant.
We have a strong technical team that through the undertaking of the Feasibility Studyhas strengthened its detailed knowledge of the Ganajur project although we must continueto build on this with the addition of mining and processing specific expertise to ensureefficient and successful implementation of the project.
I would like to remind shareholders that I am continually lobbying and advocating atvarious political levels directly as well as through various industry bodies in terms ofthe much required changes to the Mining Act and associated Policy. I am led to believethat the Government is seriously considering revisiting some of the areas that would helpboost the exploration industry and although we must remain cautiously optimistic I willcontinue to advocate strongly for the industry's best interests. In spite of theregulatory delays Deccan remains resolute with an incredibly robust and much soughtafter portfolio of gold projects. Deccan remains well placed to become a major Indian goldminer and I hope the shareholders can appreciate that although we await the LoIsignificantprogress has been and continues to be made in regards building India's firstprivate sector gold mine.
Charles E.E. Devenish