Company's equity is small, about 6 crores, with share face value of Rs. 1/- each. This means about 6 crores shares are issued out of which 28% are held by public. Promoter holding is 51% with another 11% held by other foreign companies.

 

Balance sheet size is small, about 14.5 crores. About 9.5 crores are invested in units of mutual funds. Balance money are spent in exploration activities.

 

Company has zero debt. This give it flexibility to borrow, if required.

 

Company has no sales as it is still at exploration stage of business. There is lot of inofrmation about company's prospects on its web site. However, this is not area where I understand much.

 

The stock can be treated as highly leveraged play on increasing gold prices, more like a perpetual call option on Gold price and Company's chances of finding Gold.

 

Currently, stock price has run up a lot along with rise in Gold price and general bullishness of overall market, giving the company market cap of about 190 crores.

 

I do not think that buying it at current prices is justified. However, on a deep correction, this can be bought as call option as I explained above.

 

In addition to risk of failure in finding viable, minable Gold, another risk is dilution of equity to raise funds for mining even if Gold is found viable for mining activities.

 

I would like to know if any forum member has idea on this company or any opinion about investing in such companies.

 

Mining rights in an area which has prospects of an expensive mineral deposits has a value - don't ask me how much. The "call option" logic is pretty good.

 

If they don't find gold, they'll probably build some apartments there :)

 

 

 

It is not even enough to "find" gold. It has to be viable. Better register with ICICI and invest in Canadian juniors. You will find better value. And for valuation example, Nother Dynasty Minerals has mkt cap of $665m. They have already spend lots of development money plus 40-50m cash on hand. It is going to be THE largest GOLD/Copper/Moly mine. Their minerals in ground at current metal prices should be anywhere between $300-400B. And mine is going to be viable because of quality of ore. So $40m(Deccan) is too high for a company that is "looking" for Gold.