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Panthera: Indian mining sector improving, bureaucratic barriers remain

There is a strong policy to promote and stimulate the Indian mining industry, but even as the sector develops, government bureaucracy remains a significant barrier to foreign companies seeking to invest, Panthera Resources Plc CEO Geoff Stanley said.

"India is a highly regulated environment and incredibly bureaucratic," he said in an interview with S&P Global Market Intelligence, adding that it is important to know the system inside and out to avoid the many potential pitfalls.

Panthera holds 70% of the Bhukia gold property in a joint venture in India's Rajasthan state. The resource is under development, but previous work under a reconnaissance permit identified a JORC-compliant resource of 1.7 million ounces of gold at a grade of 1.4 g/t.

Panthera has been pushing to obtain a prospecting license over the last few years, and the company believes that a recent court decision will mean the license is granted this year. In January, the High Court of Rajasthan ordered the state government to decide whether it would grant the prospecting license application. The company dropped all outstanding court cases protecting its rights to the Bhukia deposit, and the state government of Rajasthan agreed to grant the company a prospecting license over 21.07 square kilometers of the original reconnaissance permit area.

"Once the government of Rajasthan recommends the grant of a prospecting license to the government of India, they have a three-month statutory timeline to approve the grant," Stanley said, adding that Panthera anticipates drilling to start within three months of securing the license.

One of the main barriers to obtaining the prospecting license for Bhukia was the Mines and Minerals Amendment Bill of 2015. The legislation sought to bring greater transparency to the Indian mining industry by introducing an auctioning system whereby companies bid for mining lease allocations and prospecting licenses.

Stanley said the legislative change stemmed from a number of high-profile sales of semigovernment assets where companies or individuals acquired access to the assets and then traded out of them rapidly, making a fortune in the process.

The legislation was a step in the right direction, but resolving one problem gave rise to yet another, the CEO said.

"It was fine in concept, but what it did was remove all of the return for exploration investment [for] companies going in there spending exploration dollars," he said, elaborating that once companies discover a viable ore body, they then have to go through the auction process to buy it back, thus eliminating the return on investment.

The legislation damaged the exploration industry in India and set back Panthera's application for the grant of a prospecting license by two years, Stanley said. The changes to the mining legislation brought the validity of many already-existing license applications into question, and Panthera's application had to be reviewed. The application was eventually saved and was processed for grant under the amended mining laws.

Nevertheless, Panthera believes that the government is moving in the right direction and that, overall, the industry is recognized as being a positive agent for change, especially in the more remote areas of the country.

"Mining is seen positively there. They have a policy of trying to promote and grow the mining industry, but they're trying to balance that against the gradual disposal of essentially state-owned assets," he said.

In light of the latest decision to go ahead with the grant of the prospecting license, the company had the confidence to go to the market and list on the London Stock Exchange's AIM.

As part of developing of the company, Panthera struck a deal with Republic Investment Management, based in Singapore, for three-stage financing. In May 2017, RIM injected A$2 million at 25 Australian cents per share, followed by a second payment at the time of the listing in December 2017 of A$2 million at 35 cents per share. Panthera is due the third installment of A$2.7 million at 65 cents per share once the prospecting license is granted in India.

Further down the line, Stanley said, the company could look for financing from a number of sources. Panthera may consider allying the company with Indian capital interests as well as a possible listing on the Bombay Stock Exchange.

Apart from its flagship asset in India, the company also holds projects in northwestern Africa, including the Naton project in Burkina Faso and the Kalaka and Bassala projects in Mali.