Deccan Gold Mines Ltd Management Discussions

NTRODUCTION

Deccan Gold Mines Limited (Deccan Gold), Indias first listed gold mining company on the Bombay Stock Exchange Limited, Mumbai (BSE), is strategically advancing its global mining footprint encompassing a diverse portfolio of projects spanning domestic and international landscapes. Deccan Gold currently holds active operations and exploration initiatives in Kyrgyzstan, India, Finland, Mozambique, and Tanzania, with a vision of sustainable development, robust community engagement, and strategic growth within the critical and precious minerals sectors.

The companys long-term objectives are centered on optimizing production while ensuring its mining practices contribute positively to both the environment and local communities. By leveraging cutting-edge technologies and adopting innovative exploration techniques, Deccan Gold aims to establish new benchmarks within the mining industry and contribute to Indias self-reliance on critical minerals.

Deccan Golds mission encompasses creating substantial employment opportunities, fostering sustainable economic growth, and building resilient infrastructures within the regions it operates. As the company continues its strategic expansion, it remains steadfast in its commitment to responsible mining practices, thereby securing a sustainable future for generations to come. This holistic approach positions Deccan Gold at the forefront of the mining industry, driving progress and pioneering advancements in gold and critical minerals exploration and development. Furthermore, Deccan Gold Mines deeply acknowledges and values the unwavering support and trust of its over 40,000 shareholders. Their steadfast belief in the companys vision and foresight has been instrumental in propelling Deccan Gold to its current standing. The loyalty and confidenceof these shareholders fuel the companys drive to innovate and excel, ensuring a prosperous and sustainable future for all stakeholders involved.

INDUSTRY REVIEw

Indias gold imports surged by USD 12.47 billion to touch USD 58.01 billion in the financialyear 2024-25, despite a sharp rise in prices, officialdata from the Department of Commerce shows. The 27.38 per cent year-on-year increaseinvaluereflectsrobust demand for the yellow metal, driven by festive buying, a duty cut, and growing investor interest amid global uncertainty. 1 This value spike is attributed by analysts largely to two triggers. First came in August 2024, following a major policy move by the newly elected NDA government which slashed gold import duties from 15 per cent to 6 per cent in its first full Union Budget. The second trigger arrived in November during the festive season, a traditional period of heightened gold purchases.

Indias continued appetite for gold underscores its cultural and economic significance. Even in a high-price environment, gold remains a cornerstone of Indian households wealth portfolios, fueled by tradition, investment needs, and policy shifts.

Critical minerals2 such as lithium, cobalt, nickel, rare earth elements (REEs), and graphite are essential for clean energy technologies, electronics, defense, and advanced manufacturing. In 2025, the Government of India launched the National Critical Mineral Mission (NCMM) 3 with an outlay of 34,300 crore over seven years. The mission aims to:

Secure long-term supply of critical minerals.

Strengthen domestic value chains from exploration to recycling.

Promote self-reliance and reduce import dependency by 30 40% by 2035 Some of the key initiatives and developments4 that took place during the year are as under:

Geological Survey of India (GSI) initiated 195 exploration projects in FY 2024 25, with plans for 227 projects in FY 2025 26

1. Source: Gold Imports Jump To $58 Bn In FY25 Despite Record Prices - BW Businessworld 2. Source: Indias critical minerals push gathers steam - The Economic Times

3. Source: Cabinet Approves National Critical Mineral Mission to build a resilient Value Chain for critical mineral resources vital to Green Technologies, with an outlay of Rs.34,300 crore over seven years Prime Minister of India

Over 100 critical mineral blocks set to be auctioned, including offshore areas rich in polymetallic nodules

The MMDR Act was amended to give the Central Government exclusive authority to auction 24 critical minerals.

A fast-track regulatory approval system and a new Exploration Licence (EL) were introduced to encourage private sector participation.

Plans to establish 4 Mineral Processing Parks and 3 Centres of Excellence for advanced research.

1,500 crore allocated to promote a circular economy through recycling and recovery from end-of-life products.

India joined multilateral platforms like the Minerals Security Partnership, Quad Critical Minerals Initiative, and G7 Critical Minerals Action Plan India is well endowed with natural resources, particularly minerals, which serve as raw material for many industries, paving a path for rapid industrialization and infrastructural development. This, in turn, will facilitate the economys ascent to a path of sustained growth and a five trillion-dollar economy. The Ministry of Mines, Government of India, in its Annual Report for the year 2024-20255 states that the Vision is to ensure security in minerals, including critical minerals, through enhanced domestic capacity, leverage multilateral and bilateral cooperation for resilient mineral supply chain, enhancing the participation of private sector in mineral exploration, low carbon mining and recycling of used products for minerals/metal extraction, Ease of doing business for transparent & equitable allocation and regulation of mineral resources and technology adaptation and development for efficient exploration and mining.

PERFORMANCE

Details about the operations of the Company and its Projects are provided elsewhere in the Annual Report. It is pertinent to note that exploration companies by their very nature will not generate mining revenues until commencement of mining operations.

Risks and Concerns - gold and critical minerals sector

Unlocking growth and new sources of gold supply requires allocating more capital for exploration and developing or expanding gold projects. As per the Top 10 Risks and Opportunities for Mining and Metals 2025 report, Capital has emerged as the number one risk. Notwithstanding bullish global prices globally, exploration budgets remain tight. Majors focus on brownfieldprojects, while grassroots exploration receives only 20% of total spend.

Rising costs and higher shareholder expectations limit reinvestment in new projects. Total cash costs (TCC) rose 31% since 2019 due to labour, energy, and royalty increases.

Higher gold prices are driving a surge in resource nationalism as countries seek to ensure fair value for their gold, including increasing government ownership of gold projects and revising regulations to tighten tax rules. This coupled with export restrictions and policy shifts create uncertainty for foreign investors.

Long-term stable relationships with governments and ensuring transparency of returns from mining to countries will mitigate some of the impact of rising resource nationalism. Several gold mining companies are collaborating with governments in-country to unlock mutual benefit.

Further, there are also pressures from an ESG perspective to demonstrate social value through decarbonization, responsible tailings management, and Indigenous partnerships.

In India, limited incentives and auction-based allocation discourage early-stage exploration and development, particularly of gold and critical mineral projects. Further, delays in environmental clearances and multi-agency approvals (even under the auction regime) hinders development.6 As regards critical minerals, China dominates processing of rare earths (87%), lithium (58%), and silicon (68%), creating geopolitical vulnerabilities. Chinas export restrictions on gallium, germanium, and rare earth technologies

4. Press Release:Press Information Bureau 5. Source : 67b48dd05215b1739886032.pdf

6. The 2025 risks and opportunities for the gold mining sector final 7Apr25.pptx disrupt global supply chains. Further, OEMs investing directly in mining create monopolistic control and limit access for smaller players. 7 In contrast, India imports over 80% of its lithium and 76% of its silicon needs. Indias dependency on imported critical minerals stems from several challenges that include limited exploration technology to tap into deep-seated deposits; inadequate processing infrastructure that leads to reliance on refined imports; and policy shortcomings. Absence of strong policies and financial incentives to promote private sector involvement in mining and mineral processing further exacerbates the countrys reliance on imports.8 To sum up, for India, the path forward involves:

Strengthening domestic exploration and processing capabilities.

Reforming regulatory frameworks to attract private investment.

Building strategic reserves and international partnerships.

Promoting ESG compliance and sustainable practices.

OUTLOOK AND OPPORTUNITIES

India has a huge potential for unlocking substantial gold resources. Despite this potential, gold mining remains underdeveloped due to regulatory delays, limited private sector participation, and outdated technology. Further, India also identified 30 critical minerals essential for clean energy, electronics, defense, and industrial growth. The mining sector contributes 1.8% to GDP, with potential to reach 2.5% by 2030. 9 As India aims to reduce import dependency and become a global hub for mineral processing and exports, it needs to seriously and positively address issues such as technologicalgaps;infrastructuredeficits,policy bottlenecks and environmental and social concerns.

Against this backdrop, Deccan Gold expanded its footprint overseas by acquiring significant stake in gold projects in Kyrgyzstan, Finland, Tanzania. The Company also forayed into the critical minerals (lithium and copper) in Mozambique. Further, the Company is also actively developing its Bhalukona Nickel & PGE Project in Chhattisgarh, India. Shareholders are encouraged to refer to the market updates made from time to time by the Company on its Projects which can be accessed at www.bseindia.com and www.deccangoldmines.com.

To sum up, being Indias only gold exploration and critical minerals focused company listed on the BSE, DGML has successfully enlarged its footprint in India and overseas and is set to become a junior to mid-tier gold and critical minerals producing company.

ADEQUACY OF INTERNAL CONTROL

The Company has in place adequate internal control systems commensurate with its size and operations, which assure proper recording of transactions of its operations and also ensure protection against misuse or loss of the Companys assets. The Company has appointed an Internal Auditor who reports on a quarterly basis to the Audit

Committee.

SUSTAINAbLE DEVELOPMENT

DGML is committed to sustainable development; we believe in creating sustainable values that our employees, business partners and shareholders can uphold and believe in. We strive to meet the needs of all our stakeholders. DGML believes in making a positive contribution to the community in which we are involved.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of the applicable securities laws and regulations. Actual results could differ materially from those expressed or implied due to economic, regulatory, and operational factors in the jurisdictions in which we operate.

7 Critical Mineral Supply Chains: Challenges for India - CSEP

8 Indias Critical Mineral Dependency: Challenges, Chinas Dominance, and the Way

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