DECAN GOLD

Quarterly Report - Sep'06

Report of exploration work done for gold during quarter ended September 2006 During the last quarter, Deccan Gold's exploration work was confined to the Attappadi valley RP block in Kerala, and we are happy to report the discovery of the NE extension of the Kottattara gold deposit. NE EXTENSION OF KOTTATTARA GOLD DEPOSIT Exploration was commenced through systematic geological traversing in the NE part of GSI's Kottattara prospect, where our earlier exploration had indicated high grades of gold; 49 g/t, 33g/t, 22 and 9 g/t. These values come from 12 samples of quartz veins and shear zones containing altered and unaltered sulphides. Exploration in the present quarter, revealed plenty of scree of quartz containing sulphides-chalcopyrite, pyrite, malachite and azurite along the earlier explored tract further east of the Kottattara prospect. An intermittent zone of about 400m is now believed to be mineralized. The area which has given high grades in the Kottathara NE block is being dug discretely by the local people. A 4m long by 1 m wide and 1 m deep trench has been excavated along the strike. All the shear zone material with the quartz has been taken out, pounded and panned. Local people could not go deeper, due to the hard rock conditions. SW EXTENSION OF PUDUR GOLD PROSPECT LOCATED CLOSE TO KERALA-T.N. BORDER During the monsoon we diverted our attention to finding the extensions of the Attappadi gold bearing tracts across the border in TN State. This exercise was rewarding. Geological traverses at west and east of Pudur village in the Mettupalyam RP block showed a number of float quartz samples, some of which with visible gold assaying high grades of Au. The Pudur zone may extend southwest into the Deccan Gold's Attapadi block but it has not been possible to trace the extension due to the rains and thick forest across the Siruvani river. The Pudur zone could also be viewed as a faulted block of the known Kottathara NE Prospect. It may also form a parallel zone to the south of the Kottathara NE prospect. Further work is necessary to verify the ground realities. ROCK CHIP SAMPLING IN THE SOUTHWESTERN PART OF THE ATTAPADI RP BLOCK 22 samples were collected from seemingly mineralized zones in the southwestern part of the RP block. Except for 3 samples which have indicated anomalous gold in the range of 70 ppb to 130 ppb, rest of the samples have returned nil values. Therefore, no further work is proposed to be undertaken in this sector. Hirenaganur Prospect, North Hutti R.P. Block The best among Deccan Gold's gold prospects is Hirenagnur. We reported the salient features of this prospect in the last quarter. To recall, Hirenagnur comprises 4 independent gold bearing lodes having a cumulative strike length of 1030m, defined after 873m of R.C. drilling. Width and grades for the three main lodes (Nos. 1 to 3) met with in the bore holes are as follows: Footwall magnetite zone Central magnetite zone Hanging wall sulphide zone 19m x 3.02 g/t 8m x 5.02 g/t 6m x 2.94 g/t 7m x 2.65 g/t 11m x 2.17 g/t 8m x 1.38 g/t 5m x 3.02 g/t 9m x 2.21 g/t 11m x 4.52 g/t 16m x 6.38 g/t 9 m x 2.7 g/t 10m x 2.36 g/t The average gold grade works out to 3.28g/t gold for an av. width of 8m and a cumulative strike length of 1.03 km. The reconnaissance drilling has tested the lodes up to a depth of 60m. A 250 kg bulk sample has been submitted to the IBM and mineralogical studies. We expect to receive the report in a months time. We have applied for a PL and also an ML application and are awaiting the grant of these two licences. OUR ML APPLICATION ON BHARAK SILVER DEPOSIT Bharak is a small but high grade (425 g/t) silver deposit in Bhilwara district of Rajasthan. GSI has explored the deposit by drilling. To confirm the existing resources and grade, it is necessary to drill close spaced holes. As a follow-up of our application for Mining Lease, Deccan Gold has purchased a report at a cost of about Rs. 2.5 lakhs. The data is being processed for submitting a Mining Plan to the State Department to obtain the Mining Lease. FUTURE PROGRAMMES ATTAPPADI RP Our exploration in the Attapadi RP block so far has been rewarding. Work carried out by the GSI and Deccan Gold have indicated that there exist a number of parallel zones of gold mineralization in the transcrustal Bhavani shear zone. The dimension of this zone is large being 25 km long x 8 km wide extending into TN State. We propose to take up further work including reconnaissance drilling to locate the primary sources of all the gold anomalies identified by us so far and also define the surface and near surface dimensions of the known mineralization. In particular we propose the following items of works: (1) Geological traverses and rock chip sampling by a team of 4 geologists. (2) Magnetometre surveys. (3) Reconnaissance drilling. (4) Construction of a temporary building for our staff since there is no facility for camping in the Attappadi valley.