VEDANTA SIGHTS GOLD, OPENS PURSE STRINGS
Suresh Nair

Economic Times, India
May 18 2006

Times News Network[ Thursday, May 18, 2006 02:00:58 Am]

MUMBAI: Vedanta Resources plans to enter the precious metals business
by investing in gold as the sky-rocketing prices of the commodity
tempt India's leading non-ferrous metal producer.

The London-listed Vedanta may invest in Sterlite Gold, which is
now controlled by the Anil Agarwal family holding company - Volcan
Investments - and is out of the Vedanta fold. Sterlite Gold's
Armenian operation currently require $70-80 m for expanding its
operation. Vedanta is likely to step in by investing the money and
thereby picking up a stake in the company.

The Armenian operations are controlled through Ararat Gold Recovery
Company (AGRC), a gold mining and processing company in Armenia,
and is fully owned by Sterlite Gold. Sources said the group is yet
to decide on the move and the route to be followed. "A decision on
whether to bring in funds through Vedanta or through the holding
company is being debated," the source said.

Vedanta currently has a negligible presence in gold but is a major
player in copper, zinc and aluminium. The only downside of investing
in the gold , is that current prices of the metal are at an all-time
high. Entry into gold production will, however give it better
valuations as the future outlook for gold is very positive.

AGRC has two gold mines at Meghradzor and Zod and a processing plant
at Ararat in Armenia. It has plans of shifting and upgradation of
some facilities of t h e Ararat plant and to build a brand new plant
at Zod, which can treat gold ore.

The mine life, based upon proven reserves and proposed capacity
expansion, will be more than 10 years.The plans envisage shifting and
upgradation of some facilities of t h e Ararat plant and to build a
brand new plant at Zod, which can treat gold ores.AGRC is also trying
its luck with possible diamond deposits at Zod.