India-based National Mineral Development (NMDC) is considering investing Rs5bn ($61m) in a gold mining block as part of its efforts to foray into the gold mining sector, reported Reuters, citing a source with direct knowledge of the matter.

NMDC is expected to secure a mining lease soon for the Chigargunta-Bisanatham gold block in Chittoor, Andhra Pradesh.

The company already signed a letter of intent with the state government pertaining to the block last year, the source said.

According to local rules, NMDC is required to secure the gold block mining lease within three years of signing the letter of intent.

As per the estimates, the 263.01-hectare block holds gold reserves of 1.83 million tonnes comprising 5.15g of gold per tonne, according to the source.

The iron ore miner is planning to hire a consultant to help in clearing required approvals including environmental approvals.

In 2018, the Indian mining company placed the highest bid for the Chigargunta-Bisanatham gold block following an e-auction. Some of the other bidders included Adani and Vedanta.

At that time, NMDC agreed to share 38.25% of the revenues from the gold block with the government.

To be developed in phases, the Chigargunta-Bisanatham block will be operated as an underground mine.

Currently, state-run Hutti Gold Mines is said to be the only major gold producer in the Asian country.