Shares of NMDC fell over 1 percent in early trade on August 21 after Karnataka government withdrew the approval to extend the mining lease.
The company in its release on BSE said that Karnataka government withdrew the approval accorded to extend the mining lease period of NMDC at Donimalai and auction the said block.
In this regard, the company has filed revision application against the State Government of Karnataka’s said order with the Ministry of Mines, Government of India. The hearing is fixed on August 21, 2019.
The company has also requested the Karnataka government to withdraw its letter dated August 17, 2019.
The research house Citi has maintained a buy rating on the stock with a target at Rs 120 per share.
According to Citi, if the company loses the Donimalai lease, then the more immediate impact would be on volumes.
Donimalai has accounted for 6 million tons, which is 17 percent of FY18 volumes, however, the bigger worry would be the fate of the other leases, it added.
Most of the company’s Chhattisgarh leases are valid only until March 2020.
At 0935 hrs, NMDC was quoting at Rs 89.50, down Rs 0.65, or 0.72 percent on the BSE.