"Government will not act on it", Hegde said on the report which is expected to be submitted to the Government next week.
"My only hope is the Supreme Court", he told PTI in an interview.
He, however, said it was not mandatory for the Government to accept his report, which has indicted Chief Minister B S Yeddyurappa.
Four ministers, including three from the mineral-rich Bellary district, have also been indicted by the Lokayukta, whose findings say that the "huge racket"has caused a loss of Rs 1,800 crore to the exchequer in 14 months since March 2009.
Hegde, a former Supreme Court judge, said the apex court is monitoring the illegal activity in mining area in Karnataka and it has expressed very strongly that the government completely stop mining in Bellary.
"And I have evidence and other things of illegality going on in Bellary; I have put it in my report. And I am sure (the Supreme Court appointed) Central Empowered Committee which is collaborating with us (Karnataka Lokayukta)also...Their object is the same as mine (of) curbing illegal mining. They may take the report (to be submitted next week) and place it before the Supreme Court".
As an "agency" created by the Supreme Court, the CEC can "straight away" take the report and does not have to apply under the Right to Information Act, he said.
"As much as the Government is entitled to a copy, the Supreme Court is also (entitled)," he said, noting the CEC has taken his first report on illegal mining submitted in December 2008, and "relied upon it" and he expects it to do it this time as well.
Hegde, a member of the joint drafting committee on the Lokpal bill, is not surprised by Chief Minister's statement that he would not resign.
"...and each one when it comes to respective political parties... when it comes to their personal conduct and all that... they will justify it anyway (that they have done no wrong)", he said.
Hegde agreed that it's not mandatory for the Government to accept his report. "Lokayukta report will only recommend what's happened and what should be done about it, and anybody who is accountable or responsible should take action on that..." .
Based on the information in the report, he said Lokayukta can certainly prosecute those who had been named in it but added that the first opportunity is for the Government to act upon it.
"If criminal activities are noticed, liability is noticed, we can prosecute" but it's "left to the next man (his successor)".
Hegde is retiring on August two.
Hegde said he is concerned about the physical safety and career prospects of the five Lokayukta officials under him who probed the illegal mining for the latest report, and recommended to the Government to treat them as "whistle-blowers".
"It''s not only physical harm that I apprehend, I am apprehending much more than that, because their entire career could be spoiled. They have stepped on the toes of very many people.. powerful people..People who are in politics...there are (their) seniors... all based on evidence...they only gave fodder (evidence and information) and I solved the fodder", he said.
Hegde referred to an attack on U V Singh, a senior forest official and key investigator on the illegal mining, by a Bangalore Corporator when he was probing discharge of polluted water a few months ago, and said the illegal mining issue is much more serious.
"Mining people are a different kind of people altogether", he remarked.
Hegde said his endeavour is to submit the report on Monday or Tuesday but indicated that there could be some delay.
"Unfortunately, it's not in my hands", he said, adding, the printing of the report needs to be under the scrutiny of Lokayukta officers "not that we have more to be released (leaked report has it all)".