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De Grey Mining Ltd: DEEP DIVE

De Grey Mining works towards target of 2 million Pilbara gold ounces by year-end

The company has a longer-term vision to grow resources to 3 million gold ounces.
De Grey's Pilbara project in northwest Western Australia
OVERVIEW: DEG The Big Picture
A plant in the company’s development study now has 2 million tonnes annual throughput
  • Gold resources have been increased by 40% to 1.4 million ounces since a 2017 scoping study
  • De Grey continues to explore and is going deeper at some deposits
  • It has a steady news flow and is keenly watched by investors
  • The company's Pilbara assets include both conglomerate and structural gold, putting it on the Pilbara Gold Rush follow list

What does De Grey do?

De Grey Mining Limited (ASX:DEG) specialises in gold exploration in the prospective Pilbara region of Western Australia. It is run by an executive team that includes executive chairman Simon Lill and executive technical director Andy Beckwith.

Lill is a corporate adviser with more than 25 years experience in stockbroking, capital raising, management, business development and analysis for resource industry and manufacturing companies.

Beckwith is a geologist with more than 30 years geological and management experience. As managing director of Westgold Resources Ltd (ASX:WGX) (FRA:0W2) (OTCMKTS:WTGRF) he built up the company’s inventory to about 5 million ounces of resources and previously held senior roles with AngloGold Ashanti Limited (ASX:AGG) (NYSE:AU) (JSE:ANG) (FRA:AOD1) in Australia.

What does De Grey own?

The key asset is the company’s Pilbara Gold Project east of Novo Resources Corp (CVE:NVO) (FRA:1NO) (OTCMKTS:NSRPF) ground in the Pilbara region of Western Australia.

The 1.4 million ounce gold project about 60 kilometres south of Port Hedland has JORC-defined structural gold resources, with conglomerate gold also found at the large project which extends over more than 1,500 square kilometres.

Last month the company increased the size of a plant in its development study to a 2 million tonnes per annum (Mtpa) throughput.

The increase was put down to a 40% increase in resources from the project’s 2017 scoping study, recent exploration successes and the potential of De Grey’s project tenements, recent material increases in gold recoveries to between 90% and 94% and a simplified processing plant flowsheet.

De Grey's scoping study had suggested average annual production would be nearly 60,000 ounces.

The company is confident of defining new resource additions, highlighting the potential for higher grade underground lodes below at least 4 deposits.

In October 2018 the company had estimated only 10% of its shear zones had received detailed shallow RC and diamond drilling to a nominal depth of 100 to 150 metres.

A mineralised shear zone at the project extends more than 200 kilometres.

Earlier this month, the company reported further high-grade gold drilling results at Withnell gold deposit and started extension drill program at Toweranna.

Highlight intersections from Withnell included: 5 metres at 7.8 g/t gold from 43 metres including 2 metres at 14.95 g/t; 2 metres at 11.14 g/t from 61 metres, including 1 metre at 20.6 g/t; and 8 metres at 20.11 g/t from 168 metres, including 4 metres at 38.5 g/t.

De Grey executive chairman Simon Lill reported on March 20, 2019: “These drilling results are extremely encouraging.

“We have set an initial resource target of 2 million ounces by the end of 2019 and we believe Withnell and Toweranna provide a clear runway toward that number.

“Drilling is advancing at both deposits with two rigs operating, so there will be a steady stream of exploration results in the forthcoming months.”

The 5,000-plus-metre step-out reverse circulation (RC) drill program at Toweranna deposit is targeting resource extensions to a minimum of 200-250 metres depth before diamond drillers then target 400-metre then 800-metre depths.

Toweranna currently hosts 143,900 ounces at 2.2 g/t gold but has an exploration target accounting for 400-metre depth measures of 680,000-800,000 ounces grading 2.1-2.3 g/t gold.

De Grey hopes to define at least 2 million ounces by the end of 2019 while continuing to target a low per-ounce discovery cost.

The company had $5.5 million cash at the end of 2018 and tipped $2.5 million of cash outflows in the March quarter of 2019.

De Grey’s next quarterly reports are expected by the end of April 2019.

Inflection points

  • Resource upgrades for the flagship Pilbara project

  • Nearby success from structural and conglomerate gold explorers and developers

  • Significant regional transactions related to conglomerate gold mineralisation

  • Capital raisings and feasibility study progress

  • Strategic partnerships and mergers & acquisitions

Chairman Simon Lill highlights company vision

“De Grey is an exciting Australian gold growth story with a material and near-term development opportunity in one of the world’s best mining jurisdictions,” De Grey executive chairman Simon Lill told the market on February 22, 2019.

“Our vision is very simple; we have our foot on a significant new gold province, two drill rigs on site, aiming to grow resources towards 3 million ounces and ultimately transition De Grey into a new Australian gold producer.”

De Grey Mining technical director and operations manager Andrew Beckwith will present at 9.45am on day 3 of the upcoming May 7-9 RIU Sydney Resources Round-up at Sofitel Sydney Wentworth.


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De Grey Mining Ltd Timeline

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