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De Grey sees blue sky potential at its Pilbara gold project
Mining
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Special Report: De Grey is moving quickly towards development of its significant Pilbara gold project, ticking off a number of key milestones over the last quarter.
The project, 60km south of Port Hedland in Western Australia, hosts over 200km of mineralised shear zones within the over 1500 sq km landholding.
In October, De Grey increased total gold resources to 1.4 million ounces on the back of an aggressive and highly successful exploration program. All deposits remain open.
The focus was to increase shallow gold resources for the Open Pit Mining Pre-Feasibility Study (OPMPFS), due in the first quarter of 2019.
The OPMPFS is targeting an initial 7 year mine life from the 1.4 million ounce resource.
Study work is well underway with the important metallurgy test work across nearly all deposits nearing completion and engineering design and costings of the proposed processing plant commencing.
Exploration success
Resources at the Mt Berghaus (181,000oz), Amanda (50,800oz), Mallina (160,700oz) and Toweranna (143,900oz) deposits all increased during the quarter – and all four remain open along strike and at depth.
With just 10 per cent of the mineralised zones drilled to a depth of 100m to 150m, some serious ‘blue sky’ potential remains, as De Grey works toward its next resource target of 3 million ounces.
This drilling success has continued into the December quarter.
In mid-October follow up drilling at Mallina returned 56m at 3.04 grams per tonne (g/t) of gold, with a higher grade core of 30m at 5.29 g/t.
De Grey exploration manager Phil Tornatora said Mallina had provided one of the best intersections across the project area that the company had seen.
“A wide zone of intense alteration and sulphide development with 56m of mineralisation demonstrates the large scale of this system,” he said.
Follow up drilling at Toweranna also confirmed more gold mineralisation along the western zone and southern zone, De Grey told investors.
The high-grade gold in the individual gold-bearing veins and increased overall resource ounces “are expected to boost the shallow open pit mining potential of the deposit, plus improve overall open pit mine life and economics of the Pilbara gold project”, the company said.
Going Underground
De Grey also conducted drilling focused on the underground potential at its Withnell deposit.
A recently completed 15-hole drilling program confirmed the discovery of two high-grade gold lodes below the existing Withnell open pit.
The first lode delivered grades of up to 70.4 grams per tonne (g/t), while the second returned grades of up to 14.52g/t.
Anything above 5 g/t is considered high grade.
De Grey says the economic impact of a high-grade underground mine being added to the proposed open pit mining strategy is substantial in terms of potential for increased revenues, mine life and annual production rates.
Conglomerate Gold focus
Conglomerate gold became a hot topic after Artemis Resources (ASX:ARV) and its Canadian partner Novo Resources uncovered what was described as “watermelon seed nuggets” south of Karratha at their Purdy’s Reward project mid-last year.
De Grey followed up Novo’s Purdy’s Reward discovery with its own nugget discoveries at Loudens Patch, Jarret Well and Steel Well.
Conglomerate gold refers to nuggets hosted in rock containing rounded grey quartz pebbles and other minerals.
At Loudens, the Company has commenced a program of bulk sampling and intend to update investors during November.
The bulk sampling program is expected to continue through the December quarter.
De Grey are close to completing a drilling program at the Farno JV with Novo Resources, targeting both the White Quartz Hill and Clarke prospects. Assays results are expected soon.
De Grey Mining is a Stockhead advertiser.
