De Grey sets itself up for a bigger gold resource in the Pilbara; shares climb
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De Grey Mining thinks it won’t have too much trouble expanding its gold resource in the Pilbara after finding more mineralisation at shallow depths.
The goal of recent drilling, according to technical director Andy Beckwith, was largely to improve confidence in the resource so it could be converted to a reserve.
Mineral reserves are resources known to be economically feasible for extraction.
However, at the same time, De Grey (ASX:DEG) has extended the mineralisation at some of the prospects within its Pilbara gold project – which already hosts a 1.2-million-ounce-resource.
Shares climbed 11 per cent on the news to an intra-day high of 20c on Friday morning.
Recent drilling at the Mallina prospect has returned several shallow gold hits – most of which are at less than 60m deep.
Results included broad intercepts of 46m at 3.26 grams per tonne (g/t) of gold from 14m, including a high-grade section of 26m at 5.35g/t.
Anything above 5g/t is generally considered high grade.
The mineralisation also remains open along strike and at depth, De Grey noted.
De Grey is now working on updating the resource with the aim of releasing a new estimate once it has all the drilling results, which are expected by the end of July.
While Mr Beckwith could not put a number on how much he thinks the resource will increase by this time around, he does see the Pilbara gold project eventually being a multi-million-ounce deposit.
“Over the next couple of years we intend to put more drilling into the whole project and we’d be aiming to get to 2 million ounces, if not more,” he told Stockhead.
“I think we’ve put out previously that we see that this is a 2 to 3-million-ounce project easily, it just needs the drilling.”
So far only about 10 per cent of the 200km stretch of shear zones has been drilled down to a depth of 100 to 150m.
Mr Beckwith says there are about 40 anomalies that have never been drilled.
About 60 per cent of the current resource is in the higher confidence “indicated and measured” categories.
Mineral resources are categorised in order of increasing geological confidence as inferred, indicated or measured. By moving resources into the indicated category, it means a company has sufficient information on geology and grade continuity to support mine planning.