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Special report: De Grey Mining already has over 1.2 million ounces of gold in the Pilbara, but the explorer is fast proving it has its foot on a much bigger system with extensive high-grade gold.

The first nine holes of a recently completed 15-hole drilling program has 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 over about 5g/t is considered high grade.

Investors like the news, pushing shares up almost 7 per cent to an intra-day high of 16c.

De Grey (ASX:DEG) has proven it is sitting on a large gold system with multiple high-grade stacked lodes that remain open at depth and along strike.

And it is still waiting on the results of the remaining six drill holes.

“Our focus going forward will be to continue step-out drilling to define the limits of the high-grade lodes both down dip and along strike, as the potential to materially increase resources and improve economics to include high-grade underground mining is compelling,” technical director Andy Beckwith said.

This has led De Grey to outline an underground exploration target of 2.6 to 3.5 million tonnes at 4 to 6.5g/t for 330,000 to 720,000 ounces immediately below the existing 377,300-ounce resource at Withnell.

The Pilbara gold project lies 60km south of Port Hedland, Western Australia and it hosts over 200km of mineralised shear zones within the over 1500 sq km landholding.

So far just 10 per cent of these shear zones have received detailed shallow drilling down to between 100 and 150m.

That small amount of drilling has already delivered a resource of over 1.2 million ounces, and a resource update is due out in early October.

The underground potential at the two largest gold deposits, Withnell and Wingina, is considered high in terms of additional tonnes, grade and resource ounces.

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.

An open pit pre-feasibility study and the underground scoping study are currently underway and these new high-grade results are likely to lead to an expanded economic study of combined open pit and underground mining strategy.

The Pilbara project has a large pipeline of attractive targets and De Grey is ramping up exploration in its drive to expand the current resource.

The pipeline of targets includes over 40 identified and as yet untested soil anomalies along the highly prospective regional scale shear zones and the newly discovered conglomerate-gold style of mineralisation.

Conglomerate gold refers to nuggets hosted in rock containing rounded grey quartz pebbles and other minerals. The world’s most productive gold region, South Africa’s Witwatersrand Basin, is famous for its similar geological formation.

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. Bulk sampling on these targets is set to begin shortly.

 

De Grey Mining is a Stockhead advertiser.

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