De Grey’s conglomerate gold could provide a ‘nice grade sweetener’ for Pilbara project
Special report: De Grey Mining already has a hefty 1.4-million-ounce conventional gold resource in the Pilbara, but one external group has tagged the company’s conglomerate gold project a “potential sweetener in both grade and ounces”.
The junior explorer (ASX:DEG) has found visible coarse gold and nuggets along a 6m strike of its Loudens Patch prospect, located at the western end of the larger Pilbara gold project.
The discovery was made during initial bulk sampling at Loudens Patch, where over 200 gold nuggets have been found previously.
Financing and marketing specialist Red Cloud Klondike Strike said the grades are in the high range of comparable results reported by one of the pioneers of the conglomerate gold rush, Canada’s Novo Resources.
The group estimates that the samples returned grades of 0.82 grams per tonne (g/t), 3.92g/t and 7.92g/t — with an average of 4.22g/t.
This compares favourably to the weighted average grade of 2.4g/t for Novo’s conglomerate sampling, both small and large bulk samples, Red Cloud said.
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.
This style of gold mineralisation became all the rage after Novo and its Australian partner Artemis Resources (ASX:ARV) uncovered what was described as “watermelon seed nuggets” south of Karratha in July last year.
So far, six 250kg bulk samples have been collected from Loudens West and processed.
While De Grey is assessing the conglomerate gold potential at the Loudens, Jarret Well and Steel Well prospects, it is also continuing exploration at its conventional gold projects.
The most recent drilling delivered high grades of between 5.13g/t and 51.2g/t from two lodes below the proposed Withnell open pit at the Pilbara gold project.
Anything over 5g/t is considered high grade.
The company has also set itself an exploration goal of an additional 2.6 to 3.5 million tonnes at 4 to 6.5g/t for 330,000 to 720,000 ounces of gold.
The underground potential at the two largest gold deposits, Withnell and Wingina, is considered high in terms of additional tonnes, grade and resource ounces.
“It appears that the conglomerate assets may provide a nice grade sweetener to the hard rock assets, where the average resource grade currently stands at 1.6g/t [gold],” Red Cloud said.
Share price upside
Red Cloud estimates De Grey’s conventional gold assets are worth between $110.9m and $166.4m based on a per share value of between 30c and 45c.
The high end of the range is more than triple the company’s current share price of 13.5c.
Red Cloud sees the potential for De Grey to fast track the assessment of its conglomerate gold potential.
“Conglomerate bulk samples are able to be quickly processed at the company’s recently commissioned crushing and gravity sampling circuit, which may be valuable in providing quick turnover between discovery and assessment of the target host,” Red Cloud noted.
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.
De Grey is working towards the delivery of a pre-feasibility study in early 2019.
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