De Grey is poised to apply its proven exploration prowess across the border of its Mallina Gold Project at Novo Resources’ Egina project, which is highly prospective for large scale, intrusion-related gold deposits similar to the Hemi discovery.

The heads of agreement with Canada’s Novo Resources effectively expands De Grey’s exploration exposure in the Mallina Basin by 70% to more than 2,500km2.

That is plenty of room for De Grey Mining (ASX:DEG) to repeat the magic that led to the discovery of the play opening Hemi discovery that it first made in 2019 and now hosts a frankly jaw dropping resource of 9.5Moz, the majority (6.9Moz) of which is in the higher confidence Indicated category.

Evidence that there is significant potential for new discoveries across the Mallina Basin comes from the fact that although De Grey has been almost fully focused on drilling out the Hemi discovery, the limited regional exploration it has undertaken has returned encouraging results at targets like Charity Well and Withnell South.

Novo has also had some interesting results about 30km south of Hemi at its Becher target and surrounding prospects.

Under the heads of agreement with Novo, De Grey has the right to earn a 50% joint venture interest in Egina by spending $25m within four years including a minimum expenditure of $7m within 18 months.

The company will also have full program management and sole rights to explore the tenements during the earn-in phase.

On top of the earn-in, De Grey will also become a significant (11.6%) shareholder of TSX-listed Novo through a $10m corporate investment ahead of a planned ASX listing by Novo. De Grey will also have the right to appoint one member to the Novo Board.

“This agreement represents a considered and strategic transaction for De Grey to build on our dominant position in the Mallina Basin Gold Province,” managing director Glenn Jardine said.

“We believe the Egina Project represents extensions to the prospective geology and fertile structures along strike from our existing discoveries. We are excited to have reached this agreement with Novo and look forward to advancing exploration into these new areas.”

Mallina development focus

Jardine added that the company remained focused on delivering the Definitive Feasibility Study for the broader Mallina gold project, which encompasses Hemi, in the September quarter.

“The DFS is expected to strongly support the development of a major gold processing facility at Hemi, providing a regionally strategic asset in the West Pilbara,” he explained.

“By expanding our exploration footprint in the region by 70%, we increase the potential to discover new gold resources capable of being processed at Hemi in the future. De Grey’s discovery cost at Hemi is currently less than $10/oz for Inferred resources.”

The DFS will place De Grey on track towards becoming a major Australian gold miner given that last year’s Pre-Feasibility Study had estimated that Mallina could deliver production of 540,000oz per annum for the first 10 years, generating a post-tax net present value of $2.7bn.

De Grey
Location of the Mallina project and Novo’s Egina project earn-in tenements. Pic: Supplied (DEG).

Egina project

Egina contains similar geology and structures to those found within the Mallina gold project.

Adding this tenure to the western end of the project also opens up the exploration footprint along the strike extensions of the structural corridor that hosts the Mallina gold deposit and opportunities to discover new intrusions similar to Toweranna and Charity Well.

The company added that an immediate exploration target includes the Becher prospect – located immediately south of its Withnell deposit – and surrounding targets, where Novo has intersected encouraging aircore drilling results.

Most of the remaining areas throughout the Egina Project area have received very little modern systematic exploration providing scope for new discoveries.

De Grey noted that the farm-in to Egina progresses its strategy to discover and grow a large resource base centred around the future Hemi processing plant.




This article was developed in collaboration with De Grey Mining, a Stockhead advertiser at the time of publishing.


This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.