De Grey’s focus on infill drilling over the past 12 months has paid off with a staggering 80% growth in higher confidence Measured and Indicated resources at its Mallina gold project.

Along with a 25% interest in overall resources at the Hemi deposit to 8.5Moz of contained gold, resources at the Mallina project now stand at 251Mt grading 1.3 grams per tonne (g/t) gold for 10.6Moz of contained gold with Measured and Indicated Resources making up a solid 65% of this figure – or 6.9Moz of contained gold (5.8Moz at Hemi).

This was achieved at an Inferred discovery cost of $10/oz and an additional conversion cost to Indicated resource of $7/oz, which is below the industry average.

It also provides De Grey Mining (ASX:DEG) with a strong platform for completing its pre-feasibility study during the September 2022 quarter and defining future Ore Reserves.

There is also plenty of room for growth given that all deposits remain open at depth and along strike with the company pivoting its focus to resource extension and exploration for discoveries within the Greater Hemi corridor and regional target areas. An impressive 10 rigs are currently operating at site.

Huge potential for the pit

Technical director Andy Beckwith said Hemi is now Australia’s largest undeveloped gold deposit with drilling over the last 12 months extending the open pit potential – particularly at Diucon and Eagle, converted Inferred to Indicated Resources to about 370m depth, and enabled the PFS economic study to advance thanks to geotechnical and metallurgical drilling.

“The upgrade to 5.8Moz of Indicated Resources from the total of 8.5Moz since Hemi’s discovery in early 2020 now provides an increased baseline for the ongoing PFS,” he adds.

“Further resource upside is expected as drilling continues to show extensions at depth that have not been included in the resource update due to the April cut-off date.

“The exploration focus over the next 12 months and beyond will now pivot back to resource growth through along strike and down dip extensions at Hemi and the high priority untested targets within the Greater Hemi region and large regional tenement package.”

Increased resources to feed greater production

Managing director Glenn Jardine adds that PFS will seek to increase overall gold production, mine life and annual gold production rate relative to the October 2021 Scoping Study of 4.3Moz over 10 years.

“Project studies, including metallurgy, geotechnical, mining, environmental, infrastructure and hydrogeology have continued in parallel with the resource extension and definition drilling,” Jardine notes.

“These studies will be incorporated into the PFS. The increase in Indicated resources and completion of the PFS are expected to provide a strong basis for project development and financing.”

An even bigger resource

The updated Mallina resource is based on 323 diamond drill holes totalling 83,933m and 949 reverse circulation holes totalling 232,012m that were completed between February 2020 and 5 April 2022.

All of Hemi’s Indicated resources occur within the open pit classification to a depth of 370m from surface.

It underscores the potential of the Hemi discovery, which was made in November 2019 and is credited with opening up the search for intrusion-host gold in the Pilbara – as evidenced by other companies looking for Hemi-style mineralisation.

The October 2021 Scoping Study had flagged the broader Mallina project’s potential to produce 473,000oz of gold a year for the first five years of operation and 427,000ozpa over its initial 10 year mine life for almost 4.3Moz.

This will place it amongst the top five largest gold mines in Australia.

Capex for the mine and the ~10Mtpa processing plant were estimated at $893m with all in sustaining costs of $1,111/oz over its first five years to approximately $1,224/oz over the life of the project.

This makes for some substantial margins given current gold prices of about US$1,852.42/oz (A$2,579.88).

 

 

 

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.

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