DGO Gold has taken a stake in fellow Pilbara conglomerate gold player De Grey Mining.
DGO will inject $5 million into De Grey for an initial 7 per cent interest.
The investment is being done at 20c a share, which is a 17.6 per cent premium to De Grey’s closing share price on Monday.
“We are extremely pleased with this endorsement from DGO, one of our Pilbara neighbours,” chairman Simon Lil told investors.
“Recent excitement in the region has been about conglomerate gold. However, DGO have been attracted to our significant and under-explored mineralised shear zones.”
Is it the start of consolidation in the Pilbara conglomerate gold space?
ASX-listed players flocked to the area last year after Artemis Resources (ASX:ARV) and Canadian partner Novo Resources revealed they had found gold nuggets at the Purdy’s Reward project south of Karratha in Western Australia.
Prospector Johnathon Campbell told Stockhead this week he first discovered the conglomerate-hosted gold potential of the Pilbara — finding “thousands and thousands” of nuggets.
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‘Virtually unexplored’
De Grey has more than 200km of shear zones that are virtually unexplored.
“Now if that was in the Kalgoorlie region it’s like a shear zone that stretches from Kalgoorlie to Leonora,” Mr Lil told Stockhead. “This has hardly been touched.”
Mr Lil says that although DGO is interested in De Grey’s shear zone-hosted gold, the conglomerate gold is still very much a draw card.
DGO executive chairman Eduard Eshuys, who is contributing $400,000 of his own cash to the De Grey investment, was “very much interested in the potential of the shear zone hosted gold”, Mr Lil said.
“That doesn’t mean he’s not interested in what’s happening with the conglomerates and the conglomerates … it’s the X Factor.”
De Grey’s landholding has the potential to host gold resources sufficient to support a medium-to-large scale operation, Mr Eshuys believes.
“The conglomerate gold play adds high impact exploration upside and offers potential synergies with DGO’s extensive Pilbara ‘Witwatersrand’ tenement holdings including DGO’s prospective Mt Roe Basalt conglomerate position approximately 10km South of De Grey’s key conglomerate prospects,” he added.
De Grey plans to use the extra cash to expand its current exploration program in the Pilbara.
The company has also done a $1 million equity deal with drilling partner Top Drill.
Both DGO and Top Drill have agreed to a 12-month escrow of their shares.
DGO joins Canadian mid-tier gold miner Kirkland Lake Gold as a substantial shareholder in De Grey.