De Grey Mining (ASX:DEG)
Only those that have been living under a rock for the past few months (we understand if it’s to avoid coronavirus) would not know that De Grey Mining is onto something big at its Mallina gold project in the Pilbara.
The first signs of a discovery at the Hemi prospect at Mallina emerged in December last year, but it wasn’t until early February, when thick, high-grade gold intercepts were returned from two zones, now known as Brolga and Aquila, 640m apart, that its potential size truly became apparent.
In early March, after another round of mouthwatering drilling results had dropped (including 93m at 3.3 grams per tonne (g/t) gold from 39m from the Brolga Zone), Argonaut analyst Matthew Keane estimated that the combined Brolga and Aquila zones could already contain 1.7 million ounces of gold at a grade of 2g/t plus.
Giving some sense of how fast the discovery is evolving, Keane upgraded his estimate to 2.8 million ounces in a note to clients yesterday.
Add those 2.8 million ounces to the 1.7 million ounces at 1.8g/t in resources that De Grey has defined in the greater Mallina project area and there is easily the critical mass to support a significant gold operation.
The company has indicated it could be in a position to announce a maiden resource for Hemi within six months and given that the mineralisation remains open in most directions, there is a good chance it will surpass Keane’s latest estimate.
There is also thought to be strong potential for more Hemi-style discoveries in the greater project area.
De Grey recently appointed mining engineer and former LionOre chief operating officer Glenn Jardine as its managing director, starting in early May.
This could be interpreted as gearing up for a rapid move into development, but it is unlikely the company will take any serious steps down that path until it has a better handle on the size of Hemi.
The question that begs to be asked then is will De Grey still be the owner of the project when first gold is poured?
Hemi’s rapid emergence as a shallow, high-grade gold discovery and the probability that Mallina’s global resource will exceed 4 million ounces is sure to have put De Grey on the radar of the big Australian gold miners, not to mention some of the international heavy hitters.
Providing some level of protection against any opportunistic, low-ball takeover offers that might be lobbed, fellow listed explorer DGO Gold (ASX:DGO) holds a significant blocking stake of more than 16 per cent.