De Grey Mining Limited (ASX:DEG) is Australia’s fastest-growing gold company, with the recent Hemi discovery in Western Australia and strong newsflow reflected by their market cap which is now around A$1 billion.
The Hemi discovery sits within the Mallina Gold Project and is a new style of mineralisation in the Pilbara region - intrusion-hosted, large-scale and close to the surface with grade continuity. It is also is largely underexplored with district-scale upside.
While it has the same geological setting as the Yilgarn Craton, which has a very mature exploration history of more than 120 years, the Pilbara Craton has only been actively explored for the last 20 years.
The company is confident the region could host new shallow discoveries, unlike in the Yilgarn where new discoveries are only expected at depth.
This represents a significant opportunity for De Grey with the immediate growth strategy linked to increasing gold resource, extending deposits, and making more Hemi-like discoveries close to established mining infrastructure in the region.
Hemi gold system
The Hemi system consists of three main deposit areas - Brolga, Aquila and Crow.
Large potential extensions to Aquila and Brolga have been identified from drilling with four rigs currently drilling extensional targets.
At Aquila, results include 33 metres at 1.5 g/t with the potential to extend the strike by 50% to more than 1,200 metres.
At Brolga, new extensions were recently reported with results from aircore drilling of 16 metres at 2.4 g/t with the southern extension currently around 1,000 metres long by about 200 metres wide and open.
Further aircore results are pending while more RC drilling is planned at both deposits.
At Crow deposit, the company is targeting an area up to 400 metres wide and 1,000 metres of strike with RC drilling planned and early-stage step-out drilling underway.
The company believes that further drilling will determine the scale of any future open pit mine which may have significant operating cost benefits.
Further drilling will determine the scale of any future open pit mine which may have significant operating cost benefits.
Initial metallurgical test-work on Brolga mineralisation achieved recoveries of:
- 96.3% from fresh rock using flotation, oxidation and carbon in leach (CIL); and
- 93% in oxidised using CIL.
Results from a broader metallurgical test-work program are expected later in the current quarter.
Finding the next Hemi
De Grey has identified four ‘lookalike’ mineralised intrusions within 10 kilometres of Hemi called Scooby, Antwerp, Shaggy and Alectroenas.
Two rigs are testing targets at Scooby and Antwerp and a detailed aeromagnetic survey has been completed over the prospective 30-kilometre zone.
Modelling, interpretation and a targeting study are well advanced and the company is now in the position to accelerate drill testing.
A total of eight known intrusions have been identified throughout the overall project area and seven are mineralised. Four of these are mineralised in the Hemi corridor.
More than 20 new magnetic features have been identified as possible intrusions and geophysics, geochemistry and aircore drilling will be undertaken to locate new intrusions.
This will then be followed up with RC and diamond drilling to define scale.
The Mallina project is 45/60 minutes’ drive from the ports and regional centres of Port Hedland/Karratha.
Tier-1 production potential
The company aims to demonstrate the tier-1 gold production potential at Hemi and the Mallina project as a whole.
Project-wide, drilling will continue on other Mallina project resources to deliver incremental expansions of the existing 2.2 million ounces resource, which excludes Hemi, as well as incorporating existing resources into potential Hemi production scenarios.
The company’s growth strategy is to:
- Deliver a tier-1 scale indicated resource at Hemi;
- Continue to grow resources at a discovery cost below industry average of A$20/ounce;
- Build organisational capability and progress development studies, and;
- Ultimate objective to become a large gold producer from the Mallina project.