De Grey Mining has confirmed it has another potentially large gold prospect in its still-growing Mallina complex of deposits in the Pilbara region of WA.
Mallina includes the huge Hemi prospect which De Grey is looking at bringing into production in the next couple of years.
The company said this week that it had 14 proposals from leading banks and other groups to finance the first $A800 million cost of a proposed open cut mine in the area at Hemi (which has a resource of 8.5 million ounces of gold, including a reserve of 5.1 million ounces at 1.5 grams of gold to the tonne).
At the moment the Hemi prospect is the largest known gold deposit in the Mallina region – there’s an estimated resource of 10.6 million ounces of gold along the 150 kilometres that covers more than dozen areas of interest southwest of Port Hedland.
There’s an already known prospect called Withnell and the new areas just south of that. Previous work had seen De Grey estimate the known Withnell area had 1.6 million of the 10.6 million ounces of gold at the Mallina area.
De Grey says it has found “multiple new lodes defined over 800 metres of strike and 200 metres vertical depth…[it is] open to the east and at depth.”
“To date, drilling has defined a structural domain comprising up to six lodes spanning 800m of strike with mineralisation open at depth and along strike.”
The company said the “drilling results demonstrates the potential that remains to meaningfully increase the resource base and future production from our existing, structurally hosted, regional deposits which include Mallina, Mt Berghaus and Wingina.”
De Grey told the ASX this week that the latest drilling operations at Withnell South had “yielded strong results”.
“The recent exploration activities and drill results achieved by the regional exploration team have identified a new structurally hosted mineralised zone at Withnell South and demonstrates the potential for De Grey to find substantial additions to mineral resources at the Withnell gold deposit,” De Grey manager of exploration Phil Tornatora said.
“The new results at Withnell South are quite significant in that they open up the southern footwall structural position along the 7km long east-west Withnell trend.”
Previous exploration has defined a 7km long mineralised trend centred on the Withnell gold deposit, extending from Dromedary in the west and past the exploration camp in the east. The Withnell South discovery highlights the exploration potential of the Withnell trend, all of which is located within existing granted mining leases.
The Withnell South discovery is located adjacent to the Withnell open pit resources.
Future exploration in the area will aim to make new discoveries and expand potential open pit resources in the Withnell area, which already has an existing resource base of 723koz Au and located on a granted mining lease.
These results highlight the potential and grade of the known Resources at Withnell which, combined with the recent results at Withnell South, illustrate the exploration potential underneath and adjacent to the current area of mining studies.
Withnell already has a resource estimated at more than 25 million tonnes of ore, at 2 grams to the tonne for more than 1.6 million ounces of gold.
At the Withnell main lode, metallurgical drilling of the existing lode shows the potential to extend mineralisation below the current resource model. In other words, the dip-down continuity of the main mineralised structure was confirmed after the structure was drill tested, he said.
Much of the know and discovered prospects are shallow deposits but De Grey has started talking about the prospect of deposits at depth under the known areas – certainly the new strikes at Withnell South suggest that possibility.
Meanwhile, the response to the call for expressions of interest to debt fund the Hemi mining project shows there’s still solid interest for new gold projects among banks and other financiers.
Being close to services and utilities and the iron ore port facilities at Port Hedland (60 kilometres away) makes the mine very attractive as it should have a low start-up cost base to work from.
De Grey said the “majority of institutions have indicated the Project supports traditional debt funding capacity of approximately $800 million based on the Company’s September 2022 Prefeasibility Study (PFS).
“The non-binding proposals contain commercial terms consistent with the Tier 1 quality and jurisdiction of the Project and its a strong response from lenders as De Grey progresses the Definitive Feasibility Study (DFS) targeted for completion in mid-2023.
