De Grey Mining's
(ASX:DEG) Hemi gold project in Western Australia's Pilbara region appears poised for a significant upgrade following the discovery of extended gold mineralisation in ongoing drilling at the Eagle and Diucon deposits. The company's recent announcement on the Australian Stock Exchange (ASX) highlights the potential for substantial resource increases and enhanced production metrics for the project.
Hemi is situated in the gold-rich Mallina mini province, with over 10 million ounces of gold outlined so far, predominantly at Hemi. However, recent drilling results, in addition to those from August, strongly suggest that the Eagle and Diucon deposits are due for an upgrade.
The September 2023 Hemi Definitive Feasibility Study estimated the project's cost at approximately $1.3 billion, with annual gold production projected at 530,000 ounces over ten years (553,000 in the first five years), making it one of Australia's largest gold mines, scheduled to begin production in late 2026.
De Grey and its 19.9% shareholder, Gold Road Resources, are currently in talks with potential funders to secure financing for the project, with a final investment decision expected in about a year.
As of now, Hemi represents a 9.5 million ounce prospect, with the mine targeting a 6.5 million ounce reserve grading at 1.5 grams per tonne. The recent drilling results indicate the possibility of an early 2024 boost to project plans, including a potential underground extension.
The drilling at the Eagle deposit revealed significant extensions, with notable intercepts, including one at 67 meters with a grade of 2.1 grams per tonne of gold, and another at 38 meters with a grade of 3.6 grams per tonne. These intercepts are at considerable depths, between 412 and over 700 meters below the surface, suggesting enhanced underground mining potential.
Drilling at the Diucon prospect produced smaller intersections, with the best result being 16.4 meters at 1.9 grams of gold per tonne, at depths ranging from 372 to 452 meters below the surface. Additionally, several small 'hanging wall lodes' were discovered, including one with 6.5 meters at 5.1 grams of gold per tonne, at shallower depths ranging from 15 to 298 meters below the surface.
The results indicate the potential for an increased scale of the planned Diucon-Eagle open pits at the Hemi Gold Project and enhance the potential for future underground mining.
De Grey plans to conduct follow-up drilling in the Eagle, Diucon, and Antwerp Link areas, with ongoing discovery and resource extension drilling both within the Hemi area and at regional targets and the Egina Joint Venture area nearby.
De Grey General Manager Exploration, Phil Tornatora, commented on the findings, stating that "The extensions below the Eagle DFS pit and shallower Diucon extensions have the potential to result in a substantial expansion of the current Diucon-Eagle open pit shell outline." He also emphasised the importance of deeper drilling to support conceptual studies for potential future underground mining.
