De Grey to Expand Pilbara Gold Project

De Grey Mining (ASX:DEG,OTC Pink:DGMLF) has opted to expand the development study for its Pilbara gold project after a boost in resources from a previous 2017 scoping study.

The decision from the company was underpinned by recent exploration results and the growth of the project’s resource from 1 million ounces to 1.4 million ounces. De Grey also attributes the choice to recent material increases in gold recoveries to the 90 to 94 percent range.

As such, the project’s processing plant will now be upgraded for throughput of 2 million tonnes per year (Mtpa) from the previous 1 Mtpa planned in the scoping study.

According to De Grey, its expansion decision was also supported by an improved gold outlook, a simplified processing plant flowsheet and preliminary economic evaluations that indicate the increased scale will see a production profile of over 100,000 ounces per year (ozpa) and provide “significantly higher returns.”

“Our vision is very simple; we have our foot on a significant new gold province and we plan to grow resources towards 3.0 [million ounces] and ultimately develop a new standalone +100,000-ounce gold mining operation,” De Grey Chairman Simon Lill said in a statement.

“To achieve this vision, exploration guidance is to increase resources to 2.0 [million ounces] in 2019.”

He continued, “[r]ecent open pit evaluations, together with improved gold recoveries, show expanding the mining and processing rate to 2.0Mtpa is likely to deliver far superior returns and increase production beyond our goal of 100,000ozpa compared to the original 65,000ozpa defined in the 2017 1Mtpa scoping study.”

The company has two drilling rigs currently in operation to further advance resource extension drilling, with a diamond rig targeting underground high-grade lodes and a reverse-circulation rig working on the shallower targets beneath Pilbara’s existing Withnell pits.

De Grey believes there is potential for higher-grade underground lodes below at least four deposits at the Pilbara project.

The rigs will then work to test and extend resources at the Toweranna deposit, with further drilling planned at the Mallina and Mount Berghaus deposits for shallow open-pit resources. The company hopes to define a minimum seven-year mine life at the asset.

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Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.