DE GREY Mining has the funds to continue highly successful gold exploration in the Pilbara after its cash position doubled to over A$9 million following receival of $4.75 million from shareholder DGO Gold’s exercising of options.

18 March 2020 | Michael Quinn

Significantly, $3.75 million worth of the options were exercised at a price 50% above current levels, with the 30c options also not due to expire till December next year.

DGO, run by experienced Australian gold sector executive Ed Eshuys, now holds more than 16% of De Grey – assuming the acquisition of De Grey shares from other shareholders announced late last week is approved at an upcoming DGO general meeting.

DGO shares were trading at about $1.80 when the deal to acquire the 41 million shares in De Grey from the shareholders was revealed, with the consideration involving 6.5 million DGO shares and 3.3 million DGO options (exercisable at $2.50 by mid-2022).

For its part, the arrival of the option funds to De Grey comes after it started the current quarter with about $8 million and had a budget to spend about $3 million the three months ending March.

Analysts at capital markets firm Argonaut estimate nearly 2 million ounces are already on the cards at the Hemi discovery near Port Hedland – with another 1.7Moz estimated by De Grey at its surrounding Mallina project.

The emergence of the discovery began as recently as December when promising aircore drill results were recorded.

De Grey has an RC rig, an aircore rig and two diamond core rigs currently in action at the discovery.

Shares in De Grey were up 7.5% to 21c in midday trade, capitalising the company $220 million.