Another round of outstanding drilling results fires up De Grey and its leading shareholder DGO Gold

6th March 2020| Barry FitzGerald


The Pilbara Craton’s ranking as a gold province has long suffered in comparisons with the Yilgarn down south.

Its 8 million-ounce gold endowment compared with the Yilgarn’s 200Moz says as much, even if the Pilbara has all the same ingredients that has made the Yilgarn one of the world’s great gold regions.

But things are stirring in the Pilbara, ignoring for the time being the over-promotion in 2017/18 of its Witwatersrand conglomerate gold potential.

Leading the way is De Grey (ASX:DEG), which has been the talk of Perth exploration circles since its Hemi gold discovery late last year.

Hemi is about 80km south of Port Hedland and is part of De Grey’s broader Mallina gold project, where it has already established a 1.7Moz gold resource (due for an upgrade soon) and where it has previously set a 3moz target to underpin a mining project.

Hemi looks as if it could get De Grey there in a hurry. Latest drill results reported on Thursday included 93m at 3.3g/t (including 21m at 4.7g/t) from 39m, which correlated nicely with shallower gold results immediately above in earlier reconnaissance drilling.

The hit was from the Brolga Zone (previously section B) while over at the Aquila Zone (previously section A) there was an 11m hit at 3g/t from 193m which finished in higher-grade mineralisation (4m at 6.5g/t).

Exploration manager Phil Tornatora summed it all up with the comment that the early drilling at Hemi is producing “some of the best discovery intersections that I have seen”.

“Drilling to date shows exceptionally wide, continuous and good-grade mineralisation,” Tornatora said. “We have three rigs advancing this exciting new discovery.”

He added that Hemi might be an intrusion-related style of gold system rather than WA’s more typical shear-hosted style.

All that was good enough to send De Grey shares 4.5c, or 24%, higher to 23c for a market cap of $238m.

Basking in the glory of De Grey’s Hemi success is Melbourne-based DGO Gold (ASX-DGO), mentioned here in November last year when it was a 96c stock. The thinly traded stock – it is pretty much by appointment only – is now $2.

DGO holds a 10.7% stake plus options in De Grey which was one of two investments it made in the ASX gold junior space (the other was a 12.1% stake NTM Gold, ASX:NTM) after screening more than 90 projects held by juniors against three criteria.

They were projects where the finding cost was assessed to be below the brownfield average of $25/oz, they had a resource potential of more than 3Moz and they come with upside.

The idea behind all that was to capture the value lift that comes for a cost of less than $25 an ounce, becomes valued by the market at $50 an ounce at the resource level and $500 an ounce or more at the development stage.

It’s all quite neat and is the work of DGO lead guys, veteran geologist Ed Eshuys of Plutonic, Bronzewing and Jundee gold deposits discovery fame and Bruce Parncutt of analyst/investment banker fame with McIntosh Securities and Merrill Lynch, and a geologist to boot.

As DGO’s $85m market suggests, it is much more than its De Grey and NTM investments. Apart from its own adjoining tenements to De Grey’s Mallina, it has a bunch of other interesting projects – and the IP that resides with Eshuys and Parncutt.