ED Eshuys has outlined what his company DGO Gold, primarily an resources investor, looks for in a company
9 December 2019 | Kristie Batten
The company is focused on gold in Western Australia.
It screened 100 companies across three main criteria: low cost of discovery, potential for more than 5 million ounces of gold, and optionality to the upside.
DGO shortlisted 15 companies and so far has invested in two: De Grey Mining and NTM Gold.
Eshuys hopes the pair will be the next Bellevue Gold, Gold Road Resources, Dacian Gold or Capricorn Metals, which created a combined $1.2 billion of value for discovery costs of less than $20 an ounce.
“We’re looking for discoveries with big margins,” he told the Resources Rising Stars Summer Series last week.
Eshuys said De Grey had discovered 1.7Moz of gold at an average cost of $15/oz in the Mallina gold province in the Pilbara.
“The 25Moz Yandal belt is an analogue for the potential of Mallina,” Eshuys said.
“The potential for finding a big one is why DGO has invested in De Grey.”
DGO has 10.7% of De Grey and two board seats, while DGO has 35km of prospective shear in the region to the southwest of De Grey’s 200km.
It contributed another $500,000 last week to maintain its position.
DGO has also invested in NTM, which has 500,000oz in resources near Leonora, found at a discovery cost of $12/oz.
The company exercised its anti-dilution right last month to maintain its 10.9% stake.
The exercise of 120 million could see DGO reach 19.9% of NTM.
Eshuys said less than 20% of the 40km-long Mertondale shear zone had been explored.
He said the scale potential was evident in NTM’s exploration target of 840,000oz to 1.7Moz at 1.8-2.5 grams per tonne gold.
DGO is willing to be patient with its investments.
“Both have 2-3 years in front of them to build resources,” Eshuys said.
DGO is also exploring for gold and copper-gold in WA and South Australia in its own right.
The company had $4.1 million in cash at the end of September.
DGO last traded at 87.5c, valuing the company at $30.8 million.