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De Grey passes PFS test

e Grey Mining Ltd’s seamless devel- dine said the capital cost increases were alised extensions to Diucon in a diamond
Dopment of its Mallina gold project in “not unexpected, given economic condi- hole which intersected 359.4m @ 1.2 g/t
the Pilbara has passed its latest land- tions as they relate to inflationary pres- gold, including 19.3m @ 7.4 g/t gold and
mark with the release of a positive PFS sures”. 20m @ 22.5 g/t gold, 200m beneath the
last month. “The PFS capital estimate has taken May 2022 resource.”
Market darling De Grey hasn’t missed a place at a time in the economic cycle Updated pit shell optimisations and in-
beat at Mallina since announcing the Hemi where cost inputs are high and potentially creased indicated resources and reserves
discovery in January 2020. The company at peak levels,” Jardine said. “The payback within pit designs are also expected to de-
has since swiftly moved through the mile- period of the project remains below two liver additional mineable ounces. The PFS
stones, announcing maiden resources years. The project has one of the lowest did not consider underground mining.
and upgrades followed by a scoping study capital cost intensities of any large scale, The other key breakthrough of the
last year. undeveloped gold project on a global ba- PFS was to define the Hemi processing
The PFS adds strength to the notion sis and operating costs remain within the flowsheet with the 10 mtpa rate and pres-
that Mallina is the most exciting gold de- lowest cost quartile of Australian gold pro- sure oxidation circuit identified as the ideal
velopment in Australia for nearly two dec- ducer operating costs.” route.
ades. Annual production was estimated at Speaking on the technical aspects of “Extensive metallurgical testwork con-
550,000 ozpa for the first five years and the PFS, Jardine said De Grey had met its ducted during the PFS has continued to
540,000 ozpa for the first 10 years, based targets of material improvements in annual de-risk the project and demonstrated con-
on a throughput of 10 mtpa. production rates, grade, mine life, confi- sistently high gold recoveries, averaging
Production will come from a maiden ore dence levels and project economics from 93.6%,” Jardine said. “These recoveries
reserve of 5.1 moz @ 1.5 g/t gold with total the scoping study. have been achieved across the deposits
production anticipated to be 6.4 moz over The maiden reserve was based on the at Hemi using the robust flowsheet devel-
13.6 years. updated resource for Hemi, published in oped during the PFS. The PFS process-
The financials are just as compelling. May, which takes total ounces to 8.5 moz ing study settled on pressure oxidation as
The increase in production from 427,000 @ 1.2 g/t gold. the preferred oxidation process. Pressure
ozpa in the scoping study has pushed pre- The company remains confident of ex- oxidation and the comminution circuit are
tax NPV to $3.9 billion (from $2.764 billion) panding Hemi’s gold endowment with both widely and successfully used at other
with AISC remaining stable at $1,220/oz the exploration rigs continuing to operate large-scale gold mines.”
for the first five years ($1,280/oz thereaf- across the project. Jardine said the PFS confirmed Mallina
ter). “We remain enthusiastic about the pros- as commercially viable, providing justifica-
Capex has increased to $985 million pect of increasing resources and reserves tion for De Grey to move to the DFS stage.
(from $835 million) with $100 million com- at Hemi and the regional deposits with “In parallel with the DFS, the company
mitted for “growth allowance”. continued resource extension drilling,” Jar- will engage further with potential project fi-
De Grey managing director Glenn Jar- dine said. “We recently announced miner- nanciers to achieve an appropriate project
funding outcome by mid-2023 in line with
the completion of the DFS,” Jardine said.
“Initial engagement has shown strong in-
terest from Australian and international fi-
nancial institutions in project debt funding.”
On current schedules, first production
would occur in 2025.
Analysts were quick to praise the PFS,
saying it had shown the project would with-
stand inflationary pressures.
Argonaut director research John Mac-
donald said the positive financials and fur-
ther confirmation of the processing route
should prompt larger companies to solidify
interest.
“We think a group will eventually pay up
for control of De Grey, because Hemi’s
long-life, high-volume potential transcends
gold price and cost inflation concerns,” he
said.
– Dominic Piper

De Grey has continued to add ounces via the drill bit at its Mallina gold project

Page 6 OCTOBeR 2022 aUSTRaLIa’S PaYDIRT