One of the largest virgin Australian gold discoveries in recent years has received a major tick of approval from global bankers as it fast-tracks its way to first gold production.
Owner/operator De Grey Mining Limited (ASX: DEG) has received extremely strong interest from potential lenders from all over globe looking to be part of project debt funding for the Mallina Gold Project in Western Australia.
The company recently received non-binding proposals from 14 leading banks and financial institutions for the traditional project debt funding component of an overall project development financing package.
The majority of institutions have indicated the Project supports traditional debt funding capacity of approximately A$800M based on De Grey’s September 2022 PFS.
The company says it will consider the optimal level of debt funding within an overall financing package.
The indicative commercial terms were reflective of the high quality of the Project, detailed Project studies completed to date and favourable jurisdiction in Western Australia.
An independent technical consultant has been appointed to support the project financing process which will continue in parallel with the DFS targeted for completion in mid-2023.
The project financing process is expected to conclude in the second half of 2023.
Azure Capital is acting as corporate and debt financing advisor to De Grey and Wright Legal is acting as the Company’s debt legal advisor.
“We’ve been heartened by the strong response to our request for traditional project financing proposals for the Mallina Gold Project,” Chief financial officer, Peter Canterbury, said.
“A range of indicative proposals have been received from highly regarded financial institutions which have significant experience in the mining sector. The company feels confident that it can deliver an attractive funding package for the development of the Project, subject to a final investment decision by the De Grey Board.”
“During 2023 we will further assess and progress various debt, equity and other strategic funding sources available to determine the optimum financing structure to deliver the greatest long-term value for De Grey shareholders from the Tier 1 discovery at Hemi.”
Definitive feasibility study milestone
The DFS results for the Mallina Project – that is the Hemi deposits plus regional resources – has ranked it as one of the world’s best new gold projects, while the maiden Hemi JORC probable reserve of 5.1Moz @ 1.5g/t Au, came in as one of the largest and highest-grade maiden Reserves in the history of gold developments.
Total production was increased by nearly 50% from the scoping study to 6.4Moz with the annual gold production rate increasing by around 25% to 540,000ozpa over the first 10 years.
The DFS also successfully saw the net present value of the Project on a post-tax basis increase by approximately 35% to A$2.7B from A$2.0B in the scoping study.
Capital costs of the plant and infrastructure have increased by approximately 15% to A$985M from the scoping study.
The project has been rated as one of the lowest capital cost intensities of any large scale, undeveloped gold project on a global basis and with operating costs remain within the lowest cost quartile of Australian gold producer operating costs.
DeGrey is now targeting mid-2023 for the completion of a Bankable Feasibility Study (BFS) and a Financial Investment Decision (FID) on the back of a very robust DFS completed in Q3, 2022.
DeGrey has also reached a significant share price milestone.
“For a company to commence from the lowly market capitalization that we had prior to 2020 and enter the ASX 200 within a short two and a half years is an outstanding achievement, though we should note that we are not the only resource company to have enjoyed that trajectory,” Chairman, Simon Lill, noted at the company’s last AGM.
DeGrey has also achieved a number of other significant milestones over that time. The company has undertaken well over 1,000km of drilling and raised over A$400M.
Compelling project economics have been demonstrated through the initial Scoping Study and the more recently released Pre-Feasibility Study (PFS) from September 2022.
Continuing growth
De Grey Mining continues to obtain positive new results where drilling at the Diucon deposit have extended mineralization by approximately 120m along strike and 400m down plunge to the west of the May 2022 mineral resource estimate (MRE).
Diucon is in the west of the world class Hemi gold discovery. The Diucon mineralized intrusion has been intersected over a strike of approximately 560m, depth of 900m and a true thickness of approximately 300m. Recent drilling has demonstrated that mineralization extends down plunge for at least 400m to the WSW of the May 2022 mineral resource model and remains open.
“Wide-spaced drilling down plunge to the WSW of the current Diucon resource has demonstrated that the Diucon mineral system is open in this direction,” General manager Exploration, Phil Tornatora, said.
“Drilling is still very widely spaced and significant intersections are being returned from holes such as HEDD136 and HEDD128. This work has strong potential to extend Diucon’s current 1.6Moz mineral resource.”
“Higher grade zones, often showing visible gold in quartz continue to support the potential for underground mining below open pit depths. In addition to diamond holes to follow up deeper mineralization, shallow RC drilling is planned west of Diucon to follow up significant results from aircore and RC drilling at Antwerp.”
Extensional Drilling
Deep mineralization has been intersected in HEDD135 and HEDD136 up to 120m west of the May 2022 mineral resource model and 900m deep. In addition to broad, moderate grade intercepts, HEDD136 also shows narrow, high-grade intersections at a 3.0g/t Au lower cut, which demonstrate potential for selective high grade underground mining.
Shallow mineralization remains open to the west of the Diucon and Eagle deposits towards Antwerp. AC drilling around 500m north of this Antwerp trend intersected 2.0m @ 261g/t Au from 36m in HEAC920 within altered sediments. An intersection of 3.0m @ 2.7g/t Au from 57m was returned from hole in HAC349 on the section 160m to the west of HEAC920.
