De Grey Mining uncovers shallow high-grade gold at Mt Berghaus

Western Australia-based De Grey Mining (ASX: DEG) has uncovered shallow high-grade gold zones while drilling the Mt Berghaus deposit at its flagship Pilbara gold project in the state’s north.

Reporting to the market today, the gold explorer also cheered its high “hit rate”, with 38 of the 58 reverse circulation (RC) drilled holes revealing significant intersections including many very high-grade “bonanza” gold zones (grading at more than 15 grams per tonne).

Drilling result highlights included an 15m intersection grading at 5.3g/t of gold from a depth of 34m, including 3m at 19.2g/t gold, plus a 12m intersection grading at 7.3g/t gold from 36m including 2m at 35.5g/t gold.

In addition, a metallurgical diamond hole returned a particularly high grade of 1m at 242g/t gold.

The drilling discovered new lodes as well as extensions to existing lodes, with all the uncovered gold zones being at a depth of 60m or shallower. The mineralisation remains open along strike and at depth, De Grey stated.

De Grey technical director Andy Beckwith said the “numerous high-grade intersections, together with the discovery of new parallel lodes and extensions to existing lodes, augurs well for future resource increases”.

“Mt Berghaus is a prime example of the more drilling we do, the more gold we find,” he said.

Beckwith noted that the new lodes and extensions were all at shallow open pit depths and fell on margins or just outside the pit shells of the existing 2017 scoping study.

“The likelihood of increasing the open pit shells in the 2018 pre-feasibility study looks encouraging,” he said.

An additional phase two extensional and infill RC drilling program is now underway at the Mt Berghaus deposit, De Grey reported.

Exploration funding

Mt Berghaus lies within De Grey’s wholly owned Pilbara gold project, which is located 60km south of Port Hedland in the north of Western Australia and covers an area of 1480sq km.

The project has been estimated to contain a resource of 23.88 million tonnes grading at 1.6g/t for more than 1.2 million ounces of gold.

Last week, De Grey announced the conclusion of a A$6 million capital raising, with Pilbara neighbour DGO Gold (ASX: DGO) subscribing to A$5 million worth of shares and drilling partner Top Drill Pty Ltd investing the other A$1 million.

In addition to costs associated with the Pilbara project’s ongoing pre-feasibility studies, the funds will be used to expand the current drilling program across more than 200km of mineralised shear zones.

De Grey chairman Simon Lill said the company was extremely pleased with DGO’s endorsement as the company is backed by significant gold investors and led by the well credentialled geologist Ed Eshuys.

“Recent excitement in the region has been about conglomerate gold. However, DGO have been attracted to our significant and underexplored mineralised shear zones,” Lill said.

He also acknowledged Top Drill for its ongoing support, as “access to quality drill rigs forms an integral part of the programs as we ramp up exploration activities”.

Eshuys, who is DGO’s executive chairman, said of his company’s investment: “We believe De Grey’s structural gold mineralisation and associated large exploration upside has the potential to host aggregate gold resources sufficient to support a medium to large scale production operation”.

DGO announced last week it would fund its investment in De Grey via a 1 for 2 non-renounceable entitlement offer of its own shares to raise between A$4.43 million and A$5.99 million before offer costs.

Future work

A ramp up of exploration activities has commenced with the aim to increase resources across the Pilbara gold project.

At Mt Berghaus, future work includes a 3000m-minimum RC drilling program to infill resources along the North Lode, an RC and diamond drilling program to test for new extensions beyond the resource model, and diamond core drilling for additional metallurgical test work.

De Grey has also planned project-wide work programs including detailed aerial photography, airborne magnetics, soil sampling, structural mapping, target generation and a base metal review, which is near completion.

Shares in De Grey were up 8% on today’s news by midday trade to A$0.195 per share.