What is De Grey Mining's New Ashburton Gold Project? De Grey Mining Limited

What is De Grey Mining's New Ashburton Gold Project?

De Grey Mining Secures Option to Acquire Ashburton Gold Project

De Grey Mining Limited has entered into an exclusive agreement with Kalamazoo Resources to potentially acquire the Ashburton Gold Project in Western Australia. The project, boasting a 1. 44 million ounce gold resource, represents a strategic move for De Grey to consolidate its position in the region and leverage its upcoming Hemi Gold Project.

With a significant upfront option fee and a commitment to exploration expenditure, De Grey is poised to enhance its portfolio and potentially increase the annual gold production rate and extend the operational life of its Hemi project.

Strategic Expansion in the Pilbara Region: The Deal Outline

De Grey Mining has committed $3 million as an upfront option fee to Kalamazoo Resources for the exclusive right to acquire the Ashburton Gold Project. Located 290km south of De Grey’s Hemi Gold Project, Ashburton spans 217km^2 with granted mining leases and exploration licenses. The option period, lasting 12 to 18 months at De Grey's discretion, involves a minimum expenditure of $1 million on exploration, testwork, and due diligence studies.

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Acquisition Costs and Terms

Should De Grey exercise the option, the acquisition involves a payment of $15 million at the time of the exercise and an additional $15 million within 18 months. Payments can be made in cash or De Grey shares, highlighting the flexible financial structuring of the deal.

Ashburton's Potential and Historical Production: Development Prospects

Historical production at Ashburton yielded approximately 350,000 ounces of gold from 1998 to 2004, with significant exploration infrastructure still in place. De Grey's initial due diligence suggests that Ashburton could economically deliver high-grade gold concentrate to the proposed Hemi POx plant, enhancing Hemi’s production capabilities.

Resource Estimate

The Ashburton project's current resource estimate stands at 1. 44 million ounces of gold across five deposits. The majority of the resource is at the Mt Olympus deposit, highlighting the project's significant untapped potential.

Enhancing Hemi’s Strategic Value: Integrating Ashburton with Hemi

The acquisition of Ashburton is seen as a strategic move to leverage the infrastructure and processing capabilities being developed at Hemi. De Grey's Managing Director, Glenn Jardine, emphasized the regional strategic asset that the Hemi plant represents, capable of treating ore from Ashburton and potentially increasing Hemi’s production and economic returns.

Future Development Considerations

The potential development of Ashburton hinges on the successful commencement of production and cash flow from Hemi, indicating a phased approach to regional development. This strategy aligns with De Grey’s broader vision for growth and regional consolidation.

Next Steps and Long-term Prospects: Exploration and Development Plans

De Grey plans to conduct geological mapping, drilling, and metallurgical testwork at Ashburton as part of its due diligence and exploration strategy. The focus will be on assessing the metallurgical characteristics and integration potential with the Hemi processing circuit.

Strategic Importance of the POx Plant

The Hemi pressure oxidation plant is a cornerstone of De Grey’s strategy, potentially serving as a central hub for processing refractory ore types from Ashburton and other regional deposits. This aligns with the company’s long-term growth plans and emphasizes the strategic importance of the Hemi project’s infrastructure.

De Grey Mining’s option agreement to acquire the Ashburton Gold Project underscores the company’s strategic vision for growth and regional consolidation in Western Australia. With a significant resource base and the potential to synergize with the Hemi project, Ashburton represents a pivotal opportunity for De Grey to enhance its production capabilities and solidify its position in the gold mining sector.

The coming months will be crucial as De Grey undertakes exploration and due diligence activities to assess the full potential of Ashburton in conjunction with the development of its flagship Hemi project.

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