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De Grey Mining Limited (ASX:DEG) is a mining company which operates in the business of exploring base and precious metals. On 22 February 2019, the Board of the company has made an announcement about the expansion of the scale of the Pilbara Gold Projectâs development study to a 2Mtpa plant throughput.
The decision of the Board to increase the scale has emerged on the back of an increase in resources to 1.4 million ounces from the previous 1 million ounces on which the 2017 Scoping Study was based, recent exploration results coupled with the ongoing exploration potential of De Greyâs tenements, the recent material increases in gold recoveries, to between 90% to 94% and a simplified processing plant flowsheet.Â
Moreover, improved the gold outlook, and recent price increases, economies of scale with the reduced unit operating costs, confidence in defining new resource additions and potential for higher grade underground lodes below at least four deposits have led the company to increase the development study scale further.
The 2017 Scoping Study was based on a proposed 1Mtpa processing plant, with highlighted gold production outputs ranging from 65,000 oz in Year 1 to 51,000oz in Year 4 and noted lower unit operating costs are to be expected with increased scale.
GR Engineering Services is near to the completion of design and costing of a proposed 2Mtpa processing plant. The work will be completed to PFS standard (+/- 20%) and will form a critical aspect of defining operating costs to be used in further open pit and underground optimizations and evaluations. Revised open pit optimizations based on the new operating and mining costs will be then undertaken by Cube Consulting. From this work, any additional drilling will expand both open pits, and underground resources, metallurgy, and geotechnical activities and associated timeframes will be determined.
Two drilling rigs are already operating to progress the resource extension drilling. A diamond rig is targeting the encouraging underground high-grade lodes, and an RC rig is currently targeting the shallower targets beneath the existing Withnell pits. Subsequently, both rigs will move to test and extend resources to a depth of more than 200 meters at Toweranna, where previous optimizations indicated pit shells are restricted by the depth of drilling and the high-grade quartz lodes show potential for open pit resource extensions and underground lodes to at least a depth of 400 meters.
Further in an announcement today, which Is related to the previous announcement of the company dated 20 February 2019, titled âPositive recoveries and increased resource potentialâ the company wishes to retract the announcement as it had included statements that are considered to represent production targets and a discussion of internal preliminary economic evaluations that are not disclosed in accordance with ASX Listing Rules 5.16 and 5.17.
On the price-performance front, the stock of De Grey Mining Limited last traded at $0.110 with the market capitalization of ~$46.55 million. The stock has generated a negative YTD return of 8.33% and posted a negative return of 37.14% over the last six months period. The stock has a 52-week high price of $0.245 and a 52-week low price of $0.100 with an average trading volume of 454,846.
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