De Grey Mining has revealed preliminary plans for a huge gold mine costing around $A1 billion to exploit the still growing Mallina complex of gold deposits in the Pilbara region of WA.
The company released the results of a pre-feasibility study (PFS) to the ASX on Thursday – which updates an earlier scoping study on the prospect and a possible mine – and calls for a larger operation, costing more with a more ambitious target of more than half a million ounces a year for the first decade.
The Mallina complex of gold deposits near Port Hedland in the Pilbara is dominated by the huge Hemi prospect which could be a mine on its own.
De Grey said the PFS calls for a huge mine – processing 10 million tonnes of ore a year at its peak. The capital cost for the plant of this size and the site infrastructure is estimated to be $A985 million inclusive of $A100 million in growth allowance (for cost overruns).
On top this there’s a $68 million cost estimated for the mine preproduction pre-stripping of overburden.
The Mallina complex has mineral resource estimate of 10.6 million ounces with the Hemi deposit dominating with 8.5 million after being upgraded in May of this year.
The PFS calls for an average total annual gold production of 540,000n ounces a year over the first 10 years with a peak of 550,000 ounces a year in the first to the 5th year. Peak production is estimated at 637,000 ounces in the 5th year.
De Grey said the rich Hemi deposit alone “contributes average annual gold production of approximately 500,000 ounces a year over the first 10 years and 520,000 ounces a year in years 1 to 5
Total production of 6.4 million ounces over a 13.6-year life of mine (before any new discoveries, of which there is already one huge strike beneath the small deposit known as Diucon and high prospectivity around another called Eagle
De Grey said that to kick the mine off, the maiden probable ore reserves for the mine is 103 million tonnes at (1.5 grams g/t) to the tonne for 5.1 million ounces of gold.
The targets in the PFS are all much higher than in the original scoping study and De Grey says this is down to increased tonnes at Hemi and higher confidence about tonnages and grades “at all deposits, particularly Diucon and Eagle”.
“For example, the Company recently intersected 359.4 metres at a grade of 1.2g/t Au at Diucon approximately 200 metres beneath the May 2022 Mineral Resource Estimate block model,” De grey said.
“Hemi in production will be in the top five Australian gold mines and is a top three global undeveloped gold development project based on average annual gold production rates,” De Grey said in Thursday’s statement.
The mine is projected to have an All in Sustaining Cost of $A1,220 an ounce in years one to five of the mine and $A1,280 an ounce in years one to 10. It will have a fast payback – less than 2 years, the company estimates on a pre- and post-tax basis.
De Grey is now 20% controlled by Gold Road which lifted its stake in late August. Gold Road’s main asset is 50% of the rich Gruyere mine in the northeast goldfields of WA. Goldfields owns the other 50%. The duo expects Gruyere to produce 300,000 ounces a gold or more from the 2023 financial year.
