Project Studies

De Grey is advancing project studies based on a development scenario involving a centralised mining and processing operation at the Hemi discovery and satellite feed from deposits in the wider Mallina Project region, including Greater Hemi.

An initial evaluation of the Mallina Gold Project was contained in a Scoping Study completedin October 2021 and was based on the Maiden Mineral Resource Estimate for Hemi released in June 2021.

These outcomes were improved upon in a Pre-Feasibility Study (PFS) completed in September 2022 which was based on the updated Mineral Resource Estimate released in May 2022. The PFS also included a maiden Ore Reserve for Hemi.

A Definitive Feasibility Study (DFS) was completed inSeptember 2023 which outlined a high confidence Tier 1 production profile and updated Ore Reserve for Hemi. The De Grey Board approved the outcomes of the DFS and commencement of early project implementation activities.

Highlights from the DFS and Ore Reserve include the following:

Tier 1 Production Profile and Expanded Ore Reserve

  • Average annual gold production and All-in Sustaining Cost (AISC) from Hemi deposits alone of:
    • 553,000oz @ $1,229/oz in years 1 to 5
    • 530,000oz @ $1,295/oz in years 1 to 10
    • Peak production of 570,000oz in year 2
  • Hemi-only JORC Probable Ore Reserve increases by 0.9Moz to 121Mt @ 1.5g/t Au for 6.0Moz.
  • High confidence production profile underpinned by 99% Probable Ore Reserves from Hemi over the current 12 year evaluation period.
  • Growth in the Hemi Ore Reserve delivers a lower risk, higher margin production profile compared to the PFS which included a contribution from the Regional deposits.
  • DFS confirms Hemi’s status as a Tier 1 gold project which, once in production, will be a top five Australian gold mine and in the lowest AISC quartile for large Australian gold mines.
    • Hemi is a top three global undeveloped gold project based on average annual gold production.

 

Compelling Financial Metrics (Unleveraged)

  • Undiscounted free cashflow of $6.3 billion pre-tax and $4.5 billion post-tax.
  • Net Present Value (NPV5%) of $4.2 billion pre-tax and $2.9 billion post-tax.
  • Internal Rate of Return (IRR) of 45% pre-tax and 36% post-tax.
  • Capital cost estimate for the 10Mtpa plant and site infrastructure of $1,298M is inclusive of $162M of design growth allowance and contingency, plus an additional mine pre-strip capital cost of $47M.
  • Short payback period of 1.5 years pre-tax and 1.8 years post-tax due to commencement of mining operations at the high margin Brolga starter pit.
  • Capital cost estimate increase of 24% on the base capital estimate or 28% with design growth allowance and contingency in the DFS compared to the September 2022 PFS.
  • The capital cost increase is in line with the experience of other mining projects recently in Australia.
  • Hemi remains one of the world’s largest and lowest capital intensive gold development projects.
  • Pit shells, leading to the DFS pit designs, were selected at an average gold price of $2,170/oz demonstrating the Company’s discipline in maintaining cash operating margins and providing protection to the Project production profile and mine plan in the event of a lower gold price environment.

 

Upside to the DFS Outcomes and Value Catalysts

  • Potential to increase the Diucon and Eagle pits based on significant extensions identified after the DFS mine design cut-off.
  • Opportunity for a Regional concentrator at Withnell concurrently treating Regional deposits, targeting 150kozpa production.
  • Initial assessment of the underground mining opportunity of the 1.4Moz MRE below 390m, concurrent with open pit production at Hemi.
  • Conservatism in the DFS design – potential to increase nameplate throughput and scalability built into the comminution and pressure oxidation (POx) circuits.
  • Further near surface success in the Greater Hemi area at similar grades to Hemi has the potential to increase mine life from open pits.

 

Board Approval of Pathway to Production

  • Based on the compelling DFS outcomes the De Grey Board has endorsed the DFS and has approved the commencement of Project implementation activities including:
    • Ordering and placing deposits, if needed, on long lead major equipment items on the Project critical path.
    • Continuing to refine the Project execution plan.
    • Detailed engineering and design to a high confidence level in parallel with Project approvals.
    • Refining the Project contracting strategy.
    • Advancing major Project tenders.
    • Progressing activities to support the Project execution schedule.
    • Progressing and concluding Project financing.
  • The Company will consider a Final Investment Decision (FID) in parallel with Project financing and approvals.
  • Full construction activities are expected to commence at Hemi in the second half of calendar year 2024 following the receipt of environmental approvals and the completion of Project implementation activities which will significantly de-risk Project construction.
  • Based on an estimated two year construction period, first gold pour at Hemi targeted for second half of calendar year 2026, subject to the receipt of approvals.

To view the full details of the September 2023 DFS, including important supporting information and disclaimers, please view the Announcement and Presentation.

To view the full details of the September 2022 PFS, including important supporting information and disclaimers, please view the Announcement and Presentation

To view the full details of the October 2021 Scoping Study, including important supporting information and disclaimers, please view the Announcement and Presentation

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