DEG - De Grey Mining

[over9k]

Yeah, this kind of stuff is basically expected for DEG now. There's a LOT that's already been priced in, hence its meteoric rise

 

[over9k]

Big dip today, tempted to top up (so I'm still holding). Chosen for stock competition because of it.

 

[Sean K]

I think DEG is about at the upper Discovery Phase on the Lassonde Curve. They probably have a few more million ounces to add to the MRE but it will be interesting to see how it conforms.

 

[over9k]

Nah it's had its pullback. We're in the dip right now.

 

[Sean K]

Hemi could easily go up to 10m oz au imo leading to over 12m oz au + global resource. This is huge and it's still open in just about every direction. $1.4b MC. What should 12m oz au actually be worth with POG around $2k?

 

[Sean K]

Phil is probably not the guy you'd want to be inspiring the troops into battle, but it's good to hear an explanation of results from the horses mouth.

 

[Sean K]

These are pretty good extension results for Eagle and Diucon, and well beyond the initial MRE. Not caring too much about hits below 300m under 2g/t. Maybe not worth going UG for that.

Not sure how closely any ASF'ers have looked at this deposit and wondering about the type of ore body ie, refractory, and how much Capex/Opex effect that will have to produce some ingots. Processing is a lot more complicated and expensive. Not sure how much of that is factored into the current valuation from the experts. I suppose with potentially 10m OzAu + from surface a capex of $1b+ should get finance.

 

[Sean K]

Recoveries look good and they're trialling three potential oxidation processes (pressure oxidation, biological oxidation and Albion). Biological oxidation is normally for smaller operations so my guess is they need a POX as part of the process which they've included in their example flow sheet. Haven't seen Albion Process mentioned before so had to ask Mr Google. Interesting paper here for anyone interested comparing POX and Albion. The cost comparison is below and this is pretty old, so could be much higher numbers than this.

Needing POX or Albion certainly adds to the Capex and Opex of refractory ores. Considering the volume of Hemi, I don't think this will have a significant factor in actually getting to production. Will just be part of the value consideration down track.

 

[Sean K]

Scoping study out.

Capex lower than I expected which is good to me. Was expecting more discussion of POX in the mill plan and $$ associated with it. Maybe they're not mentioning it for a reason. (the skeptic in me). 1.5-1.8 yrs payback seems very good. Assuming gold price at $2400 might be a bit rich. It could be over $3000 by the time they get to mining, but providing a range might have been better with the current price at the top to be conservative.

Producing over 400k oz pa is pretty spectacular. If they increase the resource to over 10m oz, which I expect them to, then they could perhaps increase the mill size and get to over 500k oz pa.

After payback these guys are going to be making a lot of money.

Project is just going to get bigger as well.

Not sure how they stay independent.

 

[Sean K]

Scoping study out.

Capex lower than I expected which is good to me. Was expecting more discussion of POX in the mill plan and $$ associated with it. Maybe they're not mentioning it for a reason. (the skeptic in me).

My bad, I missed this slide discussing mining process and the oxide options are going to come out in the PFS. Not sure how they've done a scoping capex to the dollar when these three processes will cost different $$.

 

[Sean K]

Hoping this sequence continues. Blue channel next. Need a turn around in POG and no market crash, thanks.

 

[Sean K]

Exploration results out and nothing to really get excited about. They don't really need to find anything else I suppose, this project is going to be over 10m oz once the Hemi deposit is drilled out further and I reckon they will increase the scoping study to be 500K + oz pa output eventually, just on Hemi.

So, anything else is just a bonus.

Extending Withnell is good and 30m@5g/t points to quite a few more ounces there. This will probably go 1m + oz by the looks.

Surprised a major hasn't already taken this over. You don't find up to 400k + oz pa inventory in such a fantastic location every day.

 

[Sean K]

TH for CR.

They have $70m in the bank so this raise may be quite significant and let's hope there's an issue to current holders at a nice discount to the current SP.

Why do they need to raise now when they're yonks off BFS? Maybe just because the SP has jumped quite a bit the past few weeks and it's a good opportunity...

 

[Sean K]

Why on Earth would it take this much cash to take it to PFS? I'm guessing there's a lot of corporate costs and general working capital associated with this...

And:

The Board has chosen not to proceed with a Share Purchase Plan (“SPP”) as it notes all shareholders have had the opportunity to acquire shares at reasonable prices over the last 30 days.

What an absolutely BS justification. I'm guessing there'll be more opportunities at lower prices after this. Thanks for nuthin.

 

[Miner]

View attachment 131695

Why on Earth would it take this much cash to take it to PFS? I'm guessing there's a lot of corporate costs and general working capital associated with this...

And:



What an absolutely BS justification. I'm guessing there'll be more opportunities at lower prices after this. Thanks for nuthin.

Thanks for sharing @So_Cynical . DEG somehow attracted attention of a plethora of smaller mines around its tenements. In addition to what you mentioned, company could not feel comfortable to include current holders on the $125 M CR .
8 pc discount is nothing considering the brokers will be paid some 5pc in commission towards CR work.
Time for me to get out of DEG or buy more if the price goes significantly below $1.1 once it opens for trading.

 

[frugal.rock]

Time for me to get out of DEG or buy more if the price goes significantly below $1.1 once it opens for trading.

FWIW, have entered on $1.11 on Friday 22 Oct, a first for me on DEG.
Last time I seriously considered a buy, it was around 4 cents...?

If it dips below $1.05, I'm worried, and would be looking to exit.
However, that would depend on POG.
POG currently trending up again on the daily.

 

[Sean K]

Time for me to get out of DEG or buy more if the price goes significantly below $1.1 once it opens for trading.

I've topped up a little. It's going to be a slow burn to get to production with considerable costs on the way, but it will eventually be a very high cap gold company. Not many producing around 500k oz pa from the one mine. In fact, I imagine one of the super majors might want to bolt this on.

FWIW, have entered on $1.11 on Friday 22 Oct, a first for me on DEG.
Last time I seriously considered a buy, it was around 4 cents...?


If it dips below $1.05, I'm worried, and would be looking to exit.
However, that would depend on POG.
POG currently trending up again on the daily.

Unless the thesis that gold is in a longer term rise proves incorrect, I'm just buying dips on this. Not sure exactly what MC it should have for it's stage of exploration/dev and ounces in the ground, but if it gets to a MC of around the $2b mark (target just a nice round number and pending any further discoveries) before another CR, I might be out by then.

 

[Dona Ferentes]

a bit of commentary in the Press

Ally Selby (Livewire Markets) : Tim, staying on you. Next, we have struck gold with De Grey Mining. Its share price has been quite a volatile ride for shareholders over the past 12 months. Now, it’s pretty flat. Is it a buy, hold, or sell?

Tim Serjeant (Eley Griffiths Group) : Buy, Ally. 500,000 ounces per annum for over 10 years in Western Australia makes it a Tier 1 asset in a global gold context. There are just two issues to monitor over time, I think both of which are intertwined, which are capex and recoveries. I think both are eminently solvable, it’s just whether it’s De Grey or someone else.

Ally Selby (Livewire Markets) : David, over to you. It has a market cap of around $1.4 billion and it recently completed an institutional capital raise of around $125 million. Is it a buy, hold, or sell?

David Franklyn (Argonaut) : We’ve got it as a buy, Ally. It’s a Tier 1 asset in a Tier 1 location. It’s going to be attractive. It’s either going to move through development and become a global producer of scale and be well sought after or else, and just as likely, a major will look to acquire it relatively soon. So, we like it.

 

[Sean K]

a bit of commentary in the Press

Ally Selby (Livewire Markets) : Tim, staying on you. Next, we have struck gold with De Grey Mining. Its share price has been quite a volatile ride for shareholders over the past 12 months. Now, it’s pretty flat. Is it a buy, hold, or sell?

Tim Serjeant (Eley Griffiths Group) : Buy, Ally. 500,000 ounces per annum for over 10 years in Western Australia makes it a Tier 1 asset in a global gold context. There are just two issues to monitor over time, I think both of which are intertwined, which are capex and recoveries. I think both are eminently solvable, it’s just whether it’s De Grey or someone else.

Ally Selby (Livewire Markets) : David, over to you. It has a market cap of around $1.4 billion and it recently completed an institutional capital raise of around $125 million. Is it a buy, hold, or sell?

David Franklyn (Argonaut) : We’ve got it as a buy, Ally. It’s a Tier 1 asset in a Tier 1 location. It’s going to be attractive. It’s either going to move through development and become a global producer of scale and be well sought after or else, and just as likely, a major will look to acquire it relatively soon. So, we like it.

I doubt that De Grey will take this to production. It's too valuable to a bolt on for a major who needs some growth, either internal or otherwise. One company that might need a significant bolt on in Newcrest who may not get Wafi-Golpu over the line due to PNG turning more nationalist and wanting to keep their resources. This will only end in tears for PNG imo as they couldn't organise a root in a you know what. One of the other majors may be looking at DEG but the only Australian company who has the balance sheet now is NCM. The current resource is going to quite clearly expand and 500k oz pa for what will turn out to be 15 years + is a lot of coin.

 

[Sean K]

Eagle looks like it's going to be quite a decent deposit and the overall tonnage go up considerably for the Hemi global MRE. Potentially a 10m oz + resource. Very long life, through the cycles, generational type stuff. I'm actually on the hunt for junior explorers under the radar so this does not fit the bill anymore, but I just see a lot of upside here in the long run. Over 50m at over 5g/t outside the current MRE is big.

Questions remain about their Capex and the cost of the POX part of the flow sheet.