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- De Grey Mining (DEG) completes a pre-feasibility study for the Mallina gold project in WA
- The PFS outlines improved outcomes to the project’s scoping study, including an increase of almost 50 per cent in production to 6.4 million ounces over an extended 13.6-year mine life
- The increased production was driven by Hemi’s updated MRE and supported by a maiden probable ore reserve of 103.4 million tonnes at 1.5 g/t gold for 5.1 million ounces
- Despite capital costs increasing due to current economic conditions, the payback period remains below two years, with a pre-tax internal rate of return of 51 per cent
- De Grey will now conduct a definitive feasibility study and progress financing discussions for Mallina
- Company shares are up 3 per cent to trade at 95 cents at 12:46 pm AEST
De Grey Mining (DEG) has completed a pre-feasibility study (PFS) for the Mallina gold project in Western Australia’s Pilbara region.
The company said the PFS confirmed the Mallina as a globally significant project and presented a potentially commercially-viable opportunity with upside potential.
Importantly, De Grey said the PFS delivered improved outcomes from the project’s scoping study, completed in 2021. Specifically, the PFS showed improvements in the project’s mine life, grade, production, cashflow and net present value (NPV).
In total, the project is forecast to produce 6.4 million ounces of gold over a 13.6-year mine life, up from the 4.3 million ounces and 10-year mine life outlined in the scoping study.
In the first 10 years, Mallina will produce an average of 540,000 ounces of gold per annum, with the Hemi deposit alone to contribute 500,000 ounces annually.
The bolstered production was driven by an increase in Hemi’s mineral resource estimate, as well as the company’s confidence level in the project’s resource and grade across multiple deposits, particularly Diucon and Eagle.
The PFS was supported by a maiden probable ore reserve for Hemi of 103.4 million tonnes at 1.5 g/t gold for 5.1 million ounces. The company said this was one of the largest and highest-grade maiden reserves in recent decades.
Due to current economic conditions and inflationary pressures, capital costs for the 100-million-tonne-per-annum plant and infrastructure increased by 15 per cent from the scoping study to $985 million. In total, pre-production capital costs are estimated to be $1.05 billion.
Yet, despite the capital cost increase, the payback period remains below two years, with an internal rate of return of 51 per cent, pre-tax.
The PFS also outlined a 35 per cent increase in post-tax net present value to $2.7 billion.
“The results of the PFS are compelling and confirm the project status as a tier one gold asset,” De Grey Managing Director and CEO Glenn Jardine said.
“The PFS provides justification that the project is commercially viable and, accordingly, will progress to a definitive feasibility study (DFS) expected for completion in mid-2023.”
In addition to the DFS, De Grey Mining will continue financing discussions to secure project funding by mid-2023 in line with the completion of the DFS.
De Grey shares were up 3 per cent to trade at 95 cents at 12:46 pm AEST.
