De Grey strengthens balance sheet with A$300m placement

Australian gold explorer De Grey Mining has launched a fully underwritten two-tranche placement of new fully paid ordinary shares to raise A$300-million, strengthening its balance sheet and providing it with flexibility to progress project activities.

The new ordinary shares in the company (new shares) are to be issued under the placement at a price of $1.05 a new share.

This represents a 5.8% discount to the last closing price of $1.12 a share on September 27, and a 12% discount to the five-day volume-weighted average price of $1.12 on September 27.

The placement follows the release of the outcomes of De Grey’s definitive feasibility study (DFS) for the company’s Hemi gold project, in Western Australia.

The DFS outlines average yearly gold production and all-in sustaining cost (AISC) from Hemi deposits alone of 553 000 oz at $1 229/oz in years one to five and 530 000 oz at $1 295/oz in years one to ten.

The Hemi-only Joint Ore Reserve Committee-compliant probable ore reserve has increased by 0.9-million ounces to 121-million tonnes at 1.6 g/t gold for six-million ounces, with a high confidence production profile underpinned by 99% probable ore reserves from Hemi over the current 12-year evaluation period.

The DFS confirms Hemi’s status as a tier-one gold project which, once in production, is expected to be a top five Australian gold mine, and in the lowest AISC quartile for large Australian gold mines based on figures for the 2023 financial year.

Hemi is also considered a top three global underdeveloped gold project based on targeted average yearly gold production.

De Grey targets the project financing process to be completed in the middle of next year ahead of a final investment decision (FID).

Full construction activities are expected to begin at Hemi in the second half of next year, and based on an estimated two-year construction period, first gold pour at Hemi is targeted for the second half of 2026.

“Delivery of the Hemi DFS is a major milestone for the company, and sets a solid foundation from which we can proceed with confidence to the next stage of development of the Hemi gold project,” enthuses De Grey Mining MD Glenn Jardine.

“Physical and financial outcomes of the DFS reaffirm the quality and attractiveness of the project and confirms its tier-one status. Alongside its spectacular gold endowment, the project is also located in the major mining services centre of the Pilbara, with world-class infrastructure at hand.

“These attributes – along with the quality of studies, testwork and milestones achieved – mean the project has been significantly de-risked over the last three-and-a-half years.”

Jardine confirms that De Grey’s board has endorsed the outcomes of the DFS and approved the beginning of preliminary project development activities.

These activities include ordering critical-path long lead items, continuing detailed engineering and refining the project execution plan, advancing major tenders and finalising the contracting strategy.

“This will establish the platform for a FID and full project financing next year, ahead of the start of construction.

“This placement is instrumental to De Grey’s focus on de-risking further the construction through these activities in support of an updated capital estimate, project funding and FID in the middle of next year. It is important to note that in excess of half of the amount targeted to be realised is capital-related and will reduce the final capital numbers to be financed.”