De Grey secures Pilbara gold project

Local explorer De Grey Mining will proceed with a $15 million acquisition of the Indee gold project, located near Port Hedland, from private company Northwest Nonferrous Mining Australia.

Under the agreement, De Grey will pay a $1.5 million deposit next month, a further $700,000 deposit in January next year, followed by the issue of $3 million worth of new De Grey shares and a $9.7 million cash consideration in July 2019.   

The issue of shares will be based on 90 per cent of a 20-day volume-weighted average price prior to settlement.

De Grey said it would seek shareholder approval for the issue of the shares.

Following the acquisition, De Grey will own a tenement package in the Pilbara with more than 1.2 million ounces of established gold resources, including its Turner River project.

Chairman Simon Lill said the deal would allow the company to expand its gold output.

“De Grey has expended considerable funds in exploration and feasibility work over the last 12 months on the Indee project to confirm that the metrics of the Indee acquisition make sense,” he said

“We are comfortable that acquiring Indee is the right path forward as the economic decision will only improve with further work planned through the next 12 months.

“The Indee and Turner River projects combine as the Pilbara gold project with positive economics based on a simple open pit mining strategy, but with substantial exploration upside remaining.”

Shares in De Grey were down 7.1 per cent to 13 cents each.