The De Grey Mining Ltd (ASX: DEG) share price had its 'Eureka, I found gold!' moment in 2020 after a series of positive announcements for its Mallina Gold Project in Western Australia. This led to its share price surging as high as 3,000% from 6 cents to $1.60.
Today, the company announced new results at its Mallina Gold Project in an area called Hemi.
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De Grey share price down despite continued gold discovery
De Grey reports two new discoveries named Diucon and Eagle. The gold mineralisation shows similar alteration and sulphide development at its adjacent Hemi deposits of Aquila, Brolga, Crow and Falcon. The company has left these zones open and believes it has the potential to rapidly and cost-effectively increase Hemi's gold endowment with continued drilling.
De Grey Managing Director, Glenn Dardine commented on the results:
"The discovery and growth profiles of Diucon and Eagle are good examples, along with Falcon, of the potential for the Company to continue to rapidly increase gold endowment at Hemi. Falcon was discovered in September 2020 and has also grown substantially. The Diucon and Eagle discoveries were announced in January this year after positive results in initial wide spaced RC drilling. Additional RC drilling has now rapidly expanded the mineralised footprints at both zones which both remain open."
Dardine went on to comment that extensional drilling is continuing at Diucon and Eagle, and that drilling for new discoveries is underway in the Greater Hemi area.
The bigger picture
Ultimately, the company plans to complete and evaluate early-stage project de-risking studies to pursue a strategy to develop itself as a Tier 1 Gold Project. This is defined as a project producing a minimum of 300,000 ounces per year with a minimum mine life of 10 years.
To add some perspective, Ramelius Resources Limited (ASX: RMS) produced 230,426 ounces of gold in FY20 with a market capitalisation of approximately $1.1 billion.
While De Grey is still a gold explorer with a similar market cap, the company could possess significant potential and reserve upside should things go to plan.
Gold prices holding miners back
Gold prices have been far from inspiring for ASX gold miners, slumping from highs of US$2075 to US$1,683 at the time of writing. The strong Australian dollar is another factor that is likely to curb the revenue gold miners receive. This has dragged ASX gold mining shares prices across the board.
The De Grey share price is currently trading 1.7% lower at 86 cents per share.
