The De Grey Mining Limited (ASX: DEG) share price is backtracking in early afternoon trade despite the company announcing a new shear-hosted gold discovery. At the time of writing, the gold and mineral exploration company's shares are fetching $1.0475, down 2.1%.
What were the results?
Investors are dumping De Grey shares regardless of the initial positive results obtained from its RC spaced drilling campaign.
According to its release, De Grey has identified new shear-hosted gold deposits at the Gillies prospect. This is located within the Farno McMahon joint venture and is about 30 kilometres southwest of the Hemi gold discovery.
The drilling results yielded strong gold mineralisation which included a strike of 15 meters @ 1.8g/t (grams per tonne) Au (gold) from 90 meters in GLR016. This was within the broader 52 meters @ 0.7g/t Au from 53 meters in GLC016.
De Grey has increased its equity in the Farno McMahon joint venture to 75%, up from the original 30%. The other joint venture partner is Novo Resources Inc, which holds the remaining 25%.
The Gillies prospect is relatively untouched with only early-stage exploration activities focused on target generation and mapping bedrock gold systems. The new gold target is shear-hosted and intersected over a broad 50-meter-thick zone downhole.
The initial drilling program completed 21 reverse circulation (RC) holes with over 4,400 meters drilled. Previously in late 2019, air-core and soil sampling results led to encouraging finds.
De Grey revealed that the prospect area contains sandstones and siltstone units over 3 kilometres long by 600 meters wide. The northern-half of the prospect is of particular interest as shallow and spatial gold results were identified in the 2019 air core program. These findings included 1 meter @ 1.2g/t Au in GLAC013 and 1 meter @ 0.9g/t Au in GLAC012.
The company noted that a follow-up RC drilling program is scheduled to be undertaken in Q2 2021. Over 2,000 meters is being planned to be drilled across a number of holes. Additional air-core drilling is also planned to test numerous bedrock gold anomalies.
Management commentary
De Grey managing director Glenn Jardine commented:
De Grey has formed a dedicated regional exploration team which is preparing for the Company to restart exploration outside of the Greater Hemi area, in parallel with extensional and exploration work within the Greater Hemi area. We anticipate following up the Gillies discovery hole in the next quarter.
About the De Grey share price
The De Grey share price has accelerated by almost 340% since this time last year. However, it's a different picture when looking at the company's shares year to date. De Grey shares have fallen by around 4% so far in 2021.
On valuation grounds, De Grey commands a market capitalisation of about $1.38 billion, with almost 1.3 billion shares on hand.
