The De Grey Mining Limited (ASX: DEG) share price is having a very strong day.
In afternoon trade, the gold developer's shares are up 13% to $1.10.
This means the De Grey share price is now up almost 20% over the last two trading sessions.
Why is the De Grey share price rocketing higher?
Investors have been buying the company's shares since the release of the pre-feasibility study for its Mallina gold project in Western Australia.
That study revealed upgrades across the board to previous estimates. De Grey expects a life of mine (LOM) of up to 13.6 years, average processed grade up to 1.6 g/t Au, recovered gold of up to 6.4 million ounces, LOM EBITDA of $7.1 billion, and total pre-production costs of up to $1.05 billion.
De Grey managing director and CEO Glenn Jardine said:
Total production has increased by nearly 50% from the scoping study to 6.4Moz with the annual gold production rate increasing by around 25% to 540,0000zpa over the first ten years.
Also getting investors excited were comments relating to its Hemi deposit. Management revealed that its maiden Hemi reserve has 5.1 million ounces of gold at a grade of 1.5g/t Au. It highlights that this is "one of the largest and highest grade maiden reserves in recent decades."
Positive broker response
It wasn't just investors that responded positively to the news.
According to a note out of Macquarie, its analysts have responded to the update by retaining their outperform rating with an improved price target of $1.65.
Even after rising strongly this week, this implies potential upside of 50% for the De Grey share price over the next 12 months.
Macquarie was pleased with the material increase to the pre-feasibility study and appears optimistic ahead of the final investment decision next year.
