Ann: Further coarse gold in bulk sampling at Loudens Patch, page-73

28-Feb-2019

De Grey Mining Ltd


Updates Demonstrate Project Wide Upside
Impact:Mildly Positive
De Grey has provided positive updates from both its conglomerate target Loudens Patch target and Farno JV highlighting project wide explorational potential. As De Grey continues to outline an increasingly economic operation for its Pilbara project supported by significant exploration upside, we expect mid-tier producers to begin to show an interest.
Highlights:

• • • Conglomerate potential looking increasingly promising. Bulk sample results to date from De Grey’s Loudens Patch West have returned an overall average grade of 3.04g/t Au. These results continue to demonstrate the possibility that Loudens Patch could provide supplemental higher-grade ore to the company's proposed hard rock development plans without necessarily defining a resource. These results continue to that further testing of the conglomerate gold target is warranted.
    • Farno JV shows potential from initial drill results. Reconnaissance drilling completed 20km to the South of the company’s Withnell deposit have delivered new anomalous gold prospects at Quartz Hill, Clarke and Gillies. A total of 2,310m of drilling was completed at the three targets returning grades ranging from 0.23-1.19g/t Au over various quartz vein and anomalous gold zones. De Grey expects to earn its initial 30% interest (can earn up to 75%) in the Joint Venture with Novo Resources through the completion of planned 2019 work programs.
    • Considerable news-flow coming from multiple prospects. We don’t expect the company will ease-up on its current momentum in 2019. As it pursues resource expansion throughout the entirety of its Pilbara Gold project, we expect updates are coming on capital costs, operating costs and mine plans for the proposed project bolstered by further drill results.

Valuation:
Market does not value Pilbara Project’s current resources or expansion potential.

• • 
    Our preliminary estimate for De Grey’s hard rock assets are worth at least A$0.30/sh. These estimates do not account for the optionality the company has with its conglomerate targets. We believe that as the company demonstrates the exploration upside and scale potential of PGP, it is likely to become a takeout target for larger peers.

Upcoming catalysts:

• • 
    1) Ongoing exploration results and 2) Project development updates.