Market Open Radar: Hemi project could be the most significant Australian gold discovery in decades
October 16, 2023When it comes to potential gold discoveries in Australia, few projects have generated as much buzz as De Grey Mining’s Hemi project. Located in Western Australia’s Pilbara region, Hemi has the potential to be one of the most significant Australian gold discoveries in decades.
De Grey Mining is a Pilbara-focused explorer of its flagship Hemi gold project in WA. Although Hemi was once known as the Mallina gold project, De Grey was inspired by its 2019 discovery of Hemi to rename it in 2020. The deposit has an intrusion-hosted form of gold mineralisation uncommon to the Pilbara region, with a scale of mineralisation not seen before in Mallina Basin.
The project is large, with a high grade. The more comprehensive project has a mineral resource estimate of 9.5 million ounces of gold grading of 1.3 grams a tonne. If turned into a mine, Hemi could prove quite profitable, given the resource has a low-strip ratio and can be mined as a low-cost open pit. The project’s mineralisation remains open in multiple directions, with significant potential to further extend mineralisation.
De Grey is tracking towards producing a Hemi pre-feasibility study early next year. Analysts have tagged shares in Hemi’s owner, De Grey, as a buy, with price targets of about $1.35 to $2.45. Macquarie analyst Greg Barnes has set a $2.45 target, dubbing De Grey “one of the most exciting gold exploration companies in Australia,” with Hemi a big reason.
However, the Hemi project has its challenges. It is in a remote area of the Pilbara with limited existing infrastructure. Roads, water pipelines and other infrastructure must be built before the project can be produced. While the company has a respected team with a proven record of accomplishment, it is small and will need to attract significant funding to open a mine. Environmental approvals are needed, which could prove time-consuming and complex.
Despite the challenges, De Grey Mining’s Hemi project is a testament to the potential for significant gold discoveries in Australia. If the company successfully navigates the project’s challenges and brings Hemi into production, it could be a significant producer for years and a major contributor to Australia’s gold mining industry. When you look over the price charts for Western Australian gold explorer and developer De Grey Mining, one thing is clear – when gold moves, it moves more.
The company has the monster Hemi project in WA’s Pilbara region on its asset register, a project that could make its eventual developer a significant producer for years to come.
We look at why Hemi is on our Radar.
Hemi project’s up
ASX200 member De Grey Mining (ASX:DEG) is a Pilbara-focused explorer of its flagship Hemi gold project in WA.
Although Hemi was once known as the Mallina gold project, De Grey was inspired by its 2019 discovery of Hemi to rename it in 2020.
Hemi is named for the shape of the gold deposit, which looks like a hemi engine.
The deposit has an intrusion-hosted form of gold mineralisation uncommon to the Pilbara region, with a scale of mineralisation not seen before in Mallina Basin.
Developer De Grey hopes Hemi has the potential to be one of the most significant Australian gold discoveries in decades.
Outside of Hemi, there are other targets for the project, although they are less of a priority.
Advantages
De Grey’s Hemi project is one of Australia’s most significant undeveloped gold projects.
The project is large, with a high grade.
The more comprehensive project has a mineral resource estimate of 9.5 million ounces of gold grading of 1.3 grams a tonne.
If turned into a mine, Hemi could prove quite profitable, given the resource has a low-strip ratio and can be mined as a low-cost open pit.
The project’s mineralisation remains open in multiple directions, with significant potential to further extend mineralisation.
De Grey is tracking towards producing a Hemi pre-feasibility study early next year.
Analysts have tagged shares in Hemi’s owner, De Grey, as a buy, with price targets of about $1.35 to $2.45.
Macquarie analyst Greg Barnes has set a $2.45 target, dubbing De Grey “one of the most exciting gold exploration companies in Australia,” with Hemi a big reason.
During intraday trading yesterday, De Grey shares were changing hands for $1.19 each.
De Grey Mining has a strong relationship and mining agreement with the local Kariyarra people.
Issues
Hemi project is in a remote area of the Pilbara with limited existing infrastructure.
Roads, water pipelines and other infrastructure must be built before the project can be produced.
While the company has a respected team with a proven track-record, it is small and will need to attract significant funding to open a mine.
Canaccord Genuity analyst Chris Gottschalk has set a $1.35/share price target, labelling De Grey a “high-risk, high reward” investment because of the early stage of its exploration projects.
Environmental approvals are needed, which could prove time-consuming and complex, but De Grey has just been advised from the EPA that Hemi will now be assessed on referral information followed by public review, allowing for the timely development of secondary approvals for Hemi.
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