PILBARA GOLD STORY

Read this article earlier during the week in the Australian Financial Review, fits in with the gold explorers in the region and the "Plibara" gold story that is unfolding.

One of this year's best Australian gold discoveries could become one of the nation's top five gold mines if targets included in De Grey Mining's executive remuneration package are any guide.

Shares in De Grey have risen 24-fold over the past nine months after it found gold at Hemi, located about 80 kilometres south of Port Hedland in Western Australia.

Investor confidence that Hemi will one day be the site of a major mine was strong enough to raise close to $140 million of new capital this year, and De Grey's board provided insight to its ambitions in documents filed on Friday.

The board asked shareholders to approve a plan that would see more than half a million dollars worth of shares issued to managing director Glenn Jardine. Those shares are set to vest upon production of an independently verified feasibility study for a mine at Hemi that produces 500,000 ounces of gold a year for "no less than 12 years".

A mine of that size would be among the five biggest gold producers in Australia. Surbiton Associates reported in February that Newmont's Tanami mine in the Northern Territory was Australia's fifth-biggest producer in 2019 after 500,000 ounces were extracted.

Gold fever

New gold discoveries have been eagerly embraced by investors this year amid very strong gold prices and inflated valuations on existing producers.

Of the $1.34 billion raised by listed exploration companies in the three months to June 30, more than 57 per cent was raised by those drilling for gold.

Greatland Gold's London listed shares have risen almost as much as De Grey's since the start of 2020 on the back of encouraging drilling results from the Havieron joint venture with Newcrest Mining in WA.

From microcap status at the start of the year, both Greatland and De Grey now boast billion-dollar valuations, with the latter's market capitalisation standing at $1.5 billion on Friday.

Massive stimulus spending and quantitative easing by many nations in response to the coronavirus pandemic has added fuel to the gold price boom that was ignited in November 2018 when the US Federal Reserve started to signal that it would not raise interest rates as aggressively as expected.

From $US1200 an ounce in mid-2018, gold surged above $US2000 an ounce for the first time this year. It fetched $US1939 per ounce on Friday

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Related Quotes

DEGDe Grey Mining

$1.175 3.98%

1 year1 day

Nov 19Feb 20Jun 20Nov 200.0000.8001.600

Updated: Nov 13, 2020 – 12.10pm. Data is 20 mins delayed.

View DEG related articles

NCMNewcrest Mining

$29.880 2.96%

Nov 19May 20Nov 2020.00030.00040.000

The other criteria for the shares to vest would be for Mr Jardine to declare an official mineral resource of 12 million ounces of gold in the province surrounding Hemi.

For context, that would be almost six times the size of the 2.2 million ounce resource currently attached to the project.

The same vesting conditions will apply to more than half a million dollars worth of options that will be offered to De Grey's technical director Andrew Beckwith if shareholders give their blessing at the annual meeting scheduled for December 4.