Turner River results to support production at Wingina

With the overall Wingina drilling program now finalised, De Grey Mining (ASX: DEG) has released further drilling results confirming shallow high grade gold lodes at Turner River located 50 kilometres south of Port Hedland in the Pilbara region of Western Australia.

DEG is currently assessing the most advanced prospects within the Turner River project that are considered likely to provide further additional open-pittable gold resources which will support the proposed Wingina development.

Consequently, the encouraging drilling results released in relation to Turner River on Tuesday are significant in terms of the company’s progression from explorer to producer.

The results included 13.6 metres grading 3.6 grams per tonne including 10.5 metres grading 4.4 grams per tonne. There was a particularly strong return delineated from 70.5 metres which featured 9.6 metres grading 7.6 grams per tonne.

Management also highlighted that deeper drill holes confirmed extensions to the East and at depth, demonstrating an envelope of lower grade gold mineralisation hosted in a thick shear zone, now termed the Wingina Shear Zone which shows internal high-grade extensions to a depth of 350 metres.

There is a significant share price catalyst on the horizon for DEG with the company expecting to provide a resource update on Wingina in October. This will focus on high-grade lodes identified in recent months.

However, it should be noted that exploration results are not an indication of a company’s prospects of moving to commercially viable production, and as such shouldn’t be used as a basis for an investment decision. Seek professional financial advice for further information about the company.

Given DEG is a relatively small company in the early stages of exploration it can be prone to commodity price volatility and should be considered a speculative investment.

That said, the following outline of exploration success to date holds promise for the future.

In terms of the recent drilling campaign it is worth noting that high-grade lodes were continuous over the entire 600 metres strike length, an important factor in terms of assessing future mining optimisation options.

Management highlighted that structural information underlying today’s results was limited due to the oxide material and highly variable recoveries achieved while drilling. This resulted in the second planned hole being deferred until additional equipment can be used to improve recoveries.

The upside to this development is that due to core losses the drill results can be viewed as the minimum gold intercept for that interval as the missing core is classed as a zero gold grade when calculating the combined intercepts.

It is reasonable to assume that this is probably not the case and therefore the grade would increase if the missing core was mineralised.

The Wingina gold deposit currently has a Total Mineral Resource Estimate of 268,000 ounces of gold, including 156,000 ounces in the measured category and 48,000 ounces in the indicated category.

Based on exploration results to date DEG considers the Wingina deposit will most likely be developed as an open pit and underground mining operation with additional ore sourced from satellite open pits within economic trucking distance.

The Mount Berghaus (43,000 ounces) and the Amanda (35,000 ounces) gold deposits, both located within 10 kilometres of Wingina, are expected to provide additional ore feed.