De Grey Mining Limited (DEG)

Pilbara Conglomerate Gold

Novo and De Grey Mining refuelling interest in Pilbara gold

Novo Resources Corp (TSX-V:NVO) and De Grey Mining (ASX:DEG) have both announced progress updates on their conglomerate gold targets in the Pilbara. DEG has announced further discoveries of gold nuggets around the Loudens’ Patch, Jarret and Steel Well prospects on the western edge of its (Indee) tenement block. Although previous discoveries of ‘watermelon seed’ shaped nuggets had been found in alluvial channels, it has not been until now that there is direct evidence to show that gold is hosted within the conglomerate sequence in just the same way as that found by Novo at Purdy’s Reward and Comet Well, 80km to the west. Novo too has released an update on the ongoing evaluation program on its tenements. Both announcements have injected some investor interest back into the conglomerate sector that appeared to go to sleep after the initial fervour.

Key Points

DEG discovers more nuggets: DEG has found the first physical evidence of gold hosted in conglomerates with an intact gold nugget and associated fine-grained halo of gold, found within the matrix of a conglomerate at the Loudens Patch prospect. This is the same mode of occurrence seen by Novo 80 km to the west at Purdy’s Reward and Comet Well.

Prospectivity increased around the Loudens range: Furthermore, DEG has discovered additional nuggets and supporting fine grained gold in stream sediment sampling at other locations in the Loudens range. The total number of nuggets found now numbers 200 (90 previously) as the evidence mounts that the conglomerates at the base of the overlying Mt Roe Basalt is the source of the gold. Discoveries of gold at other prospects at the base of the basalts infers a widespread occurrence.

Novo making progress with bulk samples: Novo expect to receive first results from its +5 tonne bulk sampling program by mid to late April. A further 60 bulk samples are to be collected over the coming months to evaluate a 2km strike length of potentially mineralised conglomerates.

Gold discovered in other conglomerate horizons: In a further development, Novo has discovered gold mineralisation in other horizons within the conglomerate sequence at the Powerline showing at Comet Well. Pyrite appears frequently and gold showings have been recorded by metal detector. These detector strikes are being recorded from multiple horizons above the basal conglomerate zone. We believe this adds another dimension to the conglomerate gold story as it now appears that gold is not limited to the basal unit of the conglomerate below the Mt Roe basalt.

Our view: Over the coming weeks, Novo will be releasing its much-anticipated results from its bulk sampling program on its Pilbara tenements. DEG is also about to embark on the next phase of its evaluation of its conglomerate gold mineralisation. Both companies have seen a resurgent share price over the last few weeks as activity increases and results are anticipated. We believe the dormant conglomerate gold sector could receive increased interest driven by macro tailwinds for gold generally, increased interest in the Australian gold sector from overseas investors and, although still at a very early stage, specific interest in the potential for a significant gold discovery in the Pilbara.



This Research report, accurately expresses the personal view of the Author.

DJ Carmichael Pty Limited, members of the Research Team; including authors of this report, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly from client transactions in stocks mentioned in this report. DJ Carmichael Pty Limited acted as Lead Manager in two capital raisings for De Grey Mining Limited and was paid a fee for those services. DJ Carmichael Pty Limited and its advisors hold 2,061,000 shares as principal in De Grey Mining Limited, equivalent to 0.6% of the issued capital. DJ Carmichael Pty Limited and or its advisers hold an interest of 5,000,000 unlisted options (exercisable at $0.04 expiring 10/06/2019) and 1,500,000 unlisted options (exercisable at $0.10 expiring 31/10/2020)in De Grey Mining Limited.

DJ Carmichael Pty Limited is a wholly owned subsidiary of DJ Carmichael Group Pty Ltd ACN 114 921 247.

In accordance with Section 949A of the Corporations Act 2001 D J Carmichael Pty Limited advises that this email contains general financial advice only. In preparing this document D J Carmichael Pty Limited did not take into account the investment objectives, financial situation and particular needs (‘financial circumstances’) of any particular person. Accordingly, before acting on any advice contained in this document, you should assess whether the advice is appropriate in light of your own financial circumstances or contact your D J Carmichael Pty Limited adviser. D J Carmichael Pty Limited, its Directors employees and advisers may earn brokerage or commission from any transactions undertaken on your behalf as a result of acting upon this information. D J Carmichael Pty Limited, its directors and employees advise that they may hold securities, may have an interest in and/or earn brokerage and other benefits or advantages, either directly or indirectly, from client transactions. D J Carmichael Pty Limited believes that the advice herein is accurate however no warranty of accuracy or reliability is given in relation to any advice or information contained in this publication and no responsibility for any loss or damage whatsoever arising in any way for any representation, act or omission, whether express or implied (including responsibility to any persons by reason of negligence), is accepted by DJ Carmichael Pty Limited or any officer, agent or employee of D J Carmichael Pty Limited. This message is intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential and exempt from disclosure under applicable law. If you are not the intended recipient or employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication and its attachments is strictly prohibited.

The Author of this report made contact with the De Grey Mining Limited for assistance with verification of facts, admittance to business sites, access to industry/company information. No inducements have been offered or accepted by the company.

The recommendation made in this report is valid for four weeks from the stated date of issue. If in the event another report has been constructed and released on De Grey Mining Limited, the new recommendation supersedes this and therefore the recommendation in this report will become null and void.

Recommendation Definitions

SPECULATIVE BUY – Potential 10% or more outperformance, high risk
BUY – Potential 10% or more outperformance
HOLD – Potential 10% underperformance to 10% over performance
SELL – Potential 10% or more underperformance
Period: During the forthcoming 12 months, at any time during that period and not necessarily just at the end of those 12 months.

Stocks included in this report have their expected performance measured relative to the ASX All Ordinaries index. DJ Carmichael Pty Limited’s recommendation is made on the basis of absolute performance. Recommendations are adjusted accordingly as and when the index changes.

To elect not to receive any further direct marketing communications from us, please reply to this email and type 'opt out ' in the subject line. Please allow two weeks for request to be processed.

© 2018 No part of this report may be reproduced or distributed in any manner without permission of DJ Carmichael Pty Limited.

Paul Adams

Head of Research

Paul joined DJ Carmichael in 2006 as a Resource Analyst. Paul has an honours degree in Geology, is a member of the Australian Institute of Mining and Metallurgy and has 16 years experience in the mining industry in exploration, open pit, underground and operational roles, both in Australia and overseas. Before joining the company, he was Chief Geologist and Evaluations Manager at Placer Dome's Granny Smith mine. Paul has a Graduate Diploma in Applied Finance and Investment, fromthe Financial Services Institute of Australasia.