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.


Disclaimer

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

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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.