De Grey Mining to expand WA exploration footprint with Egina Project earn-in deal

De Grey Mining (ASX:DEG) has struck a binding Heads of Agreement (HOA) with Novo Resources Corp (TSX:NVO) to acquire 50% of the Egina Project in Western Australia. 

The agreement allows De Grey to earn a 50% joint venture interest in the project, which lies immediately south of its Mallina Gold Project, by spending $25 million on Egina over 4 years. 

Under the terms of the deal, De Grey must meet a minimum expenditure of $7 million within 18 months. 

The company also has full program management and sole rights to explore the tenements during the earn-in phase and will remain the manager of the Egina Joint Venture (JV) while it holds a minimum 50% equity. 

Both companies are responsible for funding their respective shares of the JV costs, with each company to have its share of the JV subject to dilution at a rate of 1% per $1 million of non-expenditure contribution. Any party that dilutes to less than 10% will be deemed to have withdrawn from the JV and have its equity converted to a 1% net smelter royalty. 

The Egina Project includes certain third-party JVs that are subject to preemptive rights. If the approval is granted by the third parties, then De Grey will be earning 50% of Novo’s joint venture interest. 

Separately, De Grey will subscribe to a $10 million private placement, resulting in the company increasing its shareholding in Novo to 11.6%. De Grey will also have the right, but no obligation, to increase its interest in Novo as the company seeks to list on the ASX.

Further, De Grey will have the right to nominate a Director to the Board of Novo, provided De Grey holds and retains a minimum 12.5% shareholding in Novo. 

If Novo fails to complete the proposed ASX dual-listing IPO within 6 months of the placement, De Grey has the right to nominate a director provided it holds and maintains a minimum 10% shareholding. 

Commenting on the agreement, De Grey Mining Managing Director Glenn Jardine says: “We believe the Egina Project represents extensions to the prospective geology and fertile structures along strike from our existing discoveries. We are excited to have reached this agreement with Novo and look forward to advancing exploration into these new areas.

De Grey remains focused on the delivery of the Definitive Feasibility Study for the Mallina Gold Project in the September quarter. The DFS is expected to strongly support the development of a major gold processing facility at Hemi, providing a regionally strategic asset in the West Pilbara.

By expanding our exploration footprint in the region by 70%, we increase the potential to discover new gold resources capable of being processed at Hemi in the future”

By expanding our exploration footprint in the region by 70%, we increase the potential to discover new gold resources capable of being processed at Hemi in the future. De Grey’s discovery cost at Hemi is currently less than $10/oz for inferred resources.”

De Grey says its addition of the Egina Project tenements to the broader Mallina Gold Project is an ‘important’ step in its strategy to discover and grow a ‘larger’ resource base centred around the future Hemi processing plant. 

Additionally, the new tenement represents a ‘substantial’ opportunity for the company to discover new ‘large-scale’, intrusion-related gold deposits, similar to Hemi, alongside shear-hosted orogenic gold deposits. 

The Egina Project contains similar geology and structures to those found within the Mallina Gold Project, with many directly along strike from the company’s current exploration areas. 

De Grey Mining is a Western Australian gold explorer and project development company. The company’s activities are focused on its wholly owned Mallina Gold Project in the Pilbara region of Western Australia.

Write to Aaliyah Rogan at Mining.com.au

Images: De Grey Mining Ltd
Author Image
Written By Aaliyah Rogan
Relocated from the East Coast in New Zealand to Queensland Australia, Aaliyah is a fervent journalist who has a passion for storytelling. When Aaliyah isn’t writing stories, she is either spending time with friends and family or down at the beach.