De Grey to acquire Kalamazoo’s Ashburton Project

De Grey Mining (ASX:DEG) has signed an exclusive option agreement to acquire Kalamazoo Resources’ (ASX:KZR) Ashburton Gold Project in Western Australia. 

De Grey, which has a $2.22 billion market capitalisation, says Ashburton consists of granted mining leases and exploration licences, including Kalamazoo’s existing 1.44 million ounce gold resource, near its existing Hemi Gold Project. 

De Grey Managing Director Glenn Jardine says Ashburton is a ‘regionally strategic’ asset that provides the company with one of the largest unmined gold resources in the Pilbara.    

“The proposed 10Mtpa gold plant at Hemi, including a 800,000tpa OPOx circuit, will be a regionally strategic asset that provides the company with the potential to treat gold ore and concentrates from other regional gold Projects. This leverage has the potential to increase Hemi’s annual gold production rate, economic returns and project life. 

Ashburton’s 1.44 million ounce resource is one of the largest unmined gold resources in the Pilbara outside of Hemi. It has previous mining history, an extensive drilling database and development concept studies which indicate it may be complementary with our development strategy for Hemi. 

The company’s current Scoping Study into its 2.2Moz Hemi Regional Resource is also consistent with this strategy. However, the potential development of additional production sources outside the Hemi deposits would occur only following the commencement of production and cashflow from Hemi itself.”

As part of the agreement, De Grey must action a $3 million option fee payable to Kalamazoo within 5 business days of option execution. The option period is 12-18 months (at De Grey’s election), with the company to commit $1 million minimum expenditure for exploration, testwork, and studies as part of its due diligence. 

Execution of the option would result in a total payment of $30 million within 18 months of exercise. Payments can be made in cash or shares in De Grey shares at the buyers selection. 

During the option period, De Grey announces it plans to complete a detailed review of the current Mineral Resource Estimate (MRE) of 16.2 million tonnes grading 2.8 grams per tonne gold for 1.44 million ounces across 5 deposits.

Development studies undertaken by Kalamazoo, and previous owners, to date have highlighted the potential for Ashburton to produce a ‘high-grade’ gold concentrate from processing open pit ore. 

Further, initial diamond drilling by De Grey indicates the potential to economically deliver concentrate at some future time from Ashburton to the proposed Hemi pressure oxidation plant, with a view to potentially increase Hemi’s annual gold production rate and/or extend Hemi’s operational life. 

De Grey has established business development and studies teams separate to its Hemi Project development team to conduct diamond drilling on Ashburton. 

The Ashburton Project exploration package covers 217km-square and sits about 35km from the township of Paraburdoo and is in close proximity to potential support and services. 

Additionally, pre-existing payments and royalties to previous owner Northern Star Resources (ASX:NST) will be assumed by De Grey in the event it exercises the option. 

The payments and royalties include $5 million on mining of the first 250,000 ounces of ore and a 2% net smelter royalty (NSR) on the first 250,000 ounces of gold produced, with a 0.75% NSR royalty of any subsequent gold produced from the tenements. The NSR will be applied to any other metals produced from the tenements. 

De Grey is a Western Australia gold explorer and project developer focused on defining a tier one project with ‘district-scale’ potential. 

As of 30 December 2023, De Grey had $342.729 million cash and cash equivalents at hand, according to its latest quarterly report.

Write to Adam Drought at

Images: De Grey Mining
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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.