A West Australian gold mining company claims it has struck the potentially largest discovery ever in the state’s iron ore-rich Pilbara region.
- De Grey Mining stocks have skyrocketed by 411 per cent in one month since drilling results were announced in February
- The discovery was made at a site called Hemi, part of the Mallina Gold Project, 80km south of Port Hedland
- Analysts say more work needs to be done, with more drilling results needed
But analysts are divided on whether it will spark a new gold rush, as other miners try their luck in the region.
De Grey Mining technical director and operations manager Andy Beckwith said the scale of the discovery had never been seen before in the Pilbara.
While gold stocks have been somewhat dampened by fears over the coronavirus pandemic, investors have celebrated De Grey Mining’s discovery, sending its stocks 411 per cent higher over a month since the drilling results were released in February.
Gold has traditionally been seen as a safe haven for investors, and many others are spending time looking for it.
Figures from the Australian Bureau of Statistics show mineral exploration expenditure rose 5.6 per cent to $722.1 million in December 2019.
The largest increase was in gold exploration, which rose 7.5 per cent worth $21.1 million.
The sceptical investor: is a gold rush imminent?
The gold system was discovered at a site called Hemi, which is part of De Grey Mining’s Mallina Gold Project, located about 80 kilometres south of Port Hedland.
Hartleys gold analyst John Macdonald said it was too early to say for sure how big the find would be.
“A lot of work still needs to be done,” he said.
“I would be a little more cautious, waiting until the next set of drilling results.
“They really only have a handful of holes of RC [reverse circulation drilling] or diamond, which is the type of drilling you need to satisfy the quality requirements. It typically takes between 100 and 150 holes to delineate a big system that they are looking for.
If proven, De Grey Mining would join a crowded field.
More than 75 per cent of the state’s gold comes from 10 producers.
What they found
De Grey Mining’s Andy Beckwith said the company’s latest drilling had intersected a thick and high-grade gold mineralisation, with a strike length of more than 240 metres.
“With the new reverse circulation drilling, there is potentially a 200-metre-wide zone — that’s almost unheard of in the gold scene,” he said.
The drilling defined two separate parallel gold zones, named Aquilla and Brolga.
“It has exceptionally wide intersections, we’ve got mineralisation that is very consistent, and we are just busily trying to extend them and see what we have,” Mr Beckwith said.
“Possibly it could be very different to anything in Western Australia, maybe even Australia.”
Yilgarn versus the Pilbara
The Pilbara has a scattered history of success and failure when it comes to striking gold, compared to the Eastern Goldfields, Australia’s premier gold province, located in the Yilgarn Craton.
But mineral economist Professor Allan Trench, from the University of Western Australia, was optimistic about the Pilbara’s future gold prospects.
“Like mining everywhere, it comes with its location challenges but certainly ones that can’t be overcome,” Dr Trench said.
“Both are on very ancient terrain, Archean-aged rocks, which go back into the billions of years ago, also known as greenstone rocks.
“Geochemically the two types of crust are different, structurally they are different, and the empirical evidence is that the Yilgarn block does host significantly more gold.
The Pilbara averages gold production in the low hundreds of thousands of ounces a year, compared to Kalgoorlie’s Super Pit, also known as the Fimiston project, which has an annual production rate of 700,000 ounces of gold a year.
In its lifetime, Kalgoorlie’s super pit has produced more than 16 million ounces of gold.