27-Sep-2024: Media-Speculation-in-The-Australian-newspaper.PDF

Ostensibly this announcement is to deny the rumour is true, but the reality is that it spreads the rumour from just readers of The Australian newspaper and website to everybody - and while DEG clearly haven't received a buyout proposal from Agnico Eagle Mines, i.e. there is no proposal on the table today, it doesn't mean the speculation is baseless, as DEG have commented that apart from simply stating that they have NOT received a proposal from AEM (listed on the NYSE in the USA and the TSE in Canada), it is DEG's policy to not comment on rumours or media speculation. 

So they could well be in talks with AEM that have not yet progressed to a written offer that needs to be disclosed, or for that matter they could be in talks with a number of parties; we do not know. We do know is that with a market capitalisation of $3.2 billion (with a "B", not an "M"), DEG is already too large to be taken over by any Australian listed and Australian HQ'd gold producer except for NST - and Northern Star haven't shown any interest in DEG to date, so if DEG DO get taken over, it would have to be by a large multi-national like AEM who have a market capitalisation of A$63 Billion according to this: https://companiesmarketcap.com/aud/agnico-eagle-mines/marketcap/

The DEG share price hasn't reacted much to this news - or lack of news - being up 5 cents roughly, same as they were before the trading pause and "Nothing to see here" announcement, and still around 5 cents/share below their year high of $1.445 (set intraday on 4-Dec-2023).

There are always rumours, but I don't hold DEG, and I'm not tempted to buy them. As a rule, I don't try to make a quick buck on these M&A situations, because they often don't pan out how you expect they will. And that's assuming there is ANY substance to the rumours published today by The Australian.

I think there likely is some fire there behind the smoke, but I don't know how it will likely play out. DEG still looks expensive to me for a project developer who doesn't produce anything yet.

Argonaut - Hemi DFS Review: 20231017-DEG-Argonaut-Resreach-DFS-Review.pdf [17-Oct-2023]

Macquarie - Hemi DFS Delivered & A$300m Raise Launched: 20230929-DEG-Macquarie-Research-DFS-Delivered-300m-raise-launched.pdf [29-Sep-2023]

RBC Capital Markets - Seize De Grey: Initiating DEG at Outperform: 20230803-RB-of-Canada-DEG-Seize-De-Grey-Initiating-De-Grey-at-Outperform.pdf [03-Aug-2023]

Macquarie - Mallina Growing; DFS expected in Q1 of 2024: 20230726-DEG-Macquarie-Research-MallinaGrowing-DFS-Expected-in-Qtr-1-2024-1.pdf [26-July-2023]

Bank of America (BoA) Securities - A future top 5 Australian gold producer, initiating coverage with a Neutral: 20230717-Bank-of-American-DEG-A-future-top-5-Australian-gold-producer-Initiating-coverage-with-a-Neutral.pdf [17-July-2023]

Canaccord Genuity (CG) - Hemi Resource continues to increase in scale and confidence: 20230615-Canaccord-Hemi-Resource-continues-to-increase-in-scale-and-confidence.pdf [15-June-2023]

Barrenjoey - Advancing a Tier 1 Gold Project: 20230504-Barrenjoey-De-Grey-Advancing-a-Tier-1-gold-project.pdf [04-May-2023]

Source: Argonaut Report: 20231017-DEGG-Argonaut-Resreach-DFS-Review.pdf

Hemi Gold Deposit - De Grey Mining

Investor Centre - De Grey Mining

De Grey Mining - Western Australian Gold Explorer

De Grey Mining, gradually turning the Pilbara region into swiss cheese.

10-May-2024: DEG is raising capital again - this time it's another $600m @ $1.10/share; DEG were trading at $1.265 when they called the TH (on Wednesday 8th) for the CR, however they've recently been over $1.30, up to $1.375 (closing price on 12th April, 4 weeks ago).

08-May-2024: Equity Raise Investor Presentation - De Grey Mining - Hemi Gold Project

10-May-2024: Successful-Institutional-Bookbuild.PDF

Also: GOR-Gold-Road-Participates-in-De-Grey-Entitlement-Offer.PDF

Gold Road (GOR) are taking up their full entitlement in this CR. GOR were 19.99% owners of DEG prior to this CR and I presume their full entitlement allows them to continue to maintain that percentage ownership.

Here's the indicative timetable for the retail component (retail entitlement offer):

The fully underwritten retail component of the Entitlement Offer is expected to raise a further approximately $85.6 million (via the issue of approximately 77.8 million New Shares. Eligible retail shareholders, being shareholders with a registered address in Australia or New Zealand as at the record date of 7:00 pm Friday, 10 May 2024, not being US persons or acting for the account or benefit of persons in the US, will be invited to participate in the Retail Entitlement Offer at the same Offer Price and offer ratio (1 New Share for every 7.95 existing De Grey shares) as the Institutional Entitlement Offer.

Eligible retail shareholders can choose to take up all, part or none of their Entitlement. Eligible retail shareholders who take up their entitlement in full can also apply for additional shares in excess of their entitlement up to a maximum of 50% of their entitlement under a ‘top-up’ facility. Additional new shares will only be available where there is a shortfall between applications received from eligible retail shareholders and the number of new shares proposed to be issued under the Retail Entitlement Offer. 

Disclosure: I do not hold DEG shares. Too early stage for me - and too much already in the price. DEG was already a $2.3 Billion company BEFORE this CR, and they haven't yet built their first gold mine. Here's a couple of slides from their capital raising presso (link at the top of this straw) that show how much more money they are still going to need before they actually make a dollar:

And that's for a project where the DFS estimates a total capital cost of $1.345 Billion, and these things rarely end up being built on time and on budget, especially on budget.

Their remaining funding requirements are at least $766m AFTER this $600 capital raising. And they are project developers, not producers, so there is no production income, and won't be for years. They hope to have their funding sorted out by the end of this calendar year, and then they have to do the EPC tendering process, select the winning bidder, and then the thing has to be built, commissioned, fine-tuned, and reach commercial production. And that don't all happen overnight.

If they have as much gold there at Hemi as what they think they probably have, then there would likely be upside from here, but my belief is that they're already priced for more than what they've found and proven to be there, so there's already at least SOME upside already priced in, and therefore there is some downside risk in buying at these prices if things don't pan out as they expect they will in terms of proving up the full extent of the deposit and the gold grades within it.

My preference is to usually go with the best gold producers, however on those occasions when I "invest" in a project developer, I want the plant (gold mill) to already be under construction - and be fully funded already, which DEG are not.

I mean, They Have A Plan. Everybody Has A Plan.

Not all plans... go to plan...

Things can and do go wrong sometimes. That's the risk with backing a project developer, no matter how good their project is, and Hemi is a damn fine deposit, but it's all under the ground at this point, and we don't yet know how big it is and how good it is. It's big. It's good. But HOW big and HOW good? They've spent years drilling, but my observation is that every time they say they have more gold the share price moves beyond what they've proven they've got, AGAIN, so there's always been upside priced in, and there may well be for years to come, until there isn't.

Good luck to all holders - but I'm going with gold producers over gold project developers at this point.

15-June-2023: Mallina-Gold-Project-Resource-Statement---2023.PDF

15-June-2023: The West Australian newspaper article: Mallina resource upgrade triggers underground studies by De Grey Mining | The West Australian [1:16pm]

Plain Text: https://thewest.com.au/business/gold/mallina-resource-upgrade-triggers-underground-studies-by-de-grey-mining--c-10985826

Excerpt:

An underground expansion of Australia’s biggest undeveloped gold deposit is looking more likely after a $3 billion resource upgrade by De Grey Mining.

With an eagerly-awaited feasibility study looming, the gold hopeful on Thursday revealed that ongoing drilling had increased the estimated resource at the Mallina gold project in the Pilbara by another 1.1 million ounces to 11.7 million ounces.

The additional in-ground gold is valued at nearly $3b at current prices.

--- end of Excerpt ---

[15-June-2023: DEG closes down 1 cent @ $1.275]

That was Thursday. Then today (Friday)...

16-June-2023: Response-to-West-Australian-Article.PDF [from DEG today]

[16-June-2023: DEG closes up 8.5 cents @ $1.36 - so up +6.67%]

16-June-2023: The West Australian newspaper: Herd on the Terrace: Why did De Grey get an ASX ‘please explain’ | The West Australian [posted to their website at 6:18pm]

Gold hopeful De Grey Mining was put into a trading pause on Friday after the ASX demanded it “clarify” a report about the previous day’s resource estimate at its undeveloped Mallina gold project in the Pilbara. Credit: Photography Project/Photography Project.

The fun police at the ASX in Perth have been at it again, and this time the Bull’s irresponsible colleagues have to take the blame.

Gold hopeful De Grey Mining was put into a short trading pause on Friday after the ASX demanded it “clarify” a report in this august news organ about the previous day’s resource estimate at its undeveloped Mallina gold project in the Pilbara.

The Perth listings compliance team got themselves in a tizz over our correspondent’s contextual reference to the upgrade being the equivalent of $3 billion of additional gold at current prices.

Now, yes, it’s against the listing rules for a company to put an in-ground value on its gold, but there was no suggestion De Grey did. That was down to our naughty correspondent, who was just adding a bit of colour.

The Bull can envisage a lot of trading disruption if the ASX compliance coppers are going to go questioning every headline or article which they deem puts a company potentially in breach of the listing rules.

Which raises a couple of other points. The same article was up online all day on Thursday but seemingly went unnoticed by the ASX bright sparks.

And secondly, they do know that journalists aren’t obliged to consult the listing rules before they publish, right?

Passed the pub test

Raleigh Finlayson has put in some hard yards at the Western Suburbs hangout of Steve’s to help get his Genesis Minerals’ buyout of St Barbara’s Sons of Gwalia over the line.

The Genesis boss did some last-minute pitching to a couple of dozen investors lured to the waterfront drinking hole on Thursday night with the help of stockbroker Euroz.

The deal goes to shareholders on Tuesday and is expected to get up, despite the efforts of rival suitor Silver Lake Resources.

--- end of excerpts ---

Disclosure: I do NOT hold shares in DEG (De Grey Mining) or GMD (Genesis Minerals). I do hold shares in SBM (St Barbara), who were mentioned at the end there in relation to GMD's Raleigh Finlayson and drinks at Steve's in Nedlands.

04-Dec-2020:  Mallina Gold Project Exploration Update

You can download DEG's (De Grey Mining's) announcements from their own website here and their company presentations from here.  However, today's announcement hasn't been uploaded to their website just yet (as I type this), so I've used the ASX version.

De Grey also have a very useful webpage containing links to a host of research on them by Bell Potter, Canaccord Genuity, Argonaut, Hartleys and Sprott Capital - see here.

I do not hold DEG shares, but if they live up to their hype, my decision NOT to own shares in them will likely be one I will regret.  My main reason for not holding them is that it seems to me that there is too much already baked into their share price.  However, if they pan out to be anywhere near the best case scenario, they will be going higher.  My own personal preference is generally to try to find and buy shares in companies with plenty of potential upside but limited downside, and in the gold space that tends to be the more unloved ones rather than the more popular ones.  DEG is one of the more popular ones. 

That said, while I hold plenty of gold companies in my portfolios, I currently have zero exposure to gold explorers and project developers other than those who are already producing from other mines.  All of my gold exposure is at this point via positions in a variety of producers, plus QAU, a currency hedged gold ETF.

30-Nov-2020:  High Grade Depth Extensions and Visible Gold at Falcon

DEG rose +3.85% today on the back of these latest drilling results.  BGL rose more, +4.4%, on no news.  They were swimming against the tide however with the bulk of the sector heading south again today led by PRU (-4.7%), RRL (4-2%), KLA (-4.1%), GOR (-4%), RSG (-3.8%), OGC (-3.6%), SBM (-3.2%), EVN (-2.6%), RMS (-2.6%), RXL (-2%), SAR (-1.9%), NST (-1.9%), AGG (-1.7%), CMM (-1.5%), and rounded out by NCM & SLR (both -0.6%).  I bought more NST, RRL & SBM shares today, to add to existing positions.  I do not hold DEG shares.

30-Oct-2020:  Quarterly Cash Flows Report - September 2020   plus   Quarterly Activities Report - September 2020

That second link is from the De Grey Mining Website:  https://degreymining.com.au/reports/ because the ASX site version of that document has been rendered partially unreadable by their "FOR PERSONAL USE ONLY" up the left hand edge of every page.

DEG also have a broker research / coverage page:  https://degreymining.com.au/broker-research/

That's something I wish all companies would do.  Unfortunately most companies do NOT provide links (on their website) to broker reports about them, and in that regard DEG is certainly one of the better ones.

[I do not current hold DEG shares, based on valuation vs risk, although I do love the gold sector, and have plenty of exposure to it via other companies.]

12-Oct-2020:  Thick High Grade near surface hits continue at Falcon

7-Oct-2020:  Encouraging Extensional & Infill Results at Aquila & Crow

While DEG have pulled back a little (along with the majority of gold sector companies), they're still not at levels that I am prepared to pay.  I would probably buy some around 70 cps, but up around $1.20 to $1.25 where they are now is too elevated for me.  In my opinion there is still a lot of further upside already baked into that price.  If they meet those expectations, that's fine.  If they exceed them, people buying here will do well.  But if they don't live up to that promise - then there's obviously significant downside from here.  They are not priced on what they've found already - they're priced on expectations of them finding a lot MORE gold than what they've already found.  Those are not odds I'm comfortable with personally.

15-Sep-2020:  Falcon - Drilling Update

Drill results confirm Falcon as a growing new opportunity

Highlights:

• Recent aircore drilling extends the Falcon intrusion a further 640m to the south for an overall strike of 2.4km.  Remains open to the south.
• New RC and diamond drill results, over the northern most 320m strike continues to confirm broad gold mineralisation down to 250m depth.  Remains open at depth.
  • 92m @ 1.3g/t Au* from 167m in HERC233D (section 7691720N)  [*This intercept includes the previously reported precollar intercept of 24m @ 0.8g/t.]
  • 66m @ 1.1g/t Au from 114m in HERC253 (section 7691960N)
  • 51m @ 1.5g/t Au** from 205m in HERC254D (section 7691960N) [**Ends in mineralisation with diamond tail in progress.]
• Aircore drilling will progressively move to the south to test for strike extensions.  RC and diamond drilling to test for extensions at depth.

De Grey Technical Director, Andy Beckwith, commented:

“Falcon is rapidly becoming a large intrusive gold system at least 2.4km in strike that remains open in all directions.

Extensional RC drilling is defining strong broad gold mineralisation with many holes ending in mineralisation. The first diamond core tail has extended mineralisation down to 250m depth with a true width of approximately 70m. The gold mineralisation is consistent throughout the strongly brecciated and altered intrusion.

Falcon is an exceptional drilling target and drilling is advancing as a priority. The scale of Falcon demonstrates its potential to significantly add to the overall gold endowment at Hemi. 

The mineralised footprint at Hemi also remains open to the west of Aquila, to the north-east and west of Brolga, at Brolga south and to the north-west of Crow.”

--- click on link above for more ---

14-Sep-2020:  A$100 million Capital Raising

A$100 million Capital Raising Highlights

• Commitments received for a Placement of approximately 83.4 million shares priced at A$1.20 per share to raise $100 million (before costs) through clients of Argonaut Securities Pty Ltd and Canaccord Genuity (Australia) Limited as Joint Lead Managers and Bookrunners.
• Pricing represents a 16.4% discount to the last traded share price and a 1.0% premium to the 10 day VWAP (volume-weighted average price).
• The Placement provides a strong endorsement of De Grey’s assets, being more than 3 times overbid.
• Further major shareholder participation, led by DGO Gold Limited, and global institutional participation.
• Placement concluded as De Grey Mining is poised to enter the ASX 300 index and the GLDJX index.
• Proceeds of Placement to fund ongoing extension and definition drilling of the Hemi discovery, testing of mineralised intrusions close to Hemi, regional exploration of intrusion and shear-hosted targets, enhanced site infrastructure and early stage project de-risking studies.

Managing Director Glenn Jardine said: “The Hemi discovery in the Mallina Basin is rapidly moving towards our goal of defining a Tier 1 project with true district-scale potential. Mineralisation in the Hemi area has been identified over an area spanning +2,500m north-south and +2,000m east-west, with depths of +400m in areas tested.

“This significant capital raising puts De Grey in a position of financial strength to turn this potential into greater value for all of our shareholders. The support of most of our long-term shareholders together with some new shareholders, allows the Company to maintain its substantial drilling program whilst accelerating exploration in some areas. Our intention is to maintain a minimum six drill rigs in operation well into the second half of 2021 which will continue to generate results and growth in our gold inventory. We already have 2.2 million ounces of Mineral Resources from our shear hosted deposits and expect to add substantially to this through the delivery of a maiden Mineral Resource Estimate for the Hemi discovery by mid-2021.

“The participation of many global precious metals and long only generalist funds in the placement is another strong endorsement of both our potential and our strategy. We thank all the groups that participated.

De Grey has never been better placed to achieve our goal of realising a Tier 1 gold project at Hemi.”

--- click on link above for more ---  [I don't hold DEG.  I note that they have not allowed for any participation by ordinary retail investors in this raising.  No SPP, or EI.  That's cheaper for the company, but arguably not as fair for ordinary investors.]

10-Sep-2020:  Investor Presentation - September 2020

De Grey Mining (DEG) requested a trading halt before the market opened yesterday, and they remain in that trading halt, which was called for to enable them to arrange and conduct a capital raising.  The link above is to the Investor Presentation they put out today as part of that raising.  If you look at their share price chart, you can see that they've gone vertical of late, and it's easy to see why they're raising capital up here.

I don't hold DEG shares.  I have felt there was too much already baked into the share price, for an explorer and developer.  They don't produce anything yet.  And their market capitalisation is now over $1.7 Billion!!  I know they've been finding gold, and good grades too, but that share price is suggesting that they have a MASSIVE gold deposit - which just has NOT been proven yet.  The more they find and report - the more real the picture/dream becomes, but it's just not my cup of chai.  I prefer it when I think the company is trading BELOW where they should be, and I can see clear upside, and I can't see clear upside with DEG unfortunately.  It might well be there, but I need a lot more proof before I shell out $1.40/share for DEG.  However, good luck to all holders.

I've said before, of all the over-hyped gold explorers and developers on our market, DEG is definitely one of a very small group that actually do seem to have a good chance of becoming a mid-tier Australian gold miner in 4 or 5 years' time.  It's obvious that they will become a producer if they're not taken out by someone before they reach that point, but I'm saying it looks like they have a decent shot at becoming a serious producer, like top-15 or better, if they keep finding gold at the rate they have been.  Unfortunately, from where I sit, I reckon most of that upside is already in their share price.  I'm not saying they can't go higher.  They probably will.  But the risk/reward equation is not favourable at these levels, in my opinion.  Too much downside risk if they don't live up to the hype - for me anyway.

02-Sep-2020:  Falcon - Major new gold discovery at Hemi

1.8km long, up to 80m thick, altered intrusion immediately south of Aquila.

De Grey Managing Director, Glenn Jardine, commented:

“The discovery of the Falcon intrusion demonstrates the potential to significantly grow the gold endowment at Hemi as we expand our drilling footprint.

Reinterpretation of the overall geology shows the Aquila intrusion strikes for 1.2km in a southwest orientation and the new Falcon intrusion strikes for over 1.8km in a distinctly north-south orientation. Aircore drilling is continuing to track the Falcon intrusion to the south.

Opportunities to extend Hemi and to identify similar large scale, near surface Hemi-like intrusions in the Greater Hemi area are being actively pursued, with two aircore rigs in operation.”

--- click on link above for more ---

13-Aug-2020:  Aquila mineralisation extends 400m vertical & New Crow Lode

Aquila mineralisation extends to 400 vertical metres

New lode identified at Crow

Highlights:

• Wide-spaced drilling extends Aquila mineralisation down to 400 vertical metres and remains open:
  • 39.0m @ 1.3g/t Au from 389.0m in HERC104D (incl 8m @ 2.8g/t Au from 415.0m)
  • 10.2m @ 2.5g/t Au from 254.0m in HERC111D
  • 5.0m @ 3.3g/t Au from 407.7m in HERC105D
  • 6.0m @ 1.7g/t Au from 268.0m in HERC110D
  • 2.0m @ 7.1g/t Au from 211.0m in HERC100D
• New lode at Crow, approximately 100m north of Aquila, defines mineralisation to over 400m down dip and remains open:
  • 6m @ 2g/t Au from 41m in HERC202, and
    • 16m @ 1.5g/t Au from 72m and
    • 23m @ 2.8g/t Au from 95m (incl 3m @ 8.9g/t Au from 104m)
  • 9m @ 3.9g/t Au from 138m in HERC207 (incl 2m @ 14.7g/t Au from 138m)
  • 3.4m @ 4.1g/t Au from 420.0m in HERC111D, and
    • 6.0m @ 1.9g/t Au from 445.0m
• Additional Crow mineralisation requiring further definition drilling includes:
  • 10m @ 2g/t Au from 125m in HERC135
  • 6m @ 2.1g/t Au from 180m in HERC080
  • 4.3m @ 2.7g/t Au from 129.2m in HERC081D, and
    • 2.4m @ 6.4g/t Au from 163.5m
  • 13m @ 1.1g/t Au from 50m in HERC123

De Grey Managing Director, Glenn Jardine, commented:

“Hemi is continuing to build through our drilling, this time with Aquila depth extensions confirmed and a new adjacent lode at Crow which is very encouraging.

Drilling has now extended mineralisation at Aquila to at least 400 vertical metres in the early stage of wide spaced drilling. Aquila stretches for at least 1.6km along strike and remains open in all directions.

A new mineralised lode has also been identified at Crow in proximity to Aquila. This new lode is already known to extend 400m down dip and has the potential to continue along strike. Closer-spaced drilling is being planned to further define mineralisation.

Aircore and RC drilling continues across Hemi with the aim of extending and defining the mineralised footprint. Aircore drilling is in progress in the greater Hemi area to identify new intrusion targets.”

--- click on link above for the full announcement ---

22-June-2020:  Further High Grade & Expanded Footprint at Hemi

DEG rose +9.4% today on the back of this.  This company is held by Tribeca Global Natural Resources Fund according to their Portfolio Manager (PM), Ben Cleary, (see here, from about the 20 minute mark).  Ben likes them a lot.  I note that Regal Funds Management used to be substantial shareholders of DEG also, but are not, since mid-September.  However, DGO Gold (ASX: DGO) have been increasing their stake and now own 16.35% of DEG, and Regal own 17.13% of DGO. 

Have a look at the DGO chart - from 59 cents to $2.70 in 12 months (+358%).  

DEG (De Grey) haven't done too bad either - up +801% from 7.1c ($0.071) to 64 cents over the same 12 months.

No wonder Ben Cleary likes them!

These grades that DEG have reported today are NOT spectacular, but you don't need them to be, you just need to have consistently good results over a wide area, and that seems to be what De Grey are achieving.