De Grey Mining Share Price Down, Struggles to Recover Gold (ASX:DEG)

De Grey Mining Share Price Down, Struggles to Recover Gold (ASX:DEG)

The De Grey Mining Ltd [ASX:DEG] share price was one of the ASX’s top performers in 2020 thanks to a historic gold price and the discovery of the Hemi gold deposit.

With the announcement of metallurgical testwork today, the DEG share price is down 2.5 cents or 2.83% to trade at 86 cents per share.

The gold explorer has given back nearly 50% since hitting a 52-week high of $1.60 in September.

ASX DEG Share Price Chart - De Grey Mining

Source: Tradingview

But despite the impressive size of the Hemi deposit, early metallurgical results suggest recovering its gold might mean the use of less conventional methods.

This is not a roadblock

If you were betting on DEG’s Mallina Gold Project to be a low-cost, high-grade venture then today you may have just lost that bet.

Metallurgical testwork from three samples from the Brolga zone achieved gold recoveries of 12.4%, 27.3% and 12.1%.

However, these results were achieved using conventional gravity-fed recovery methods.

Now, if you were hoping for extreme economy, you’d want to be seeing figures of more than 90%.

But all is not lost — and of course DEG aren’t going to let 70%-plus of its gold go to waste.

DEG also performed testwork assessing three separate potential oxidation processes.

Without getting into the boring details of these processes, they were able to achieve recoveries of 97%, 98% and 94%, respectively.

Which is pretty good.

REVEALED: What’s Next for Aussie Gold Stock Prices? Learn more.

Overall, DEG was able to achieve gold recoveries of 95% on samples from Brolga using a combination of gravity, flotation/oxidation and carbon-in-leach (CIL) in initial testwork.

Now, it goes without saying the more you complicate the refining process the more it could cost to refine the gold.

Below is an example of just one of the processes DEG is currently considering:

De Grey Mining Process - ASX DEG Shares

Source: De Grey Mining

What does this mean for De Grey Share Price and Hemi?

Ultimately, these test result show that there will have to be trade-offs that DEG will have to consider when designing their refining process.

Although, these results are from just one zone at Hemi and are not necessarily representative of the surrounding zones.

Managing Director Glenn Jardine commented:

The results from our ongoing metallurgical testwork program continue to give us confidence in the multiple pathways we have to achieve high gold recoveries from Hemi and the regional deposits at Mallina.

Further testwork and trade off studies underway will enable us to optimise the various aspects of our metallurgical program in terms of capital, operating costs, recoveries and operability.

The DEG share price could also be bolstered further in the coming months and years as Australia begins to surpass China as the gold capital of the world. In her latest report, gold expert Shae Russell breaks down what Australia becoming the new gold ‘epicentre’ means for gold and your Aussie gold stocks. Click here to download the free report.

Kind regards,

Lachlann Tierney

For The Daily Reckoning Australia