De Grey Mining to Raise $125 Million for Mallina Project (ASX:DEG)

De Grey Mining to Raise $125 Million for Mallina Project (ASX:DEG)

De Grey Mining Ltd [ASX:DEG] share price is on a trading halt today after launching a $125 million equity raise for their 100%-owned Mallina Gold Project. Located in the Pilbara region, Mallina is De Grey’s main focus.

$125 million to fund exploration and prefeasibility study

 De Grey’s institutional placement will issue about 113.6 million new shares at $1.10 per share to raise around $125 million. The issue price is a 9% discount from De Grey’s last closing price of $1.21.

Among other things, De Grey plans to use that money for exploration and drilling and to extend its existing resource base at Hemi and regional deposits — and to finish up a prefeasibility study for Mallina which they expect to release in the second half of 2022.

The placement comes after the company published a scoping study for the Mallina Gold project earlier this month. De Grey expects they’ll be able to produce an average of 473,000 ounces in the first five years, with an average all-in sustaining cost (AISC) of $1,111 and an average of 427,000 ounces a year over 10 years with an AISC of $1,224.

Glenn Jardine, De Grey’s Managing Director, said:

De Grey is pleased to announce the launch of a fully underwritten Placement, which displays a high level of investor support for our growth strategy at the globally significant Mallina Gold Project.

De Grey will now have a significantly strengthened balance sheet which provides a strong platform to unlock further value at Mallina.

What’s next for the DEG Share Price?

The company expects to complete the placement and lift the trading halt by Friday at the latest.

Gold usually does well when there’s uncertainty. In fact, gold prices went on a run last year, hitting north of $2,800 an ounce in August last year. They’ve since dipped and have been ranging between $2,2000 and $2,400 this year.

But while economies are starting to open up, there’s still plenty of uncertainty around.

Inflation is not looking so transitory after all and central banks are already looking at paring back the pandemic stimulus.

For Australian investors, there’s also a risk that the Australia-China tiff gets worse.

In fact, Editorial Director Greg Canavan has just released an in-depth research report on what could happen if this escalates…and how you can protect yourself. You can read all about it here.


 Selva Freigedo,
For The Daily Reckoning Australia

PS: Our publication The Daily Reckoning is a fantastic place to start your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.